A Full Summary of Each Provision of “The American Health Care Act”
AKA a Full Review of the House Republican ObamaCare Plan sometimes called TrumpCare, RyanCare, the AHCA, or Obamacare 2.0
We review and explain each of the provisions in the House bill to repeal and replace ObamaCare, “The American Health Care Act.” Below we’ll examine what the bill means for American health care and how it is different than ObamaCare.
Keep in mind this bill hasn’t passed yet, Republicans are divided on it, and it keeps going through changes.
TIP: If you want a quick summary, see our page on the unbiased Facts on the American Health Care Act. This page is a full review of every provision in the American Health Care Act. You can also see a summary from the Kaiser Family Foundation for a comparison. See a page on updates.There have been a few updates since this was written.
Some Background on the American Health Care Act
American Health Care Act, the ObamaCare repeal and replace a plan that some call RyanCare, some TrumpCare, and some ObamaCare 2.0, is a bill to make good on the Republican promise to repeal and replace (AKA “repair”) ObamaCare.
The bill is being pursued through budget reconciliation, rather than a traditional legislative process. Thus, the bill’s changes to the ACA are primarily financial. It changes financial disbursements like tax credits, Medicaid expansion, and the mandate; budget reconciliation can’t change provisions like quality control measures.
The bill was reviewed by the Energy and Commerce Committee, and the Ways and Means Committee March 9th, 2017 and is currently in the process of being reviewed and changed.
You can watch the entire video of the Energy and Commerce Committee here. Tip: This committee debated for 27 hours straight. The C-SPAN video player allows you to make clips and save the sections you like. You can see the videos of the review from the Ways and Means Committee here: Part 1, Part 2, Part 3, Part 4. TIP: this committee debated for 18 hours. As noted, the committee process could lead to amendments to the bill’s current language.
You can expect some changes, but understand that the supporters of the bill voted in lockstep against every single change suggested during committee. Make sure you understand the basics like the defunding of Planned Parenthood, the elimination of Medicaid expansion, and the Continuous Coverage provision, so you know whether to support the existing law or the new bill.
This bill has yet to be scored by the CBO, and the Republicans who are leading the charge for The American Health Care Act seem to be trying to move at lightning speed to vote on this bill while simultaneously asking for feedback on the bill and promising ample opportunity for debate and public input.
The bill ‘s supporters are selling it as a repair to Obamacare rather than a full repeal and replace. However, they agree that the bill will result in fewer Americans being insured. The bill’s full effects have been planned to be virtually unnoticeable until after the next election in 2020. However, the implications of having a sudden increase in the uninsured in at that time will be felt by the entire health industry and the vital infrastructure of our hospital network. Providers will be left scrambling.
Before we get into details, the bottom line is that this bill is a mixed bag on some issues.
There are some provisions that Democrats may like or at least don’t object to, some that establishment Republicans like, and some that factions of movement conservatives and progressive liberals don’t like.
It is doubtful the bill will pass without some major changes and the rallying of support.
Trump is generally behind the establishment House conservatives (which in this case denotes House members like Paul Ryan). The bill hasn’t made its way to the Senate yet but is anticipated to be voted on in the House as early as March 23rd.
Title I- ENERGY AND COMMERCE
Subtitle A- Patient Access to Public Health
SEC. 101. THE PREVENTION AND PUBLIC HEALTH FUND.
Written legislation is always a bit difficult to understand, especially when it amends numerous sections of laws by striking a few words here and inserting a few words there.
The provision of the ACA affected is the funding provision 4002, and it would reduce federal funding for The Prevention and Public Health Fund. An interesting note is that the bill specifically states that it affects the ACA as amended by the 21st Century Cures Act. It is specific because it eliminates a significant amount of funding that was only recently added to this program with passage of the 21st Century Act.
SEC. 102. COMMUNITY HEALTH CENTER PROGRAM.
This section would increase the amount allotted to states for community health centers for expanding coverage and access to primary care including dental and vision services. The leaked draft of this bill would have ended this program after 2018 with a smaller budget until then, but this version gives a boost for a year with no plans for funding it after 2017.
SEC. 103. FEDERAL PAYMENTS TO STATES.
This section would add a catch to Medicaid funding. For a state to receive funding for Medicaid (or a waiver) for payments to any non-profits (or anyone associated with them) who provide abortions (except under the Hyde Amendment) whose funding from Medicaid as a nationwide health care network exceeded $350,000,000 in the fiscal year 2014. This very long section would affect only one organization in the US (and potentially any affiliated organization), and you’ll only need one guess. States would be required to stop reimbursing Planned Parenthood for Medicaid covered services (like pregnancy and STD tests, cancer screenings, birth control pills, etc.) to receive federal Medicaid funding for which the state is otherwise eligible.
Subtitle B- Medicaid Program Enhancement
SEC. 111. REPEAL OF MEDICAID PROVISIONS
This section amends the SSA in a couple of different ways.
First, it would prevent states from being able to use “presumptive eligibility periods” in which providers (hospitals) can determine Medicaid eligibility. It wouldn’t take effect until after January 1st, 2020. Some states allow providers, primarily hospitals, to determine Medicaid eligibility for CHIP or Medicaid during a short window when a patient first seeks treatment. The ACA gave the states this option. If the patient’s application for Medicaid/CHIP is eventually denied, then the patient is typically still responsible for medical costs incurred; if their application is approved after review, then the medical care they received is covered. Not all states participate, and only certain types of providers are given this ability in the states that choose to. This section of the Republican plan would revoke the State’s ability to manage Medicaid eligibility in this unique way, but not until after another Presidential election has passed. It is unclear why this approach was taken.
Next, it would change the income eligibility for 6-19-year-old children back to 100% of the Federal Poverty Level (FPL) again. In 2014, the federal threshold was increased to 133% of (FPL) which affected all states. Not every state would change its eligibility threshold for CHIP. Many states currently have CHIP eligibility thresholds well above the minimum (200% FPL and up). However, the states that did reduce the eligibility thresholds could leave a significant number of low-income families stranded.
This section would also end a federal match funding program that helps States provide medical assistance for in-home and community-based attendant services and supports for individuals who are eligible for medical assistance under a state’s plan (like Medicaid, CHIP, or other state-run programs) and whose incomes are below 150% FPL.
SEC. 112. REPEAL OF MEDICAID EXPANSION
This section would start by making Medicaid expansion an option for the States and then makes the necessary changes to end federal funding for these programs by January 1, 2020. Medicaid expansion covers millions of low-income adults who are not disabled or pregnant. This leaked version of the GOP bill would reduce funding for this program over two years and would not allow new enrollees after December 31st, 2019 or those who have a break in eligibility before then to be considered for a State’s federal funding appropriation for Medicaid.
It would also eliminate something known as “benchmark benefit package” and its equivalents from the requirement to include minimal essential coverage after December 31st, 2019. This guideline is for most health plans, including insurances for state employees and plans simply “approved” the Secretary of HHS.
TIP: Slow pull, pull it easy, slow pull, after re-election.
SEC. 113. ELIMINATION OF DHS CUTS
This section would amend the SSA, and change a plan to reduced federal funding to State DSH programs for hospitals and facilities that provide for uninsured patients and charity care. This section would only apply to non-expansion states until 2019. After the fiscal year 2019, it would apply to all states. The reasoning behind the DHS allotments reducing over time under the ACA was the expectation that fewer patients would be uninsured and seek or require charity care. The fact that the GOP expects a significant increase of charity cases is a good indicator that they expect more people to depend on charity hospital care through emergency rooms once the section repealing Medicaid expansion becomes effective in 2020.
SEC. 114. REDUCING STATE MEDICAID COSTS.
This section would change eligibility requirements for Medicaid eligibility and provides guidelines for States to dis enroll individuals who have single high dollar income or lottery winnings.
In addition, this section would repeal a State’s right to cover Medicaid eligible retroactively for three months. This helps individuals who are injured (sometimes catastrophically) get up to three months of backdated coverage through Medicaid if they are eligible.
This section would prevent States from making payments for any medical care received before providing required documentation of citizenship and financial needs.
Lastly, it would repeal State’s ability to allow Medicaid enrollees to have home equity between $500,000 and $750,000.
TIP: This section is not likely to effect a lot of folks, but those affected by preventing State’s from making payments for Medicaid eligible care received before documentation and preventing State’s from backdating coverage for three months if they are eligible are vulnerable groups in bad situations. The most vulnerable groups will be the those who have a significant injury or illness that causes long-term loss of income, which results in insurance being canceled due to non-payment, as well as those who didn’t sign-up for the Medicaid they were eligible for, but who have an unexpected significant need. This group is small so preventing States that chose to provide them additional assistance when they need it the most seems at odds with “State’s Rights” beliefs and human decency.
SEC. 115. SAFETY NET FUNDING FOR NON-EXPANSION STATES.
This section would increase funding for safety-net providers in non-expansion States, so the States that chose not to expand Medicaid will a small boost in funding based on the number of adults earning less than 138% FPL in 2015.
SEC. 116. PROVIDING INCENTIVES FOR INCREASED FREQUENCY OF ELIGIBILITY REDETERMINATION.
This would require the States to redetermine an individual’s eligibility for Medicaid every 6 months. It would also make the penalty for anyone who is enrolled without meeting the income threshold limited to $20,000 for each individual or claim. This appears to include State plans that don’t use income thresholds for eligibility. It would be based on those specified in Title XIX of the Social Security Act which is amended heavily with this bill. It would take effect Oct. 1, 2017.
It provides additional match funding to States for the administrative costs of making those changes.
Subtitle C- Per Capita Allotment for Medical Assistance
SEC. 121. PER CAPITA-BASED CAP ON MEDICAID PAYMENTS FOR MEDICAL ASSISTANCE.
This section would change the way that Federal funding for state-run medical assistance programs works and adds an entirely new section to the SSA, 1903A (page 26). This would provide for per-capita based payments for medical assistance based on demographic categories enrolled in a State plan. It’s a very long and complicated algorithm that depends on the HHS and a quarterly CMS-64 report.
This section redistributes federal funding allotments to States for residents who are eligible for a variety of State administrated health related safety-net programs. These include CHIP now that the federal threshold has been lowered to 6-19 to 100% FPL from 133% FPL; Indian Health Services; Breast and Cervical Cancer Services; Partial-Benefit Enrollees including emergency care for and unlawful aliens, low-income individuals, dual eligible Medicaid/Medicare; and cost assistance for employer coverage for low-income workers. The residents would be divided into categories: Elderly, Blind and Disabled, Children, Expansion Enrollees (this would only be a transitional group), and lastly, Other Non-elderly, Non-disabled, Expansion Adults. States would be funded per Capita amounts that vary based on the categories.
States with waivers to a State plan using ACA waiver 1115 would be affected by this section. It would apply to medical assistance expenditures and medical assistance payments under the waiver in the same way as if they were made under a State plan. The limitations on expenditures supersede other payment limitations (including per capita limitations) otherwise provided by the waiver. This makes it easier to use the funds to cover even more people or to provide more assistance, but doing so won’t mean more federal funding.
This section also would increase federal matching for improving data processing and meeting reporting requirements for a few years.
Subtitle D- Patient Relief and Health Insurance Market Stability
SEC. 131. REPEAL OF COST-SHARING REDUCTION SUBSIDY
This section would repeal the entire ACA provision for Cost-sharing Reduction subsidies (CRS). These subsidies lower the out-of-pocket costs (copays, deductibles, and coinsurance) for those with incomes between 100% and 250% of the FPL. It is paid directly to the marketplace insurer (Silver plans only) and covers progressively more as income drops with thresholds at 200% FPL and 150% FPL. These subsidies significantly reduce the out-of-pocket expenses for millions. Unfortunately, many of the people who are benefiting from CRS aren’t aware they are getting this help, and they have no idea how much money they are currently saving from their out-of-pocket costs each year by it. In 2015, 57.3% of those enrolled in Marketplace plans had reduced out-of-pocket costs because of CRS.
TIP: Everyone knows about the “ObamaCare tax credits,” but few realize their out-of-pocket costs are subsidized as well. Just wait until those making under 250% realize their CRS subsidies were taken away. I can’t imagine people will like that.
SEC. 132. PATIENT AND STATE STABILITY FUND.
This section would create and entirely new title in the SSA, or to say it another way, a new group of individuals who are entitled to assistance administrated by the State. The new Title XXII would establish new state innovation grants for establishing stability in their health insurance and healthcare markets.
States may use the proposed grants provided by the HHS for several purposes. Grants may be used for helping high-risk individuals; making arrangement with “appropriate entities” to help stabilize premiums; reducing the cost of providing coverage for those who require a lot of care; promoting participation in the marketplace; promoting access to primary care (including preventative, dental, and vision), and for providing assistance to reduce out-of-pocket costs. Grants use a funding algorithm that takes into account the number of uninsured residents. These grants would be available beginning January 1, 2020, and take into consideration the number of uninsured below 100% FPL and the goals of a more competitive health insurance market and healthcare consumer choice.
SEC. 133. CONTINUOUS HEALTH INSURANCE COVERAGE INCENTIVE.
This section would amend the Public Health Service Act to allow insurers to charge 30% for premiums for an entire year when a person has a lapse in coverage for more than 63 continuous days in the last year.
TIP: This is the fabled “continuous coverage exclusion.” We were expecting this to allow exclusions of chronic illness or to have a higher rate than 30% (i.e. this version is a “good news” version). Here is the thing, a 30% increase will bar some low-income Americans from the market. This isn’t great, but this is way better than expected. This is the balancing act we are up against. This is “not as bad,” but “not good.” This indirectly replaces aspects of the mandate.
SEC. 134. INCREASING COVERAGE OPTIONS.
The section of the ACA that would be repealed with this provision includes the guidelines and definitions of plan levels (Bronze, Silver, Gold, and Platinum) as well as so that consumers can easily recognize the basic differences between how much cost a plan is expected to cover. This would start in 2020.
SEC. 134. CHANGE IN PERMISSIBLE AGE VARIATION IN HEALTH INSURANCE RATES.
This section would increase the amount insurers can charge older adults (under 65) for premiums. Under the ACA the insurers are allowed to charge more based on age, but they were restricted to charging their older enrollees no more than 3x their youngest enrollees. This section increases that to 5x which could mean middle-aged adults could see their premiums rise significantly especially since the elimination of income-based cost assistance and Cost-sharing reduction subsidies altogether.
Subtitile __- Remuneration From Certain Insurers
SEC. __1. REMUNERATION FROM CERTAIN INSURERS.
This section would eliminate a provision that prevents health insurers from deducting the total compensation packages from insurers for their employees when they exceed $500,000 annually. Insurers would be able to begin taking tax deductions on benefits packages over $500,000 a year starting in the fiscal year 2018.
Subtitle __-Repeal of Tanning Tax.
SEC. __1. REPEAL OF TANNING TAX.
This section would repeal the ACA’s 10% sales tax on tanning beds customers beginning in the fiscal year 2018.
Subtitle __-Repeal of Certain Consumer Taxes
SEC. __1. REPEAL OF TAX ON PRESCRIPTION MEDICATIONS.
This section would repeal a tax paid by companies for selling brand name pharmaceuticals if they want to be able to sell prescriptions to Medicare, Medicaid, or TRICARE. The fees collected are placed in the Medicare Part B trust fund. If this bill passes as is, the big pharmaceutical industries will enjoy a tax break beginning in the fiscal year 2018.
SEC. __2. REPEAL OF HEALTH INSURANCE TAX.
This section would repeal an ACA tax on health insurers profits which would be effective beginning the fiscal year 2018.
Subtitle __- Repeal of Net Investment Income Tax
SEC. __1. REPEAL OF NET INVESTMENT TAX.
This section would repeal the 3.8% tax on capital gains income over $200,000 for individuals and $250,000 for families beginning in the fiscal year 2018.
Subtitle __- Repeal and Replace Tax Policy
SEC. __1. RECAPTURE OF EXCESS ADVANCED PAYMENTS OF PREMIUM TAX CREDITS.
This section would affect the IRS code for Premium Tax Credits (PTC) so that it doesn’t recapture excess Premium Tax Credits for the tax years 2018 and 2019.
SEC. _02. ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT.
This section would make eligibility for the PTC regardless of whether the insurance was purchased on or off the Exchanges, but will no longer be provided to grandfathered health plans or any insurer that provides for abortions except under the Hyde Amendment. It does specifically state that individuals can still purchase separate abortion coverage without tax credits applied. This section also prohibits non-resident aliens from being eligible for PTC.
Advanced Premium Tax Credits would only be available through the Marketplace Exchanges, but everyone who is in the US legally would be eligible for this tax credit for purchasing any kind of qualified health plan (as defined by the IRS).
This section also would adjust the tax credits so that it scales them over time to also reflect age groups and the entire section only applies to the tax years 2018 and 2019.
SEC. _03. PREMIUM TAX CREDIT.
The IRS Code would be amended to repeal the PTC and amends the ACA in kind. The PTC would end on December 31st, 2019.
SEC. _04. SMALL BUSINESS TAX CREDIT.
The small business tax credit would end after the 2019 tax year, but eligible employers who want to take advantage of the tax benefits for the 2018 and 2019 tax years would not be able to use credits for health insurance that covers abortions, except those protected by the Hyde amendment. They can offer a separate health insurance plan this type of coverage.
SEC. _05. INDIVIDUAL MANDATE.
This section wouldn’t repeal the Individual Mandate, but it would amend the IRS Code (and the provisions of the ACA provisions responsible) so that there would be no fee for being uninsured. This section would apply to months beginning December 31, 2015.
SEC. _06. EMPLOYER MANDATE.
Again, this section wouldn’t repeal the Employer Mandate to offer insurance, but it would amend the IRS Code so that the there would be no financial penalty for not complying with the mandate.
SEC. _07. REPEAL OF THE TAX ON EMPLOYEE HEALTH INSURANCE PREMIUMS AND HEALTH PLAN BENEFITS.
This would repeal an ACA provision that taxed excess employee health benefits. This amount adjusts, but for example, in 2018, the current law would tax the benefits over $10,200 for an individual and $27,500 for a family (the threshold also adjusts for retirees).
SEC. _08. REPEAL OF TAX ON OVER-THE-COUNTER MEDICATIONS.
This section wouldn’t repeal a tax on OCT medications because there isn’t a tax on OCT medications (at least not federally), but it does make OTC’s an eligible expense for tax-deductible savings accounts (HSA, FSA, HRA, and Archer MSA) effective 2018. It was an ACA provision that disqualifies over-the-counter medications currently.
SEC. _09. REPEAL OF INCREASE OF TAX ON HEALTH SAVINGS ACCOUNTS.
This section would decrease the tax penalty of spending from HSA’s and Archer MSA’s on non-qualified medical expenses back to the pre-ACA levels. It would be effective beginning in the fiscal year 2018.
SEC. _10. REPEAL OF LIMITATIONS ON CONTRIBUTIONS TO FLEXIBLE SPENDING ACCOUNTS.
Contributions to FSA’s would return to the pre-ACA level of $5,000 beginning in the tax year 2018.
SEC. _11. REPEAL OF MEDICAL DEVICE EXCISE TAX.
This section would repeal an ACA provision that created a 2.3% sales tax on medical devices beginning in the fiscal year 2018.
SEC. _12 REPEAL OF ELIMINATION OF DEDUCTION FOR EXPENSES ALLOCABLE TO MEDICARE PART D SUBSIDY.
This section would restore the tax deductions for employer-provided retirement Rx drug coverage by including the stating that Section 139A of the IRS Code doesn’t apply to whether a tax deduction can be taken. This would take effect in the tax year 2018.
SEC. _13. REPEAL OF INCREASE IN INCOME THRESHOLD FOR DETERMINING MEDICAL CARE DEDUCTION.
This section would lower the threshold for tax deducting medical expenses. Currently, the medical deduction threshold is 10% of Adjusted Gross Income (AGI) and would reduce it to the pre-ACA level of 7.5% of AGI. This would take effect starting with the tax year 2018.
SEC. _14. REPEAL OF MEDICARE TAX INCREASE.
This section would repeal the ACA provision affecting IRS Code adding a Medicare Tax on incomes over $200,000 for single filers and over $250,000 for people who file either the .9% on employee wages or the 2.9% on self-employed wages. This would become effective starting with the tax year 2018.
SEC. _15. REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE COVERAGE.
This is the section that would implement a new refundable tax credit for those who purchase health insurance during the year. This tax credit would be based on age, it would not exceed the actual expenses a person paid for insurance, and it is limited to $14,000 per taxpayer with regards to dependent premiums.
The tax credit would be paid for each month a person had coverage from the first day. A taxpayer is eligible for is 1/12 of these annual amounts for each covered individual based on their age:
- Under 30: $2,000 ($166.67/month)
- 30-39 years old: $2,500 ($208.33/month)
- 40-49 years old: $3,000 ($250/month)
- 50-59 years old: $3,500 ($291.67/month)
- 60 and up: $4,000 ($333.33/month)
For tax families filing together the tax credit is capped at $14,000 annually and based on the five oldest individuals in the tax family. It is also would phase out by 10 percent of the excess income above $75,000 filing single and $150,000 filing a joint return making it unavailable to high earners. The amounts would also adjust annually for inflation after 2020.
It also defined ‘qualifying family member’ to include any tax-dependent and child of the taxpayer who is under 27. It doesn’t cover abortions except under the Hyde Amendment; this is a general theme throughout the bill.
It doesn’t apply to those who have ‘other specified coverage.’ The term includes anyone on a federally funded health insurance program (CHIP, Medicaid, Medicare, TRICARE, VA); group health plans (employer coverage) that fail to include substantially all of the coverage which is described in section 9832(c) of the IRS Code; members of a Health Care Sharing Ministry; and a few others. However, it also allows States to “certify” that other coverage offered in the State meets the requirements, but it’s fairly vague.
Married couples would be required to file together.
It creates special rules for qualified small business employer health reimbursement arrangements (HRA) that reduce the tax credit an individual can be eligible for if their employer contributes to an HRA.
This plan also makes adjustments based on cost of living increases after 2020.
It adds new sections to the tax code to the provide for advanced tax credits through the Exchanges and to make excess Health Insurance Coverage Credits payable to an HSA.
SEC. _16. MAXIMUM CONTRIBUTION LIMIT TO HEALTH SAVINGS ACCOUNT INCREASED TO AMOUNT OF DEDUCTIBLE AND OUT-OF-POCKET LIMITATIONS.
This section would increase the maximum contribution for to an HSAs that are tax deductible to be equal to the maximum out-of-pocket for High Deductible Health Plans (HDHP). This would become effective starting with 2018 tax year.
SEC. _17. ALLOW BOTH SPOUSES TO MAKE CATCH-UP CONTRIBUTIONS TO THE SAME HEALTH SAVINGS ACCOUNT.
This section would allow spouses to contribute catch-up contributions to the same HSA account without dividing it between the spouses beginning with the fiscal year 2018.
SEC. _18. SPECIAL RULE FOR CERTAIN MEDICAL EXPENSES INCURRED BEFORE ESTABLISHMENT OF HEALTH SAVINGS ACCOUNT.
This section would allow individuals who start an HSA within 60 days of beginning coverage with a qualified HDHP to treat be treated as having an HSA from the beginning of that coverage for tax purposes. It would begin with the tax year 2018.