The Republican leadership in the House of Representatives has introduced legislation titled the American Health Care Act to repeal and replace the Affordable Care Act. The proposal actually would leave in place a significant portion of the ACA, including those parts affecting Medicare and many insurance reforms.
Among the ACA provisions that have been preserved are the prohibitions against health status underwriting and lifetime coverage limitations. Also preserved are coverage for pre-existing conditions, a cap on out-of-pocket expenditures, coverage for adult children to age 26, and guaranteed availability of coverage.
Penalties related to the individual responsibility and employer responsibility provisions of the ACA would be repealed retroactively to 2016. The most significant change is the repeal of the individual mandate. This would be replaced with a continuous coverage requirement. Under this requirement, an individual would be subject to a 30 percent premium surcharge if there was a gap in creditable coverage of more than 63 days.
Changes to the current system of premium tax credits are also included. An age-adjusted refundable tax credit will be available for individuals purchasing insurance in the individual market beginning in 2020. Annual credits will range from $2,000 to $4,000 per person depending on age and will begin to phase out for individuals with income in excess of $75,000.
Revenue provisions in the ACA would also be repealed. Most significantly, this would include the 3.9 percent tax on net investment income for high earners and the 0.9 percent tax surcharge on earned income exceeding $200,000. Restrictions on flexible spending accounts, including the $2,500 contribution limitation and the use of funds for over-the-counter medications would also be eliminated. Several other taxes including the health insurance tax, the “Cadillac plan” tax and the medical device excise tax would be repealed.
There are a number of changes to the Medicaid program proposed, including a transition from the current funding to Medicaid funding utilizing a per capita cap by 2020. The legislation will create a Patient and State Stability Fund. This will provide money to individual states to be used in connection with health care coverage. Among the permissible uses would be financial assistance to high-risk individual, promotion of preventative care, paying for mental health and substance abuse disorders, and providing incentives to stabilize individual market premiums.
House committees began markups of the bills March 8. The legislation has a long way to go before being adopted. It will require near unanimous support for Senate Republicans, as Senate Democrats are likely to oppose any meaningful changes to the ACA.