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ACA Watch 2017: The Road Ahead for Healthcare Reform

Over the past few weeks, we’ve seen things really heat up on the healthcare front. Passage of H.R. 1628, the American Health Care Act (AHCA), by the House marks the first leg of the journey for major reform. Budget reconciliation bills are only able to introduce, or make changes to, those provisions of the Affordable Care Act (ACA) that affect the federal budget, e.g. revenue, expenses, and the debt limit. Further, Congress may only use one budget reconciliation action per fiscal year.

This fiscal year ends on September 30. Congress has made a commitment to use the 2016/2017 reconciliation action for healthcare legislation and plan to use budget reconciliation for the 2017/2018 fiscal year for tax reform. Therefore, the healthcare reform window is now a narrow one requiring action and adoption in just three short months.

The introduction, last week, of the Senate’s draft amendment to the AHCA made its way to the Senate Parliamentarian for confirmation that all the content met all the rules of budget reconciliation. From there it made its way over to the Congressional Budget Office (CBO) for scoring. The new AHCA bill with the Senate amendment, now known as the Better Care Reconciliation Act (BCRA), must at least match the federal cost/budget savings as the original AHCA, or $119 billion, in order to move forward.

In reviewing the 142 page BCRA amendment, one specific stand out is the lack of the requirement for continuous coverage requirement for those in the individual market.

Over the past three years, the ability for individuals to come on and off the market, fairly easily, has driven up the cost of premiums. It’s like setting a family budget to save $100 per month so you can purchase a $1,200 appliance at the end of 12 months; really only putting two months of savings into the account. The two months of savings, or $200, will not get you the $1,200 appliance unless you borrow from somewhere or someone. Essentially, that’s what’s been happening. Individuals pay premiums for only a few months and then submit claim expenses that far exceed the premium monies collected. This results in higher costs for all.

The AHCA attempts to correct this by including a continuous coverage provisions stating that individuals must maintain continuous coverage or pay a premium penalty for the remainder of the first policy period.

The first draft of the BCRA did not include this language. After listening to concerns on this, an amendment was issued yesterday morning to include a six-month waiting period for anyone who goes 63 days without coverage during the 12-month period preceding the enrollment date.

The results of the CBO scoring, including this new amendment, were released Monday, June 26 around 4:30 PM EST. At a high level, here are the results:

Provisions AHCA BCRA Variance
Federal budget savings $119 billion $321 billion $202 billion additional savings
Additional number of uninsured 23 million 22 million 1 million fewer uninsured

Additionally, the CBO confirms that the stability of the current individual market will improve and continue improvement in 2020 and thereafter, as most of the provisions take effect, largely due to significant federal subsidization. The agency felt that only a small percentage of individuals would be unable to purchase coverage due to lack of health carrier plans in specific regions. When comparing future health care premiums to today’s costs, the CBO finds that health care premium costs would be, on average:

  • 20% higher in 2018
  • 10% in 2019
  • 30% lower in 2020 and thereafter

Since the outcomes of the BCRA improve upon the results of the AHCA and meet the reconciliation goals, the BCRA can move forward. The only issue now is there isn’t enough Senate support to pass the bill.

Reminiscent of the AHCA voting delay last March, the Senate decided Monday to postpone the Thursday, June 29 vote and work on a re-write over the fourth of July holiday. Five Republicans, three conservatives (Sens. Ron Johnson, Rand Paul, and Mike Lee) and two moderates (Sens. Susan Collins and Dean Heller), are still hold-outs looking for more modifications. The President met with Senators late Tuesday to discuss the legislation. Any new piece of legislation will need to go back to the CBO for scoring.

Barring anything crazy, we expect more events to unfold when the Senate returns from break on July 10*

Update as of 7/13/17:

Senate Republicans unveiled another version of the BCRA today, with a taget of voting on the bill next week. Read the revised draft of the BCRA here, and be sure to check out our ACA Watch 2017 page for updates and potential impact as events occur.