House Republicans Unveil ACA Repeal and Replace Policy Brief, Focusing on Tax Credits and HSAs

In a meeting of the House Republican Caucus on February 16, 2017, leadership unveiled a policy brief for repealing and replacing the Affordable Care Act (ACA). The policy brief was developed by Republicans on the Ways and Means Committee and Energy and Commerce Committee.

The policy brief reflects past policy documents published by House Republicans, such as the 2016 healthcare report released as part of the Better Way Agenda. It also closely follows the 2015 reconciliation bill repealing the ACA that was vetoed by President Barack Obama. The policy brief recommends repealing the ACA’s tax provisions, including the individual and employer mandates, as the reconciliation bill would have done. In addition, the policy brief’s major provisions include:

  • Creating a universal healthcare tax credit, eligible to be used toward premiums for a wider range of insurance plans;
  • Expanding the use of Health Savings Accounts (HSAs);
  • Repealing the Medicaid expansion and giving states the option of a block grant or per capita allotment based on the number of aged, blind and disabled, children, and adults served by the state;
  • Repealing the ACA’s cuts to Disproportionate Share Hospital payments; and,
  • Providing states with “State Innovation Grants” aimed at supporting high risk pools or other ways to reduce costs for patients.

The document also lays out three avenues for enacting these policies, stating that the House will begin the repeal process on February 27th when it returns from recess. First, Congress will advance repeal and replace legislation focusing on taxes and regulations via the FY 2017 budget reconciliation legislation. Second, the administration will take action on regulatory and enforcement relief, as it has already sought to do through actions such as President Donald Trump’s Executive Order and the recently released ACA Market Stabilization Proposed Rule. Third, Congress will seek to enact legislation through regular order affecting other policies that cannot be part of a reconciliation bill. For this portion, Republicans will have to have Democratic cooperation in the Senate, but some of these proposals could be attached to must-pass appropriations or debt-limit legislation.

While it is unclear if House Republicans have the votes to advance this legislation, it is certain to face a larger hurdle in the Senate, where some Republican Senators have expressed concern over repealing the ACA without replacing it at the same time.

CMS Releases ACA Market Stabilization Proposed Rule

On February 15, 2017, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule (press release) on market stabilization under the Affordable Care Act (ACA). The rule is intended to address immediate issues with the ACA’s exchanges, which have faced increasing premiums for consumers, higher than expected health costs for insurers, and limited plan options in some parts of the country. While participation in exchange plans grew for the 2017 plan year, the proposed rule seeks to address specific issues while Republicans formulate a plan to repeal and replace the ACA.

The proposed rule would shorten the open enrollment period for the 2018 plan year to November 1, 2017, through December 15, 2017. In previous years, open enrollment ran through the end of January. In addition, the proposed rule would require supporting documentation for enrollment through special enrollment periods, addressing a concern of insurers with adverse selection. Insurers would also be able to collect unpaid premiums from individuals before enrolling them in new plans. In determining the network adequacy of plans, CMS will defer to states’ reviews. Finally, the timeline for insurers to have plans approved for 2018 will be amended to allow insurers to adjust for these changes.

While Democrats, including Senate Finance Committee Ranking Member Ron Wyden (D-OR), criticized the proposed rule for favoring the interests of insurance companies over individuals, Republicans cited the rule as a needed step toward repairing the ACA. While it remains to be seen if the rule will have a noticeable impact on enrollment or costs for 2018 plans, it is certain that other proposed changes outside of the rule, such as stopping enforcement of the individual mandate, will have an effect on the 2018 marketplace and plans.