An AHCA (H.R. 1628) Update for Anesthesia Groups

The latest version of the House bill to repeal and replace the Affordable Care Act, passed in early May, would reduce the federal deficit by $119 billion and result in 23 million additional uninsured Americans by 2026 compared with current law, according to a new report from the Congressional Budget Office and the Joint Committee on Taxation. We highlight key findings from the report and provisions of the revised bill, including the MacArthur and Upton Amendments related to patients with pre-existing conditions, and review responses from organized medicine and groups both for and against the proposal. 

An analysis by the nonpartisan Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) issued on May 24 estimates that the amended Republican proposal to replace the Affordable Care Act (passed by a vote of 217 to 213 by the House of Representatives on May 4), would, by 2026, yield a net federal deficit reduction of $119 billion and leave 23 million fewer Americans covered by health insurance. As H.R. 1628 moves to the Senate, it remains too early to know the legislation's impact on clinicians in general and anesthesia practices in particular, but the American Society of Anesthesiologists (ASA) continues to monitor the bill through its recently created Ad Hoc Committee on Health Care Reform. The ASA also has proposed a list of key principles that the organization believes should be included in any new healthcare reform legislation. As the bill awaits its fate, for planning purposes, anesthesiologists and nurse anesthetists might want to look back and consider their payer mixes before the ACA, i.e., Obamacare (which includes the Exchange Products and Expanded Medicaid Programs in many states) to get a sense of the level of uninsured and under-insured patient populations they could potentially be caring for if the AHCA were passed in this form.

Major Provisions

Key provisions of H.R. 1628 propose to:

• End Medicaid as an open-ended healthcare entitlement program and provide states with either an allotment for each beneficiary or a lump sum as a block grant.
• Eliminate tax penalties for people who do not have health insurance.
• Allow states to obtain limited waivers to opt out of certain provisions of the ACA, including the requirement for insurers to provide "essential health benefits," such as emergency services and maternity care, and the requirement not to charge higher premiums for people with pre-existing conditions. However, states would not be allowed to charge higher premiums unless they have an alternative mechanism in place, such as a high-risk pool, to help cover people with serious illnesses. These provisions, introduced by Rep. Tom MacArthur (R-New Jersey) and Rep. Mark Meadows (R-North Carolina) in what have come to be known as the MacArthur Amendment, won critical support for the bill from the far right House Freedom Caucus. The revised bill originally allocated approximately $130 billion for a new Patient and State Stability Fund and high-risk pool funding. An additional amendment to the AHCA introduced by Rep. Fred Upton (R-MI) and Billy Long (R-MO), known as the Upton Amendment, provides an additional $8 billion for this purpose.
• Reduce taxes for high-income people by repealing a payroll tax increase and a tax on investment income mandated by the ACA.
• End the taxes on insurers, medical device manufacturers and pharmaceutical companies enacted to finance the ACA.
• Allow insurers to charge older adults five times the amount they charge young adults for the same coverage. Under the ACA, insurers are prohibited from charging older adults more than three times what they charge younger adults.
• Offer $2,000 to $4,000 annually in tax credits to people who do not have insurance coverage through their employers or a government program such as Medicare or Medicaid. A family could receive up to $14,000 per year in credits, which would be reduced for individuals earning more than $75,000 and families earning more than $150,000 annually.
• Encourage "continuous coverage" by requiring insurers to impose a 30 percent surcharge on premiums for people who experience a gap in coverage.

A Nonpartisan Analysis

The current CBO estimate of the number of Americans who would be uninsured by 2026 is slightly lower (by one million) than the CBO analysis of the bill's initial version. (See our March 20, 2017 eAlert, "The American Health Care Act: An Overview for Anesthesia Practitioners.") The net deficit reduction of $119 billion would be achieved primarily by the repeal or delay of taxes on high-income people enacted by the ACA and a reduction in Medicaid spending, including termination of the expansion of Medicaid mandated by the ACA and the creation of a per-capita-based cap on Medicaid payments (see graph below).

In brief, those most seriously affected by the American Health Care Act (AHCA) of 2017 (H.R. 1628) would be Medicaid beneficiaries and the elderly, while younger, healthier, middle-income Americans would benefit from reductions in insurance premiums and high-income earners would see tax breaks, including the elimination of a tax on investment income.

According to a CBO summary of its analysis:

The largest savings would come from reductions in outlays for Medicaid and from the replacement of the Affordable Care Act's (ACA's) subsidies for nongroup health insurance with new tax credits for nongroup health insurance. Those savings would be partially offset by other changes in coverage provisions—spending for a new Patient and State Stability Fund, designed to reduce premiums, and a reduction in revenues from repealing penalties on employers who do not offer insurance and on people who do not purchase insurance. The largest increases in the deficit would come from repealing or modifying tax provisions in the ACA that are not directly related to health insurance coverage—such as repealing a surtax on net investment income, repealing annual fees imposed on health insurers, and reducing the income threshold for determining the tax deduction for medical expenses.

The CBO predicts that the AHCA would leave 14 million Americans without insurance coverage by 2018, the same number predicted with the initial proposal. It projects that 51 million people would be uninsured by 2026, compared with 28 million if the ACA were to remain in place. Premiums for enrollees in the individual exchanges would increase by 20 percent in 2018 and five percent in 2019; however, average premiums would decrease beginning in 2020, but benefits would also be less comprehensive.