On Thursday, Senate Republicans released a discussion draft of the Better Care Reconciliation Act (BCRA), their reconciliation bill to repeal and replace portions of the ACA and a companion to the House-passed American Health Care Act (AHCA). The Senate version includes several items that NAHU supports, including a full repeal of the health insurance tax and providing for state implementation of the medical loss ratio. It also does not include any changes to the employer exclusion of health insurance, which NAHU has long supported as being the basis of the employer-based health insurance system. The Congressional Budget Office is expected to release a bill score by early next week that would show projected impacts on coverage and the cost or savings to the federal government as compared to current law. After which, the Senate may hold a vote on the bill as early as next Thursday.
Unlike the House, the Senate has opted to fast-track the legislation without any public hearings or votes by committees, allowing it to be considered on the Senate floor as early as next week. Senate Majority Leader Mitch McConnell (R-KY) is pushing for a vote next week because they will be on recess the following week for the Independence Day holiday. Delaying a vote until after the recess could threaten support of the legislation and McConnell would prefer to vote before senators would face any potential backlash from constituents, and therefore endanger passage of the legislation.
Just hours after being released, four of the Senate’s most conservative members, Senators Ted Cruz (R-TX), Mike Lee (R-UT), Rand Paul (R-KY), and Ron Johnson (R-WI), said they are unlikely to support the bill as drafted, claiming that it does not go nearly far enough to repeal the ACA. Additionally, earlier today Senator Dean Heller (R-NV) announced that he was also opposed to the bill, based on provisions that would impact the ACA’s Medicaid expansion. Senators Rob Portman (R-OH) and Shelley Moore Capito (R-WV) have also expressed strong support of retaining the ACA’s Medicaid expansion or, if not, providing for a greater period of transition than what was included in the bill. Further, moderate Senators Susan Collins (R-ME) and Lisa Murkowski (R-AK) have said they wouldn’t support legislation that defunds Planned Parenthood, as this bill does. As a reminder, under the rules of budget reconciliation, legislation needs 51 votes for passage in the Senate. As Republicans have 52 members in the chamber, they can only afford to lose at most two votes, assuming Vice President Mike Pence casts a tie-breaking vote.
If the BCRA is passed by the Senate, the legislation will then move back to the House. They have several options for how to proceed: pass the Senate bill as-is, which is unlikely given the stark differences between the two and that the House bill barely passed after caving to conservative demands that are not included in the Senate version; pass another version of the AHCA and send it back to the Senate for consideration; go to a conference committee to have the differences worked out and then have each chamber pass the same bill separately; or more likely, have a series of private negotiations between the key leadership in each chamber for something that can be agreed upon in advance and will pass both chambers.
The most important factor in all of this is likely to be time. Republicans are hoping to use the budget reconciliation process for healthcare reform this year, along with a separate reconciliation vehicle for tax reform, but everything must be done in the right order, with healthcare coming first because that was the first reconciliation bill introduced. Moving onto the tax reconciliation would nullify the healthcare package for the current year and prohibit them from advancing that legislation in 2017. The reconciliation vehicles must also be passed before the end of the current fiscal year on September 30. Further, Congress must also grapple with the overall budget process to avoid a government shutdown, and pass a debt ceiling increase to avoid a default on the nation’s debt. With such a crowded agenda, this is why Leader McConnell is stressing to pass the healthcare package as soon as possible, and if it isn’t going to pass, he has said he is willing to move on to other agenda items.
If Republicans are unable to pass a health reform package through the reconciliation process, they would then need to pass reforms under regular order, which requires 60 votes in the Senate. This would require winning over every one of the centrist Democrats to their side, plus a few others, without losing any of the more conservative Republicans. That list of centrist Democrats generally includes: Joe Donnelly (IN), Heidi Heitkamp (ND), Tim Kaine (VA), Angus King (I-D, ME), Joe Manchin (WV) and Mark Warner (VA). Extending that list to less likely Democrat targets includes: Tom Carper (DE), Chris Coons (DE), Martin Heinrich (NM) and Claire McCaskill (MO). Additionally, winning over Patty Murray (WA), who is the ranking member of the Senate Health, Education, Labor and Pensions Committee, would be crucial for any agreement.
Again, this is why Leader McConnell is attempting to move the BCRA reconciliation package as quickly as possible, so that it can pass the Senate without undergoing numerous rounds of negotiations that could stall, or even put an end to any progress on health reform this year. NAHU has been regularly meeting with key members of the Senate and their staff to advocate on our primary policy priorities and will continue to do so throughout this process. But, as a reminder, until any legislation is formally enacted into law, the ACA remains the law of the land and all of its mandates, penalties, and enforcement remains in effect and your employer and individual clients should continue to follow all rules and regulations that are currently in place.
A brief summary of key elements of the bill is below:
- Tax credits would be age, geography, and income-based and limited to those who earn less than 350% of the federal poverty level ($41,580 for individuals and $85,050 for a family of four).
- Tax credits would be available for those below 100% of the poverty level who currently are not able to access ACA tax credits.
- The maximum percent of income individuals need to contribute to a plan is increased from 9.7% under the ACA to 16.2%.
- Tax credits would be tied to plans with an actuarial value of 58% as opposed to the second lowest cost silver plan, a roughly 70% actuarial value, under the ACA.
- ACA cost sharing reduction (CSR) subsidies would be funded an additional two years until 2020.
- Eliminates the individual mandate penalty by reducing the penalty to $0, retroactive to January 2016; this is not offset with a continuous coverage requirement or the 30% surcharge for not maintaining coverage like the AHCA.
- Eliminates the employer mandate penalty by reducing the penalty to $0, retroactive to January 2016.
- The MacArthur Amendment waivers that were included in the AHCA were not included in the BCRA.
- Takes steps to ease the requirements for states to apply for the ACA’s 1332 state innovation waivers.
Health Insurance Marketplaces
- States will be permitted to entirely opt-out of the marketplaces.
- $112 billion is provided through 2026 under two separate programs: $50 billion in a short-term reinsurance program from 2018-2021; and $62 billion in a separate grant-based fund from 2019-2026 for states to establish reinsurance programs, encourage insurers to sell in the state, and reduce premiums or out-of-pocket expenses.
Medical Loss Ratio (MLR)
- Repeals the federal MLR beginning in 2019 and permits states to implement their own definitions and rebate requirements.
- Delays the Cadillac/excise tax until 2026.
- Repeals the health insurance tax, effective January 2018.
- Repeals the medical device tax, effective January 2018.
- Repeals the indoor tanning tax, effective October 2017.
- Repeals the branded prescription drugs tax, effective January 2018.
- Repeals the medical device tax, effective January 2018.
- Repeals the net investment tax, retroactive to January 2017.
- Repeals the additional Medicare tax, retroactive to January 2017.
- Insurers would be required to provide guaranteed issue coverage.
- Insurers cannot deny coverage or increase premiums due to a pre-existing condition; but they may choose not to cover costs associated with some conditions.
- States would be permitted to determine what qualifies as an essential health benefit.
- Age-rating bands would be increased from the current 3:1 to 5:1.
- HSA contribution limits would be increased.
- Retains the ACA’s provision to allow dependent children to remain on their parents plan up to age 26.
- Phases out the ACA’s Medicaid expansion beginning in 2021. Federal matching funds for the expansion population would gradually decrease from 90% under current law to 75% by 2023, then convert to a new federal/state match by 2024 similar to the current non-expansion funding level.
- Convert Medicaid funding to a per capita cap or a block grant, with funding tied to the Medical Consumer Price Index (CPI) plus 1% through 2025, then to the urban CPI thereafter.