GOP ACA replacement plan: 4 things health execs should know

March 16, 2017

What should managed care executives know about the GOP ACA replacement plan? Find out.

On March 6, House Republican leadership introduced Affordable Care Act (ACA) repeal and replacement budget reconciliation bills. These two bills are collectively being called the American Health Care Act (AHCA). So what should managed care organizations know about the replacement plan?

1. It’s loaded with tax reforms.

First and foremost, the GOP plan should be seen as a tax reform plan, with repeals of more than 10 ACA-related taxes including the medical device tax, the health insurance tax, the prescription drug tax, and the small business tax credit, as well as cuts to funds that subsidized the ACA, says Harry Nelson, a healthcare attorney with Nelson Hardiman LLP, a healthcare law firm, and author of “From ObamaCare to TrumpCare.”

In 2020, the plan will also axe the ACA’s tax credit that funded the individual mandate for the uninsured to buy coverage, converting it to a voluntary decision to buy or leave coverage. It establishes new age-rated tax credits between $2,000 and $4,000 for people earning less than $75,000 or $150,000 per couple.

“The removal of the individual mandate requirement raises a significant potential problem, as millions of people could again be without health insurance,” says Jill Schwieters, president, Cielo, a healthcare recruiting firm. “The Republican’s plan to stem this is to create a 30% one-time re-enrollment penalty if someone lets their insurance lapse. The thought is that this will create a big financial incentive not to allow lapses and to maintain an insurance policy. However, this could also have the opposite effect and prevent people from getting insurance again once they have a lapse.”

Schwieters goes on to say that the age-related tax credits could be effective in a marketplace of quality choices, but they rely on further changes that are not in the current bill. “Due to the machinations of the law-making process, procedural changes like allowing the sale of insurance policies across state lines, will need to occur in a bill that is subject to the filibuster process. That complicates the hope that more affordable options will be made available in the marketplace,” she says.

2. Medicaid will be significantly impacted.

The AHCA wants to eliminate Medicaid expansion. The bill transitions federal Medicaid funding to a per-capita cap basis by 2020, transforming the nature of the Medicaid program by phasing out the ACA’s enhanced federal payments to states that expended eligibility to low-income adults-which extended coverage to more than 11 million Americans.

“This move would significantly change a program that has historically been considered an entitlement program for everyone who meets its financial, age, or health criteria,” says Bruce Carver, associate vice president of payer services, MedeAnalytics, a healthcare technology company.

AHCA’s goal is to reduce federal spending growth and give states greater flexibility to design programs that serve beneficiaries cost effectively. “This will likely cause concern with healthcare providers, who fear it will lead to reduced funding over time, forcing states to reduce eligibility, benefits, and provider payments,” Carver says.

Next: The final two things to know

 

 

3. Some changes to Medicare will occur.

As for Medicare, the bills call for repealing high-income tax increases and other ACA revenue provisions. “But there won’t be any changes to Medicare benefit enhancements or provider/Medicare Advantage plan payment savings,” Carver says.

4. Some mandates will remain.

The requirement that young people can stay on their parents’ plan until age 26 will continue, as will the prohibition for insurers to take into account pre-existing conditions when they write a new policy. “This should reduce the number of uninsured persons,” Schwieters says.

Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.