Affordable Care Act ("ACA") Repeal and Replace

On May 4, the House of Representatives passed the American Health Care Act (“AHCA”) by a close vote of 217-213.  Twenty Republicans and all Democrats voted against the bill. Some of the bill’s key provisions are:

• increasing contribution limits to health savings accounts (“HSAs”);
• eliminating the individual shared responsibility and employer shared responsibility penalties (though the mandates themselves remain);
• a package of insurance “market stabilizers,” including funding for state-based high risk pools, a continuous coverage requirement, and a 5:1 community rating provision with state flexibility;
• creating state waivers for age rating, essential health benefits and, where an individual’s coverage has lapsed, community rating;
• replacing the ACA premium subsidies with age-based tax credits of $2,000-$4,000 to help individuals pay for coverage;
• delaying the implementation of the Cadillac tax; 
• eliminating various taxes and fees associated with the ACA; and 
• reforming Medicaid.

The House initially passed the bill without a budget score from the Congressional Budget Office (“CBO”).  On May 24, the CBO released its score showing that 23 million more Americans will be without coverage in a decade than under the ACA.  The bill overall saves $119 billion over a decade – this number comes from $1.1 trillion in cuts to Medicaid and premium subsidies offset by repealing $874 billion in ACA taxes and fees and spending $117 billion on premium-reduction payments.

The AHCA is likely to be significantly altered in the Senate, and Majority Leader Mitch McConnell (R-KY) last week stated that he was not sure how the party will get the 50 votes it needs to pass a bill.  A healthcare working group that includes 13 members and other working groups are meeting regularly to try to hammer out a consensus proposal, and it will likely take some time before a Senate blueprint emerges. Importantly, the Senate negotiations on AHCA likely will affect the timing and process Congress will use to consider tax reform legislation.