Senate Republicans presented their bill to repeal and replace the Affordable Care Act (ACA)—called the Better Care Reconciliation Act (BCRA) of 2017, on June 22. The bill includes revisions to the House’s bill—called the American Health Care Act, which narrowly passed 217 to 213 on May 4.
Here are four things MCOs should know, according to healthcare analysts:
1. Differences among the two bills. While the House bill links tax credits to age, the Senate bill would tie subsidy amounts to income that would stop at 350% of the federal poverty level (FPL). In comparison, the ACA stops these at 400% of the FPL, explains Eugene Sayan, founder, chairman, and CEO of Softheon, a cloud-based health insurance exchange integration and remediation platform.
However, both versions of the bill would effectively eliminate the individual mandate introduced by the ACA. “They differ in that the House version allows insurers to impose up to a 30% surcharge penalty on those who allow their previous coverage to lapse, to encourage continuous coverage,” Sayan says. “The Senate’s version details no penalty for those who allow their coverage to lapse before shopping for another plan.”
Sally C. Pipes, president, CEO, and Thomas W. Smith Fellow in Health Care Policy, Pacific Research Institute, whose mission is to promote a healthcare system that provides affordable, accessible, quality care for all Americans, points out that the Senate bill retains Obamacare's essential health benefits mandates, which require all insurance policies to cover 10 specific services whether consumers want them or not. The only way they can be removed is if a state applies to HHS and receives a waiver. However, the bill repeals Obamacare's individual and employer mandates. A new tweak to the BCRA adds that anyone who goes without continuous coverage for 63 days would have to wait for six months to enroll in new coverage.
As far as coverage for pre-existing conditions, the House bill prevents the denial of coverage due to pre-existing conditions, but does allow insurers to charge extra for individuals with a pre-existing condition. “The Senate version does not include this penalty, but insurers can offer plans that provide less coverage and/or have higher deductibles than allowed under the ACA,” Sayan says. “It would also allow states to adopt waivers from a select number of consumer protections and would allow states to ease and scale back the conditions they require insurers to cover.”
Furthermore, similar to the House bill, the Senate’s health plan caps Medicaid spending at the individual level, but with a lower growth rate, which is expected to deliver deeper cuts beginning in 2025. The Senate version also phases out coverage for Medicaid expansion over a period of four years (2020 to 2024), in comparison to 2020 as the House bill mandates.
In addition, the Senate bill makes no substantive changes to Medicare. It would repeal the 3.8% tax on investment income for high earners retroactive to 2017, Pipes says. It would also repeal the 0.9% surtax on earned income in 2023.
Effects on healthcare costs. Sayan believes that the Senate’s bill could result in lower healthcare costs, in comparison to the House’s version. This is because states could have greater reign over determining what a qualified health plan is. “This would likely create a situation where a greater number of low premium, high deductible plans are created,” he says. “These types of low premium plans could attract a greater number of young, healthy individuals, which would in turn improve the risk pool.”
But Pipes by preserving so much of Obamacare, the BCRA would not reduce healthcare costs nearly as much as a truly free-market, patient-centered bill would. “Certain aspects of the bill are likely to make insurance more affordable, such as relaxing Obamacare's age-rating restrictions and its requirements that insurers cover a certain, relatively high percentage of medical costs,” she says. “But retaining essential health benefits mandates and the lack of a continuous coverage requirement are likely to make insurance just as expensive, if not more.”