4 May 2017

Legislative Alert: House Passes ACA Repeal Bill

This afternoon, the U.S. House of Representatives approved the American Health Care Act (AHCA) by a vote of 217 to 213. The vote represents a significant victory for Speaker Paul Ryan (R-WI) and his leadership team, which had been under tremendous pressure from the White House to repeal the Affordable Care Act (ACA). This is the second attempt to pass the AHCA, as the last effort was withdrawn from House floor consideration in late March. The House voted without a “score” from the Congressional Budget Office, which had previously reported that the original AHCA would produce $150 billion in savings and result in 24 million people losing their insurance.

Key provisions of the AHCA include:

  • Effectively ends the individual and employer mandate

  • Ends funding for Medicaid expansion

  • Transitions Medicaid from an entitlement program to a per capita or block grant-based model

  • Replaces premium subsidies based on income with tax credits based on age

  • Postpones the “Cadillac Tax” on health plans

  • Repeals taxes on higher income individuals, insurers, and drug and medical device manufacturers

  • Allows health plans to charge older customers higher premiums

  • Allows states to opt out of requiring plans to cover essential health benefits

Since March's failed attempt, Republican members have amended the AHCA to garner support. To appeal to the conservative branch of the House, Rep. Tom MacArthur (R-NJ) proposed an amendment that would let states opt out of requiring plans to cover essential health benefits. The amendment also would create a process for states to opt out of community rating standards, which under current law prohibit health plans from charging more to patients with pre-existing conditions. To insulate patients from higher premiums and other out-of-pocket costs that result from changes to community rating standards and secure moderate Republican support for the AHCA, Rep. Fred Upton (R-MI) and Rep. Billy Long (R-MO) introduced an amendment that provides an additional $8 billion over five years to provide premium assistance to patients who may have higher premiums because they have pre-existing conditions or failed to maintain continuous coverage. While policy experts have agreed that this funding may be insufficient, it effectively provided a reason for undecided moderate Republicans to support the bill.

Senate Passage
The Senate could start AHCA consideration as early as next week. It remains unclear when and if the AHCA will come to the Senate floor, as several Senate Republicans have expressed concern with the House bill. In any event, we expect the Senate to consider significant changes to the House passed bill. This would require the House to vote again to approve the bill; however, any changes the Senate makes may not be palatable to House members, which may diminish prospects for passage in the House.

2018 Outlook
An important factor to remember is that the AHCA may have political ramifications in the 2018 reelection season. There are currently 23 House Republicans in districts that voted for Secretary of State Hillary Clinton in 2016. House Democrats need to gain 24 more seats to control the House. Last month’s recess proved that many House Republicans already have faced backlash from their home districts for supporting the AHCA. Republican House members taking a tough vote on a bill that could die in the Senate presents an opportunity for Democrats in the 2018 reelection season. Failing to enact the AHCA would leave the ACA in place, putting House Republicans who voted for the bill in a vulnerable political position in terms of reelection. Within the last month, Republicans have faced tighter than expected margins to retain Republican-controlled House seats that were vacated.

AMGA will continue to monitor this situation and report any significant updates as the process continues.