Benefits Insights, Spring 2017
The first step by the U.S. House of Representatives to repeal and replace the Affordable Care Act has experienced a setback. The American Health Care Act (AHCA), released in early March and passed by both the House Ways and Means and Energy and Commerce Committees, was withdrawn from floor consideration by Speaker Paul Ryan because it did not have enough support.
The changes proposed by the AHCA would have been phased in over time, resulting in significant changes to the current health insurance market.
Some of the most notable changes included:
- Eliminating the employer mandate
- Removing the individual mandate and adding a 30% late enrollment penalty for individuals who do not maintain continuous coverage
- Maintaining individual tax credits, with changes, through 2019, then migrating to tax credits based on income and age
- Capping future growth in per-enrollee Medicaid payments
- Maintaining prohibition on lifetime and annual dollar limits and on pre-existing condition exclusions, and continuing the extension of dependent coverage to age 26
- Encouraging greater use of Health Savings Accounts by increasing annual tax-free contribution limit
Some argue that the proposed changes were not enough, that the AHCA is too similar to the ACA. Others point out that significant reductions in Medicaid will increase the number of uninsured. Striking the right balance between maintaining coverage and a reasonable cost is posing a challenge.
The Congressional Budget Office (CBO) stated on March 13 that the AHCA would increase the number of uninsured by 21 million in 2020 and by 24 million in 2026. However, the AHCA would reduce federal deficits by $337 billion from 2017-2026. The CBO later issued a revised estimate based on changes to the AHCA that reduced savings but did not change the number of uninsured.
Opposition to the AHCA seemed even more widespread in the Senate so even if it passed the House, the bill’s prospects seemed murky. The challenges facing any proposal to replace the ACA seem large.