5 changes made in revised ACA replacement plan

Ahead of a planned March 23 vote on the American Health Care Act (AHCA), House Republican leaders released a new version of the replacement plan for the Affordable Care Act with several big changes aimed at bolstering support for the legislation within their own party.

Political momentum hasn’t been on the side of the AHCA’s supporters, as Democrats say they’ll be in complete opposition to it while conservative Republicans have claimed the bill doesn’t have enough votes among groups like the House Freedom Caucus to pass.  

The changes to the bill come in the form of a seven-page “manager’s amendment” designed to assuage some of the concerns with the initial bill.

“We're confident these changes will set AHCA up for success in the House. We look forward to working with our Senate colleagues to get this bill over the finish line and send it to the president as quickly as possible.”,” House Energy & Commerce Committee Chairman Greg Walden, R-Oregon, and House Ways & Means Committee Chairman Kevin Brady, R-Texas, said in a statement. 

Here are five of the biggest changes made: 

1. Medicaid work requirements and block grants

Rather than having all states accept the AHCA’s per-capita cap version of Medicaid, the amendments would allow what Republican leaders consider to be extra “flexibility” to states that want to accept its Medicaid funding as a lump sum block grant.

A similar proposal had been a part of 2016’s “Better Way” healthcare plan. The advantage to lawmakers would be limiting Medicaid to growth tied to some predictable amount, such as inflation, or giving them the flexibility to keep spending flat. But it would also disconnect funding from the actual costs of providing care, potentially leaving providers or patients stuck with the extra expense or leading states to reduce Medicaid eligibility.

The amendment would also allow states the controversial option of establishing a work requirement for Medicaid beneficiaries who aren’t disabled, elderly or pregnant. While it doesn’t require states to utilize this option, it does offer a financial incentive to do so: a 5 percentage point increase in federal matching funds.

2. A New York tweak to DSH payments

One change is specifically geared towards gaining support from Republican members of Congress in upstate New York.

Through a targeted change to the allotment of Medicaid disproportionate share hospital (DSH) funding, it would block federal reimbursement for Medicaid payments made by counties, shifting that $2.3 billion cost to the state.

As New York Daily News reporter Cameron Joseph explained, it would only apply to jurisdictions with fewer than 5 million people, which excludes New York City, meaning city residents would “get none of the benefit but have to do their share to make up for the lost cash.”

3. More changes to Medicaid expansion funding

The amendments would end the additional Medicaid funding for states that haven’t already expanded the program. They could still choose to expand eligibility later but would only receive the traditional 50 to 83 percent funding from the federal government for that new population.

For states which have expanded, the 90 to 95 percent “enhanced” federal match would continue through the end of 2019 as long as enrollees maintain continuous coverage through Medicaid. In effect, this would freeze expanded Medicaid enrollment.

4. Extra tax credits for older customers

The original legislation would have the greatest financial impact on older lower-income Americans, thanks to a change in the age band ratio allowing insurers to charge those customers up to five times as much as younger enrollees. AARP labeled this switch an “age tax.”

In response, the amendments would set aside about $85 billion in funding for additional tax credits for those between the ages of 50 to 64 to buy insurance. The actual work of structuring the credits, however, would fall on the Senate, assuming the House can pass the bill.

5. Faster repeal of ACA taxes

Instead of eliminating all the ACA’s taxes in 2018, the amendments would do so retroactively to January 1, 2017. This would include the health insurer, pharmaceutical and Medicare “high-income” taxes, along with pushing up the AHCA’s tax deduction for health insurance executive compensation above $500,000.

The ACA’s “Cadillac” tax on high-cost health plans wouldn’t be repealed, but its effective date would once again be pushed back once again to 2026.

According to The Hill, these changes will be examined in an updated CBO report before the legislation is put to a vote in the full House.