House Republicans have formally begun their efforts to repeal and replace the Affordable Care Act, but a group of four GOP senators could present a significant hurdle to getting the budget reconciliation package to the president’s desk.

The budget reconciliation language – introduced March 6 – represents the first of three phases in their planned effort to quash the ACA.

Phase one “is the bill that was introduced last evening in the House of Representatives,” Tom Price, MD, Secretary of Health & Human Services said during a White House press briefing March 7.

“Second are all the regulatory modifications and changes that can be put into place,” Dr. Price said, noting that the Obama administration made 192 specific rules related to the ACA and published more than 5,000 letters of guidance. “We are going to go through every single one of those and … if they help patients, we need to continue them. If they harm patients or increase costs, they need to be addressed.”

He added that additional legislation could be needed to address changes that cannot be made through the reconciliation process, such as addressing prescription drug costs and allowing health insurance to be sold across state lines.

Sections of the reconciliation package were introduced in the House Energy and Commerce and House Ways and Means Committees, covering areas relative to each committee’s jurisdiction. Taken together, they put forth the plan to repeal and replace certain revenue aspects of the ACA.

Provisions to repeal Medicaid expansion likely will prove the most problematic. The Energy and Commerce language calls for the repeal of Medicaid expansion provisions by 2020. It also repeals a requirement that state Medicaid plans offer the same minimum essential health benefits that are required by plans on the exchanges.

Starting in fiscal 2020, states would begin to receive a per capita allotment to fund their Medicaid programs, a fixed amount per Medicaid enrollee that will adjust over time for inflation using the consumer price index. States spending more than their annual allotment per beneficiary would be penalized with reduced funding in the following year.

That provision has run afoul of certain Republican senators whose votes are needed to gain a simple majority and pass the budget reconciliation package. Because of the slim nature of the Republican majority, any defection from the party line could endanger passage.

“We are concerned that any poorly implemented or poorly timed change in the current funding structure in Medicaid could result in a reduction in access to life-saving health care services,” Sen. Rob Portman (R-Ohio), Sen. Shelley Moore Capito (R-W.Va.), Sen. Cory Gardner (R-Colo.), and Sen. Lisa Murkowski (R-Alaska) said in a letter to Senate Majority Leader Mitch McConnell (R-Ky.). The letter was based on an earlier draft of the legislative language but remains valid as little substantive change has occurred in the formal, introduced language.

“We believe Medicaid needs to be reformed, but reform should not come at the cost of disruption in access to health care for our country’s most vulnerable and sickest individuals,” the senators continued. “Any changes made to how Medicaid is financed through the state and federal governments should be coupled with significant new flexibility so they can efficiently and effectively manage their Medicaid programs to best meet their own needs. … [The House proposal] does not meet the test of stability for individuals currently enrolled in the program, and we will not support a plan that does not include stability for Medicaid expansion populations or flexibility for states.”

The Energy and Commerce language also includes provisions for block grants to states that would allow them to be used in a manner they see fit within a defined list, including providing financial assistance to high-risk individuals; arrangements that help stabilize premiums in the individual market; reduce the cost of providing insurance in the small group and individual markets; promoting participation in the small group and individual markets; and promoting access to preventive, dental, and vision services as well as treatment for mental and substance abuse disorders. Funds could also be used to provide payments for care or assistance to reduce out-of-pocket costs.

The House proposal also would repeal the premium cost sharing subsidies in the ACA, which would be replaced with refundable tax credits, according to the language released by the Ways and Means Committee.

The credit can be used to purchase a state-approved, major health insurance or unsubsidized COBRA (the Consolidated Omnibus Budget Reconciliation Act) coverage and increases based on age. Individuals younger than age 30 years would get $2,000, and the credit increases in $500 increments per 10-year age block, plateauing at $4,000 for those aged 60 years and older. The caps will adjust over time, based on inflation, and are available to those making up to $75,000 ($150,000 for joint filers); the credit phases out by $100 for every $1,000 over those thresholds.

The Ways and Means language also repeals a number of revenue provisions, including the individual mandate and associated penalties; the employer mandate and associated penalties; taxes on high-cost health plans (Cadillac tax); over-the-counter and prescription medications; health savings accounts; tanning; investment; and on health insurers.

In place of the individual mandate, the language will allow insurers to raise premiums by up to 30%.

The bill does not repeal the provisions regarding young adults being able to stay on their parents’ policies to the age of 26 years, nor does it allow insurers to deny coverage for preexisting conditions.

The House committees will begin consideration of their respective languages on March 8.


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