What’s in House Bill 1628 (AHCA) Anyway?

Taking a breather from the ACA, which is existing law, let’s look at the first serious attempt to “repeal and replace” it: House Bill 1628. You can find the full text here if you want to read it yourself, which I always encourage; an informed populace makes democracy work, and it’s nowhere near as long as the Affordable Care Act.

Let’s get started!

Title I: Energy and Commerce.

Subtitle A is entitled Patient Access to Public Health Programs, and contains only three short sections.

The first section amends some of the funding in the ACA. The specific funds removed are earmarked to provide “expanded and sustained national investment in prevention and public health programs to improve health and help restrain the rate of growth in private and public sector health care costs”; with this bill, that funding stops after 2018, instead of continuing on indefinitely. It’s a sliding scale up, so in 2018 it’ll be 900 million a year, but by 2025 and thereafter it’s 2 billion per year.

The second section amends the 2015 Medicare Access and CHIP Reauthorization, which is another reform besides the ACA. Wikipedia says this law changed how doctors were paid under Medicare, and extended the Children’s Health Insurance Program (CHIP). This section amends it to add an additional $422 million in funding for the year 2017. That’s right — this is spending more money. I’m surprised too.

The third section defunds Planned Parenthood. It claims that no money the federal government pays to states can be used for any organization that 1) is a non-profit (specifically, a 501(c)(3) nonprofit, which most nonprofits you donate money to are), 2) performs family planning services, 3) offers abortions, and 4) received $350 million from Medicaid in fiscal year 2014. Why that last bullet point? So that it only applies to Planned Parenthood and not to any nonprofit that offers abortions, is my guess. Ugh.

In short, when they say “patient access”, they mean “removing of”, not “adding to”.

Subtitle B is called Medicaid Program Enhancement. There are seven sections here. This is where the “repeal” starts.

Section one removes the bit from the ACA about letting hospitals sign people up for Medicaid without needing so much paperwork and time, as outlined here (I think). It goes on to end the part where you can make more money and still be on Medicaid, reducing it from 133% of the FPL back to 100%. It removes the funding for in-home assistants. It removes the “presumptive eligibility period” for pregnant women that states can opt-in to, where they treat you assuming you’ll be eligible and work out the finances later.

Section two repeals the medicaid expansion in the ACA. It reverts another few places where the eligibility cutoff is amended to 133% of the poverty line instead of 100%, some ending in 2017 and some in 2019 for some reason. It grandfathers in anyone who is enrolled on the last day of December 2019, so if this applies to you (and the bill passes with this language in place), stay enrolled and you will have some period of being grandfathered in. It also removes the requirement that state benefits cover “essential benefits” such as mental health (for the full list, see my series on the ACA).

Section three repeals cuts to the DSH program. I don’t pretend to understand all of this, but the gist of it seems to be that there’s a loophole where states can claim unlimited federal funds for certain hospitals, and the ACA asked the Secretary to reduce the federal funds spent in this manner. This bill cancels that order as of 2019, and provides any state who does not expand medicaid (aka red states) exemption from the order immediately.

Section four… I don’t have words. It specifically calls out lottery winnings as “income” for the basis of eligibility for medicaid. Note the grandfathered exemption above; if you get disenrolled via winning the lottery, you would not be able to re-enroll if you’re in that 100-133% of the FPL zone. At first glance, this seems entirely redundant; if you won more than $5k, the winnings already count as income. However, it turns out, Medicare is based on monthly income, not annual. Lottery winnings don’t count as income for that month, because it’d be a pain in the ass to disenroll someone for a month because they got lucky. This bill says if you won $80k, the winnings count for that month; more, and you add an extra month for every $10k extra you won. There’s a line about still being eligible if it would cause “undue hardship”, but I can’t imagine how it would play out in practice. Not to mention, there’s the part where you’d lose at least 40% of that to taxes — remember, this is adjusted gross income, not net.  The Guardian did a fact check and came up with under 400 people affected by this legislation in a given year; Fred Upton may insist this will save “hundreds of millions”, but I just don’t see it.

This section also repeals retroactive eligibility; under the ACA, you can file for medicaid up to three months after treatment and get coverage for that treatment, but under this bill it’d be the same month only, starting in October of this year. If you’re eligible and not already on medicaid, it’s a good idea to apply immediately. This section also removes the ability of states to determine how much home equity is needed to disallow you from medicaid, making them all use the same rule.

The next section allows states that did not expand Medicaid more federal funds to cover people who are not insured. This allots up to an extra $2B/yr in federal funds for the states to grab if they did not expand Medicaid. You can see which states these are here. Look how red they are.

The next section forces states to check if you’re still eligible at least every 6 months, and they get up to 5% more funds to pay for activities to check more often than that. This will, of course, lead to people being kicked off medicaid sooner when their income increases.

The last section (117) allows states to force medicaid recipients to work. That’s terrifying, because one reason a lot of people are on medicaid is inability to find work in the first place; remember that for most people, welfare and similar benefits are a temporary thing between jobs, while the GOP keeps characterizing your average welfare recipient as too lazy to work. There are exemptions for pregnant women (ending 60 days after the end of pregnancy), children under 19, people who are sole parents for children under 6 or disabled, and people who are under 20 and enrolled in university. The title of the section reads “Work Requirement Option For Nondisabled, Nonelderly, Nonpregnant Adults”, but there’s nothing in here about adults with disability or elderly adults. Sloppy editing? Was language like that in there, but removed later?

In short, when they say “program enhancement”, they mean “removing access to”.

Subtitle C is called Per Capita Allotment For Medical Assistance. It has one section, which is directly inserted into Title XIX of the Social Security Act. The main gist of this legislation is to get states to reduce how much they pay out for medical things. If they pay out more than their “target” amount, they receive less federal funds as a result. The target is set to “the amount paid out per-capita in 2016”. This is a major change to how Medicaid is funded, and it would seem like it’d encourage states to do whatever they can to remove “expensive” people from the insurance while striving to insure “cheap” people with no health problems to make up for it. The Kaiser foundation points out that seniors and disabled people are “expensive” in this system. Not to mention, costs have been running away in health care for years, so unless that’s curbed, Medicaid will pay for less and less every year.

Starting in 2020, states will be able to apply for a 10-year trial run of an alternate plan, called “block grant” funding. This means they’d get a set amount per year based on their target per-capita payment and the number of enrolled people they had the previous year, making for less bookkeeping. This means medicaid funding can run out, leaving states in the lurch, though they can apply any excess funds to the next year.

Subtitle D is called Patient Relief And Health Insurance Market Stability. It has 7 sections.

It starts out by repealing the bit of the ACA that makes plans cheaper for people under 400% of the federal poverty limit. Flat out repealing. Starting in 2020, you pay more.

Section two establishes the ‘Patient and State Stability Fund’. This fund can be used only for the following:

  • Helping people who are “high-risk individuals” and “do not have access to health insurance coverage offered through an employer” enroll in the health exchanges
  • Bribing companies to stabilize premiums. Well, they say “providing incentives”, but same diff.
  • Reducing the cost of insurance to people who use a lot of insurance and/or live in a rural area that’s not profitable to insure
  • Encouraging people to participate in the market
  • Increasing options in the market
  • Promoting preventative care
  • Paying for maternity coverage and newborn care
  • Inpatient or outpatient care for treatment of addiction and mental illness
  • Early identification of children and young adults with serious mental illness
  • Paying for health care services
  • Reducing out-of-pocket costs

States have to apply for this fund, but it’s automatic approval, and they are considered approved until 2026. If they do not submit a plan for using the funds (I think?), they must use it for paying insurance companies (the second bulleted item) 75% of any claim between $50k and $350k. This fund starts at $15 billion per year, but drops to $10 billion per year in 2020. In 2020, there’s an extra $15 billion that can only be used for maternity, newborn, addiction, and mental illness payments. The amount each state gets depends on how many claims they see and how many uninsured poor they have. The state also has to match funds, starting at 7% and ending up with 50% in 2026. If a state does not apply, the whole fund goes to insurance companies.

Section two also establishes a “Federal Invisible Risk Sharing Program”, which is another $15B to pay premiums for people. Eligibility requirements to be determined later. If this bill passes, a plan will have to be created within 60 days. I love that they don’t know how it’ll be used, but they know how much it’ll cost.

Section three establishes the Continuous Coverage Penalty. It forces insurers to charge 30% extra to people who did not buy insurance the previous year, starting in 2019. I can’t find any mechanism for the government to collect that money; they’re just telling the insurance companies how to do business. “Free market” capitalism?

Section four is entitled “Increasing coverage options”, but what it actually does is remove the requirement that all plans cover essential health benefits.

Section five amends a portion of the ACA called “Prohibiting Discriminatory Premium Rates”, which banned rates from varying more than 3:1 based on age. This allows you to charge up to five times as much based on age.

Section six allows states to apply to waive coverage of essential health benefits if they can show how it will reduce average premiums, increase enrollment, “stabilize the market”, stabilize premiums for people with pre-existing conditions, or increase the choice in plans. Obviously adding plans that cover nothing automatically increases choices, since there’s more plans. Furthermore, if those are plans that apply to people with pre-existing conditions, it increases their enrollment and stabilizes the premiums. Win-win! Nevermind the price-gouging, that’s built in.

(What part of this bill is promoting the general welfare again? It seems like it was written by insurance companies).

Section seven claims that no part of this Act can be used to justify discrimination in rates by gender, or limiting access to individuals with preexisting conditions. So that’s good news. They can charge you more, but they can’t not cover you.

Subtitle E just sets out $1B to cover the administrative costs incurred by the other sections.

Title II: COMMITTEE ON WAYS AND MEANS

Halfway there!

Subtitle A is called Repeal And Replace Of Health-Related Tax Policy. The first section removes the option for advance payments on the tax credit for helping people with their premiums starting in 2018.

Section two would apply to 2017, allowing it to help cover catastrophic plans, prohibiting it from paying for any plan that includes abortion services, and preventing it from applying to transitional plans. It also clarifies that you’re allowed to buy abortion coverage separately as long as no tax credit money goes toward it. It also clarifies that people are allowed to offer plans that cover abortion, and subsequent abortion side-effects are not considered abortions.

Section two also allows you to use non-exchange plans to qualify for the premium tax credit. See below.

Section three prevents small businesses from getting tax credits if they fund plans which cover abortion.

Section four removes the individual mandate penalty. Section five removes the employer mandate penalty. Section six repeals the tax on health plan benefits and premiums in employer-sponsored plans. Section seven repeals a tax on over-the-counter medication. Section eight reduces the tax on HSAs.

Section nine makes it possible to put unlimited money into an FSA. Section ten repeals another tax (on medical devices). Section eleven allows employers who are claiming a tax deduction to not have to reduce it by the amount of any federal subsidy they received for medicare — essentially a tax break for them.

The twelfth section decreases the percent of income you have to spend on medical expenses before deducting it from your taxes from 10% to 5.8%. The thirteenth repeals two more taxes (on income).

The last big change here is to tax credits. Under the ACA, you get a tax credit if you’re below the FPL to allow you to buy insurance. Under this bill, that’s replaced with an age-dependent credit instead of an income-dependent one. It ranges from $2,000 to $4,000, while the old credit depended on the price of a silver level plan. The Kaiser Foundation has put together an interactive map of how this would affect someone with a given age on a state-by-state basis. You’ll notice at the highest income level, everyone under 60 pays less; the poorer and older you are, the more you end up paying under the AHCA.

The limit on contributions to an HSA is raised to your deductible plus your out of pocket limit, which is nice. For a joint HSA, both spouses are allowed to make “catch-up contributions” ,which is also nice. You’re also allowed to start a HSA up to 60 days after enrolling in a high-deductible plan. That’s the end of Subtitle A.

Subtitles B, C, and E each repeal taxes: prescription medication, health insurance, tanning, and investment income. Subtitle D repeals a limitation on tax deductions for insurance companies for payment over $500,000 to an employee, officer, or director. Not sure what that loophole is, but it sounds like a closed loophole being re-opened.

And that’s the bill. It’s a “repeal and replace” that’s big on the repeal and distressingly light on the replace.

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