The American Health Care Act Passes the House of Representatives

Yesterday (May 4, 2017) , the House of Representatives narrowly passed the American Health Care Act of 2017 (AHCA), which contains major parts that would repeal and replace the Affordable Care Act (commonly referred to as Obamacare or ACA).  The next obstacle the bill faces is making it through the Senate, which proves to be a formidable challenge.

The nonpartisan Congressional Budget Office has not had time yet to analyze the current version of the bill, but this is expected next week. The bill must now pass the Senate and could get pushed back to the House if it sees changes in the upper chamber.

In the meantime, here are some highlights we know about the bill based on how it is written today and how it would work:

• The AHCA bill would eliminate the requirement that people buy health insurance (known as the individual mandate).  
• The bill would eliminate penalties for large employers (50+ employees) that do not provide insurance to their employees.
• The bill would impose a penalty for people who don’t maintain continuous health insurance. The AHCA would create a penalty for people who have a gap in their health insurance of more than 63 days.  People buying insurance in the individual market who have a gap of 63 days or longer could be charged a “late enrollment penalty” by the carriers that could be up to 30% of the premium price.
• The bill would end Medicaid expansion.
• The bill would cut Medicaid spending.
• The bill would change how subsidies to buy health insurance are allocated.
• The bill keeps requirements that insurers must sell coverage to everybody.
• The bill would allow states to change which benefits insurers are required to provide to people who buy plans on their own. The AHCA would allow states to waive the current requirements of “Essential Health Benefits” (aka EHB) under Obamacare that are imposed on plans or allow states to set up their own list of EHBs that insurers must cover in the individual market.
• The bill would allow insurers to charge older people more than under the current law. The ACA limits insurers to charging older customer to 3 times a much as younger customers in the individual market. The AHCA expands that ratio to allow insurers to charge older customers 5 times as much as younger customers (it was 10 times prior to Obamacare).
• The bill would allow states to let insurers charge older people even more. Under the AHCA, states could seek a waiver from the federal government regarding the age ratios which would let them set their own ratios above the 5 times ratio set by the government.
• The bill would allow states to end requirements that insurers cover pre-existing conditions.
• The bill could lead to states setting up special insurance programs for high cost patients. The main requirements for a waiver on pre-existing conditions is that states must set up some kind of program to cover the most costly customers (aka high risk pools).
• The bill could impact the benefits covered by employer sponsored insurance.
• The bill would keep the insurance exchanges in place.
• The bill would allow kids to stay on their parent’s plan until age 26.
• The bill would repeal multiple taxes that helped fund the ACA.
• The bill would cut federal spending by hundreds of billions of dollars.
• The bill would return over the counter medications to the list of qualified medical expenses for the 2017 tax year.
• The bill would reduce the tax penalty on health savings accounts from 20% to 10% for distributions that are not used for qualified expenses.
• The bill would repeal the limitation of $2500 on health FSA contributions.
• The bill would increase H.S.A. contributions for a year to equal the maximum on the sum of the annual deductible and out of pocket expenses.
• The bill would allow both spouses to make catch up contributions in one H.S.A.

We will continue to keep you up to date on the bill as it progress through legislation.