Republican ACA repeal plan leaked: 5 things to know

A leaked draft of a House Republican ACA repeal bill is the first glimpse of how Republicans plan to finance their replacement plan.

The bill was expected Feb. 27 after a congressional recess, but was leaked to Politico and published Friday.

Most of the reconciliation bill is simply a more detailed version of the policy brief revealed last week — it would repeal Medicaid expansion, a host of taxes and dismantle current cost-sharing subsidies under the ACA — and replace those items with a number of proposals that have been popular with Republicans.

Here are the five most important details to know about the proposal, as reported by Politico.

1. The main revenue generator behind the bill is a cap on tax exclusion for employer-sponsored health insurance. The bill repeals a number of taxes and tax increases installed under the ACA including the medical device tax and health insurance tax, among others. In place of these taxes, the bill caps the amount employers can contribute tax-free to employees' health plans. Benefits that exceed the 90th percentile of current premiums would be taxed, according to Politico. If that sounds familiar, that's because the cap is similar to the ACA's Cadillac tax on luxury employer-sponsored health plans, which was a 40 percent excise tax paid for by insurers. The unpopular tax was delayed due to opposition from companies and labor unions that would have had the costs passed down to them.

"Capping the exclusion is the same thing [as the Cadillac tax], but it's a much more direct hit on companies and consumers," Russell Sullivan, a partner at McGuireWoods and one of the principal drafters of the Cadillac tax, told Becker's Hospital Review. Both the cap on employer exclusion and the Cadillac tax would put downward pressure on prices by discouraging overuse of healthcare services, which is common with generous health plans. Also similar to the Cadillac tax, the proposal will likely face opposition from businesses and labor unions, according to Mr. Sullivan. "This expands the battlefield," he said.

2. The bill would roll back Medicaid expansion. Of course, states would have the option to continue with the expansion, but they would no longer receive enhanced federal funding to do so, which could make the option impossible financially. The bill lays out a proposal to instead cap federal Medicaid funding based on how many people qualify by state. However, to help offset the repeal of Medicaid expansion, the bill would restore cuts made to Medicare disproportionate share hospital payments under the ACA. The healthcare reform law reduced DSH payments presuming coverage would increase and the need for uncompensated care would decrease, particularly with Medicaid expansion.

3. The bill would also repeal the individual mandate and the premium subsidies.. Instead of tying subsidies to income, they would be linked to age. Tax credits would start at $2,000 for people under age 30. They increase in steps of $500 per decade of life, reaching $4,000 for people over age 60. In the absence of the mandates, the bill would encourage people to maintain coverage by allowing payers to penalize beneficiaries for any lapses in coverage by increasing future premiums by 30 percent. It would also encourage more young, healthy people to buy health plans by increasing the age rating band tied to insurance plans from 3:1 to 5:1, according to Politico. This means insurers can charge older beneficiaries up to five times as much as younger beneficiaries for the same plan. Currently this ratio is limited at 3:1 under the ACA.

4. The bill also offers more detail on plans to help subsidize the cost of covering more expensive enrollees, such as those with pre-existing conditions. It would allot $100 billion in state innovation grants, which can be used in a number of ways at a state's discretion to help offset the costs of high-cost patients. One option is the money could be used to reinstate high-risk pools for people with pre-existing conditions.

5. This bill is not finalized. The leaked version is still unnamed and unnumbered and considered a discussion draft. A number of issues are still disputed among Republicans. Representatives who held town halls about the ACA are finding their views are not as simple as for or against, The New York Times reported earlier this week. Leadership may also oppose certain elements. For example, Politico reported HHS Secretary Tom Price, MD, would want the subsidies to be lowered from the current proposal. Congress plans to take up discussion again next week when they return from recess.


More articles on leadership and management:

Trump administration committed to 'orderly transition' with ACA replacement, VP Pence says
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More than 130 mayors urge Congress to preserve ACA

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