The American Health Care Act Passes the House

The American Health Care Act Passes the House

On May 4, 2017, the House of Representatives narrowly passed the American Health Care Act (AHCA) by a vote of 217 to 213. This was a big step for House Republicans in fulfilling President Trump’s campaign promise to repeal the Affordable Care Act (ACA). The bill must also pass in the Senate for it to become law.

Back in March when the legislative language of the AHCA was first released, we reported the changes that the bill would make to the ACA. Notably, it would repeal both the individual and employer mandates, delay the Cadillac tax, replace income-based subsidies with tax credits based on age, reform certain aspects of health savings accounts, allow for a surcharge if individuals do not maintain continuous coverage, and discontinue Medicaid expansion in 2020, among other provisions.

Please see our March 23 Web-Seminar for a complete briefing on the AHCA and the other plans that influenced its design.  We will provide a breakdown of the final bill if it passes the Senate, where further changes are expected.

The AHCA was able to garner enough support in the House due to the introduction of the MacArthur and Upton amendments, respectively. Notably the MacArthur amendment permits states to obtain waivers from the following provisions:

  • The ACA essential health benefit requirement, allowing states to define the categories of services that health plans must cover;
  • The AHCA age-based premium rating of 5:1, allowing states to set their own age band; and
  • The prohibition against engaging in health-status underwriting, but only for those individuals who did not maintain continuous coverage in the past 12 months (i.e. had a break in coverage for at least 63 days) and only if the state has established an AHCA-approved high-risk pool. The Upton amendment appropriates additional funds to be allocated to states that obtain this waiver to assist individuals who may see a rise in premiums.

It is very important to note that the waiver allowing states to take into account health status in underwriting does not allow them to exclude coverage for pre-existing conditions. Indeed, the pre-existing condition coverage requirement would remain. Additionally, those ACA provisions that were not addressed in the original AHCA (or in any subsequent amendment) such as the dependent coverage requirement and other plan mandates, employer reporting requirements, and the PCORI fee, among others, remain in the law. Finally, the AHCA does not cap the employee tax benefit for employer-sponsored coverage.

We will be watching closely as the AHCA makes its way through the Senate and will keep you apprised of any new developments.

Please contact your Account Manager or Sales Executive, or any member of your employee benefits team if you have questions or need assistance with this or other compliance matters.