Friday, March 24, 2017

PPACA Repeal and Replace, GOP Alternative Pulled From Consideration

March 23 - House announces vote on American Health Care Act is postponed. Republicans held a closed door meeting later in the evening.

March 23 - President Trump asks that the House vote be held on Friday, March 24.

March 24
- Vice President Pence meets with conservative Freedom Caucus members to convince them to join as a Yes vote.

March 24
- H. B. 1628, American Health Care Act, is pulled and no vote takes place. Speaker Ryan said: "Moving from an opposition party to a governing party comes with growing pains, and, well, we're feeling those growing pains today. We came really close today, but we came up short. I spoke to the president just a little while ago and I told him that the best thing I think to do is to pull this bill, and he agreed with that decision. I will not sugar coat this, this is a disappointing day for us. Doing big things is hard."

We will continue to monitor the aftermath of these events. If any new legislation is proposed in 2017, we will be tracking that as well as the regulatory changes we anticipate will still proceed.

Health Care Reform News:


House Republicans pull health care bill
March 24, 2017 – CNN
Excerpt: “House Speaker Paul Ryan sensationally pulled his Obamacare repeal bill from the floor on Friday, a day after President Donald Trump had threatened to walk away from health care reform if he didn't get a vote.”

GOP health-care bill: House Republican leaders abruptly pull their rewrite of the nation’s health-care law
March 24, 2017 – Washington Post
Excerpt: “House Republican leaders abruptly pulled a rewrite of the nation’s health-care system from consideration on Friday, a dramatic acknowledgment that they are so far unable to repeal the Affordable Care Act.”

Ryan pulls GOP health care bill following call from Trump

March 24, 2017 – ABC News
Excerpt: “Republican leadership has decided to pull their Obamacare replacement bill at the last minute at the request of President Donald Trump -- capping a rocky series of weeks since the controversial measure was introduced and an order from the president for legislators to put their cards on the table today.”

Republicans Yank Obamacare Repeal Bill
March 24, 2017 – Politico
Excerpt: “The decision is a staggering defeat for Ryan and President Donald Trump in their first attempt to partner on major legislation and fulfill a seven-year Republican promise to repeal Obamacare. It comes a day after Trump issued an ultimatum to House Republicans to vote for the bill or live with Obamacare."

Tuesday, March 21, 2017

Changes to American Healthcare Act Designed to Entice the Right and Left Wings of the GOP

Republicans in the House of Representatives have proposed a handful of changes to the American Healthcare Act in an attempt to woo a few of the more liberal and conservative members of the GOP.  The House plans to vote on the full bill on Thursday.  Here is a quick summary of the enticements offered to placate the party's edge members: 
  1. About $85 billion more allocated to lower income and older Americans to use as tax credits in purchasing healthcare.  The House will charge the Senate with actually delineating how these credits are to be doled out.  But the change was an olive branch to moderates who felt that seniors and low income folks were going to have to pay too much for their own healthcare.  
  2. An option for states to choose between the per-person funding Medicaid caps and the more traditionally proposed per state block grants
  3. States now will have the freedom to place work requirements on non-disabled adults who get free healthcare via Medicaid.  Any state instituting this change will receive 5% more financial support from the federal government. 
  4. All Obamacare taxes (other than the "Cadillac Tax") will be repealed in 2017 instead of 2018.  
  5. Excess tax credits that were not used in purchasing healthcare, can now not be rolled over into Health Savings Accounts as was proposed in the original legislation.  And,
  6. An alteration in the Medicaid reimbursement rates for the elderly and disabled alleviating a concern some governors had about cuts to reimbursements for those categories of beneficiaries. 

Monday, March 13, 2017

A Brief Analysis of the CBO Report on the American Health Care Act

The Congressional Budget Office ("CBO") has scored the American Health Care Act (which I like to pronounce as "Ahaaa").  It is only 37 pages and can be found here.  I've summarized it and my thoughts on it into one page below.   

20% to 50% Reduction in Taxpayer Costs
  •  Taking the CBO at its word, the proposed bill reduces federal deficits by $337 billion over the next 10 years. (About a 20% reduction in the cost of Obamacare if we assume PPACA was at roughly $1.7 trillion.)
Fewer Americans Covered Under Taxpayer Funded Insurance
  • In 2018, 14 million fewer people would be insured than under current law. However,
    • 11 million people fewer will be dependent on taxpayer funded healthcare; and 
    • 5 million fewer people forced into a failing Medicaid system.
A 10% to 25% Reduction in Premiums for Most Americans by 2026
  • The proposed legislation would reduce prices enough overall to stabilize the insurance market by enticing younger and healthier people to purchase healthcare and do so with fewer taxpayer handouts. I.e., free market improvements with less reliance on government. (Top of P. 3 in CBO report.)
    • By 2026, premiums in the non-group market would be 20% to 25% percent lower for a 21-year-old and 8% to 10% lower for a 40-year-old—but 20 percent to 25 percent higher for a 64-year-old. (Page 22 in CBO report.) This is actuarially correct but politically challenged. 
    • For those with household income exceeding 150% of the Federal Poverty Level ("FPL"), the legislation would generally reduce the percentage of income that younger people had to pay toward their premiums and increase that percentage for older people. (Bottom of page 11 in CBO report.) This helps to correct the PPACA underwriting perversions that unduly burden young Americans.
Minor Improvements in Insurer and Employer Ability to Offer Creative Free Market Healthcare Plans
  • This bill fails to eliminate the 10 categories of “essential” benefits as defined by PPACA and therefore limits the ability for insurers to sell cheaper, mini-med or catastrophic types of policies to people who do not want or need full blown high-dollar coverage. This is a clear shortcoming. (Page 14 of CBO report.)
    • However because somewhat lower actuarial values will be allowed and because HSAs will be expanded, this bill does incrementally improve individual healthcare consumerism and lessen taxpayer reliance on governmental subsidies. 
      • A Safety Net, Not a Safety Hammock: In an illustrative example, CBO and JCT estimate that a 21-year-old with income at 175 percent of the FPL in 2026 would be eligible for a premium tax credit of about $3,400 under current law; the tax credit would fall to about $2,450 under the legislation. (Page 16 in CBO report.)
IRS Still Involved in Healthcare and Employers Still Reporting. Unfortunately, this bill did add in an income limit for the tax credit test (earlier versions were solely based on age; not income). This means that the IRS will still have to be involved in determining who gets tax credits and employers will still have to engage in the onerous reporting that PPACA spawned.  In theory, however, this reporting could be less detailed. 

Reduction in the Tax on Work and Saving. Less Punishment for Work - in another example, CBO and JCT estimate that a 21-year-old with income at 450% of the FPL in 2026 would be ineligible for a credit under current law but newly eligible for a tax credit of about $2,450 under the legislation. (Page 16 in CBO report.)

Less Reliance on Government and More Personal Responsibility
: “total federal subsidies for nongroup health insurance would be significantly smaller under the legislation than under current law for two reasons. First, by the agencies’ projections, fewer people, on net, would obtain coverage in the nongroup health insurance market under the legislation. Second, the average subsidy per subsidized enrollee under the legislation would be significantly lower than the average subsidy under current law. In 2020, CBO and JCT estimate, the average subsidy under the legislation would be about 60 percent of the average subsidy under current law. In addition, the average subsidy would grow more slowly under the legislation than under current law.” (Page 17 in CBO report, the italics are mine.) This is a significant improvement on PPACA in terms of fostering more individual responsibility and keeping deficits under control.

Tuesday, March 7, 2017

Obamacare Repeal/Replacement Watch: First Bills Released

On March 6, 2017 House Republicans released their American Health Care Act (AHCA) proposal for repealing and replacing Obamacare. Both the House Ways and Means Committees and Energy and Commerce published amending language. Articles and proposals are linked below.  I spent this morning discussing the changes, benefits and negatives of this proposed legislation on the Armstrong and Getty Radio Program.

In the afternoon I was on the Michael Berry Radio Show for a more in depth analysis of the bill.

There are two significant changes from the “leaked” discussion draft seen in mid-February versus this newer version. The newer AHCA has no mention of taxing employer sponsored health care and keeps the Cadillac tax in play but delays it even further until 2025. As in the “leaked" bill, the individual mandate and the employer mandate would be repealed (or more accurately reduced to $0) for months beginning after December 31, 2015.  Many other provisions are phased out from 2018 to 2020.

We will need to monitor any amendments closely as the bill progresses in the House and then in the Senate.

Please keep in mind, these are proposals only and subject to change.  Congress is recessed April 7-21 so we hope to have a clearer picture of legislative maneuvers. This is a works in progress but we will let you know if final action takes place to impact your employer obligations.

The American Health Care Act: Fact Sheet (PDF)
March 6, 2017 – Committee on Ways and Means, U.S. House of Representatives
Excerpt: “"[T]he primary Committees with jurisdiction over health care -- Ways and Means and Energy and Commerce -- have released the American Health Care Act -- legislation that not only repeals the law, but replaces it with reforms President Trump laid out.... [H]ere's what the American Health Care Act will do: ... [1] Dismantle the Obamacare taxes ... [2] Eliminate the individual and employer mandate penalties ... [3] Prohibit health insurers from denying coverage ... [4] [Allow] dependents to continue staying on their parents' plan until they are 26.... [5] Establish a Patient and State Stability Fund ... [6] Modernize and strengthen Medicaid ... [7] [Expand] Health Savings Accounts (HSAs) -- nearly doubling the amount of money people can contribute and broadening how people can use it.... [8] [Provide] a monthly tax credit -- between $2,000 and $14,000 a year -- for low- and middle-income individuals and families who don't receive insurance through work or a government program."

The American Health Care Act: House Ways and Means Committee Provisions
March 6, 2017 – Committee on Ways and Means, U.S. House of Representatives
Excerpt: "The legislation, part of House Republicans' American Health Care Act, ... [1] Dismantles Obamacare taxes and mandates -- including the individual and employer mandate penalties and taxes on prescription drugs, over-the-counter medications, health insurance premiums, and medical devices. [2] Empowers individuals and families to spend their health care dollars the way they want and need by enhancing and expanding Health Savings Accounts (HSAs). [3] Helps Americans access affordable, quality health care by providing a monthly tax credit to individuals and families who don't receive insurance through work or a government program."

The American Health Care Act: House Energy and Commerce Committee Provisions (PDF)
March 6, 2017 – Energy and Commerce Committee, U.S. House of Representatives
Excerpt: "The legislation, part of House Republicans' American Health Care Act, ... [1] Creates a Patient and State Stability Fund -- This new and innovative fund give states broad flexibility to design programs that best serve their unique populations. They can also use funds to increase access to preventative services. [2] Responsibly unwinds Obamacare's Medicaid expansion -- By freezing new enrollment after 2 years and grandfathering in current enrollees, we protect patients and offer a stable transition. [3] Strengthens Medicaid -- Using a per capita allotment, our legislation ensures a fair funding formula for states while creating a viable financial future for the program."
March 6, 2017 - New York Times 
Excerpt: "House Republicans released on Monday legislation to repeal and replace the Affordable Care Act, also known as Obamacare.  It fundamentally changes how health care is financed for people who do not have insurance through work, and it eliminates the mandate requiring most Americans to have health insurance, a centerpiece of the Affordable Care Act."

Rand Paul: House GOP Healthcare Plan Will Not Pass
March 7, 2017 - Washington Examiner
Excerpt: "Kentucky Sen. Rand Paul promised the healthcare plan proposed by House GOP leadership would not pass the Senate and become law because it's just 'Obamacare lite.'
Paul told Fox News he has serious problems with the plan, especially the replacement for the Affordable Care Act's individual mandate. Paul said there will still be a mandate, of sorts, in the bill but instead of paying the government a penalty for backing out of a health insurance plan that payment would go to private insurance companies."

The American Health Care Act: The Republican’s Bill to Replace Obamacare, Explained

March 6, 2017 – Vox
Excerpt: “House Republicans released their long-awaited replacement plan for the Affordable Care Act on Monday. The American Health Care Act was developed in in conjunction with the White House and Senate Republicans. Two big questions-how many people it will cover and how much it will cost-are still unresolved: It will likely cover fewer people than the Affordable Care Act currently does, but we don’t know how many. And the Congressional Budget Office has not yet scored the legislation, so its price tag is unknown.”

The Republicans Take on Health Care—and It Won’t Be Easy
March 7, 2017 – CNN
Excerpt: “Republican lawmakers have finally unveiled a plan to repeal major portions of Obamacare, capping years of attacks against the health care law and a months-long debate that exposed deep rifts within the GOP.”

Trump Praises New Health Care Bill as GOP Tries to Sell It
March 7, 2017 – Associated Press
Excerpt: “The new bill aims to replace that law - one of former President Barack Obama's signature achievements - with a system designed along conservative lines. Primarily affected would be some 20 million people who purchase their own private health plans directly from an insurer and the more than 70 million covered by Medicaid, the federal-state program for low-income people.”