The Senate Continues to Shape Its Version of A Health Care Insurance Bill

by Megan R. George

Recently Republican Senate Majority Leader Mitch McConnell released the Senate’s updated version of the Better Care Reconciliation Act (“BCRA”). Although a similar version of the bill passed in the House, the BCRA failed to obtain the necessary support in the Senate, leaving Republican leaders and the American people asking the question of “what next?” A summary of the key provisions of the BCRA are below. While this list is not exhaustive, it serves as the Republican party “wish list” of changes to the Affordable Care Act. Any further legislation will most likely have all, if not many, of the below provisions included.

  • The BCRA eliminates Employer and Individual Mandate Penalties enacted under the Affordable Care Act (“ACA”). The Individual Mandate Penalty has been a hot topic since the ACA was enacted.
  • The BCRA repeals taxes that were enacted under the ACA such as the excise tax on medical devices, the health insurance tax, the Medicare surcharge tax, the net investment tax, the branded prescription tax, the health insurance executive tax, the Medicare tax on high income taxpayers and the tanning tax. The bill would also temporarily repeal the “Cadillac tax” through 2026.
  • The BCRA ends the exclusion of coverage for over-the-counter medications from HSA or FSA funds, allows individuals to use HSA funds to pay insurance premiums, allow individuals to use HSA funds to cover health care related expenses incurred up to 60 days before HSA coverage becomes effective, and increase the amount that an individual can contribute annually to an HSA.
  • The BCRA eliminates the ACA’s small business tax credit by the year 2020.
  • The BCRA amends the IRS code to allow small business health plans to be treated as a group health plan.
  • The BCRA provides $45 million in federal funding to combat the current opioid crisis.
  • The BCRA will restructure the premium tax credits beginning in year 2020. Subsidies will be available to those below 350% of poverty. Subsidies are geared to a plan with an actuarial value of 58%, just below a bronze-level plan. The current subsidies are tied to the silver plans, which cover 70% of costs for most customers.
  • Cost Sharing Reduction (“CSR”) payments will be fully repealed by year 2020.
  • An additional $70 billion in stabilization funding will be provided to insurers as a way of reducing premiums and reducing out of pocket costs. This is an increase from the first version of the Senate’s BCRA, which provided for $112 billion dollars in stabilization funding.
  • The BCRA begins to phase out the enhanced federal match for Medicaid expansion over a three year period beginning in calendar year 2021.
  • Medicaid payments to beneficiaries will be capped for each Medicare beneficiary beginning the calendar year 2020. Blind and disabled children are not subject to the cap.
  • BCRA provides safety-net funding over a five years period to states that did not expand Medicaid under the ACA.
  • The BCRA has an incentive program in the form of a bonus payment for states in if states can demonstrate that on a set of child and adult quality measures, they were able to achieve results while also showing lower-than-expected aggregate Medicaid expenditures during an annual performance year.
  • The BCRA, like the AHCA will impose more frequent eligibility redeterminations. Although the BCRA makes this an optional exercise, the Senate bill would increase by 5 percentage points the federal contribution to state costs in connection with a more frequent eligibility redetermination process.
  • The BCRA allows the states to impose work requirements on non-disabled, nonelderly, and non-pregnant adults using the TANF work rules as the basis of a new Medicaid work policy.
  • The BCRA allows states to offer Medicaid coverage of “qualified inpatient psychiatric hospital services” to persons age 21 through 65. Under this provision, qualifying stays cannot exceed 30 consecutive days in a month or 90 total days in any calendar year.
  • As with the AHCA, the BCRA prohibits using tax credits to purchase health plans that cover abortion.
  • Also the same as the AHCA, the BCRA prohibits for one year any Medicaid, CHIP, Maternal and Child Health Services Block Grant, and Social Services Block Grant funding for Planned Parenthood.
  • The BCRA loosens 1332 waiver requirements.

Ted Cruz’s amendment to the BCRA will allow consumers to buy health insurance plans that do not meet the current requirements for health plans under the ACA. In essence, these plans would be cheaper and offer less coverage. Insurers could offer these plans if the insurer also offers a plan that does include all of the current ACA requirements, allowing those with pre-existing conditions to obtain coverage at a reasonable rate. This is a heated topic in the discussions surrounding the passage of the BCRA. One of the most population functions of the ACA is that individuals with pre-existing conditions can obtain affordable health insurance.  Because all Americans are currently required to purchase health insurance, risk shifting takes place between those with preexisting conditions and those who are generally healthy but still paying high premiums. Opponents of the Cruz legislation argue that all Americans will purchase the bare bones plan, essentially making health insurance costs rise for those purchasing the more comprehensive plans. With less being collected by insurance companies in the form of premiums, the funds will have to be recaptured elsewhere.

After the failure of the BCRA, Senate Republicans attempted a “skinny repeal” of the Affordable Care Act, repealing only some of the provisions of the ACA, allowing further legislation to be passed in the future. The skinny repeal would have included repealing the unpopular individual mandate, defund planned parenthood while diverting funds to community health centers, eliminate the medical device tax for three (3)  years, allow for increased contribution to Health Savings Accounts, allow states to have more flexibility in determining waivers for essential health benefits, and eliminate the employer mandate for eight (8) years. The hot button topic of Medicaid was not discussed in the skinny repeal. Even without some of the more controversial topics being included, the skinny repeal of the ACA did not pass. Again, Republicans and the American people are asking themselves the question of what will happen next. Regardless of what side of the political spectrum you fall, health care and health insurance affects every American.

There is great uncertainty surrounding the Republican effort to repeal and replace the Affordable Care Act. Thus, it is unclear whether the Republican “wish list” outlined above or any other version can ultimately muster up sufficient votes to make it through both chambers of Congress to get to the President’s desk.