This morning, just over six weeks since the House of Representatives passed the American Health Care Act (AHCA), Senate leaders unveiled their own proposal to repeal and replace the Affordable Care Act (ACA). Text of the bill can be found here. The bill, which was crafted by a small group of Senators led by Majority Leader Mitch McConnell (R-KY), follows a similar approach to the House legislation, but with several important differences.
The summary below is based on our initial read of the bill, and may be updated as provisions change and the Senate process unfolds. As of today, Senate leaders still plan to hold a vote on the bill next week, before Congress adjourns for the July 4th recess. Yet multiple reports suggest that the bill as currently drafted does not yet have the support of the 50 Republican Senators needed to ensure final passage. For this reason, the text released today is labeled a “discussion draft,” meaning we can and should expect additional changes as Senators get a look at the bill and begin staking out positions and trying to make deals.
So what does the bill do? Let’s look at it category by category.
As with the House bill, the bulk of the savings generated by the Senate bill come from major changes to the Medicaid program, which is critical to health centers and those we serve. The Senate bill contains the same two major changes to Medicaid that were in the House bill: first, a rollback of the ACA Medicaid Expansion, and second, a cap on future federal spending on Medicaid known as a “per capita allotment,” or “per capita cap.”
Compared to the House bill, the Senate approach attempts to “soften the blow” of repealing the Medicaid expansion by phasing out the expansion funding more slowly – specifically, it would take three years to do so, starting in 2021. Beginning that year, federal funding for the Medicaid expansion population would decline, resulting in pre-expansion levels by 2024.
However, while the bill takes this slightly more generous approach on Medicaid expansion, changes to the per capita cap under the Senate proposal would actually make even deeper cuts to the underlying Medicaid program than the House bill did. The cap would go into effect in 2020, but beginning in 2025, the Senate bill would lower the annual rate by which each state’s federal funding would be allowed to grow, thus ensuring Medicaid spending would grow more slowly than health care costs. This change would have a major effect on the future direction, size and scope of Medicaid itself, and would likely lead either to increases in state taxes, or to cuts in eligibility, loss of benefits, and reductions in provider payments. It would also be very difficult – and expensive – to reverse these reductions in future years.
The Senate bill also gives states the option to create a “Medicaid Flexibility Program,” which resembles a more traditional block grant of the Medicaid program – in other words, states are given lump sum (rather than per-person) payments and additional flexibility to run their programs. However, a number of population groups (elderly, disabled, children) are exempted from inclusion in this block grant option. Notably, even under a block grant approach, states would still be required to cover FQHC services, as well as other services like mental health and substance use disorder treatment. However, the block grant approach would not protect FQHC PPS payment rates in those states that elect this option.
The Senate bill would also exempt Medicaid costs related to care for blind and disabled children from the calculation of each state’s per capita cap, and, like the House bill, would exclude Disproportionate Share Hospital (DSH) payments and several other smaller payment mechanisms from the cap. And unlike the House bill, which would peg that cap calculation to a state’s Medicaid spending in Fiscal Year 2016, the Senate bill would give states more flexibility in setting that “base year,” allowing states to choose any 8 consecutive quarters from a 3-year period starting in 2014.
Overall, NACHC’s primary concerns with the House bill are related to the proposed changes to Medicaid: rollback of the expansion and a per capita cap. The Senate proposal generally mirrors those changes, while making even deeper cuts to the program’s long-term financing, beginning in 2025.
Like the House legislation, the Senate draft bill would effectively eliminate the ACA’s individual and employer mandates – requirements to purchase insurance coverage. However, both bills maintain some form of public support to certain qualifying individuals to purchase coverage.
In the House bill, that support came in the form of standard tax credits based on a person’s age. The Senate bill would hew closer to the original ACA approach, providing subsidies to individuals based on their income. While the ACA provided some financial support to those individuals with incomes up to 400% of the Federal Poverty Level (FPL), the Senate bill would lower that top threshold to 350% FPL. However, the bill does allow for subsidies to flow to those individuals earning below 100% FPL – whereas the ACA assumed that all of those lower-income individuals would be covered by Medicaid.
One issue that’s been hotly debated this year is whether Congress and the Administration would continue paying the so-called Cost Sharing Reduction (CSR) subsidies that were created by the ACA. These payments go to insurers to help individuals earning less than 250% FPL afford co-pays and deductibles. Uncertainty surrounding the CSR payments has, in some cases, led insurers to increase the cost of plans offered on the marketplace to adjust for greater risk, or contemplate withdrawal from the marketplaces altogether. The Senate bill would fund the CSR payments through 2019.
The bill also mirrors the House “stability fund” to shore up insurance markets, with a slightly different structure.
Toward the end of the House debate, one of the most controversial provisions added to the bill was the so-called MacArthur amendment, which would allow states to waive certain consumer protections required of insurers by the ACA. The Senate bill, instead of creating a new waiver authority for states, would significantly loosen an existing authority known as “Section 1332” to allow much more flexibility for states in terms of benefit design. In short, the Senate bill takes a different approach than the House to arrive at the same goal – loosening ACA requirements on insurers selling through state marketplaces.
States would be allowed to waive several ACA insurance requirements, including requiring states to have an exchange, rules for what benefits insurers must cover, what qualifies as a health plan, and what the “actuarial value” of the plans must be – in other words, the percentage of health care costs a health insurance plan must cover. The Senate bill does not allow states to waive ACA requirements that insurers must accept everyone and charge the same rates regardless of health status.
The Senate bill contains an additional $2 billion for opioid treatment next year. This is far less than the $45-50 billion many Senators were calling for in the lead-up to the bill’s release. Keep an eye on this funding, as it could enter the debate as a bargaining chip as a vote gets closer.
The Senate bill would repeal most of the taxes that were created by the Affordable Care Act. However, repeal of the so-called “Cadillac Tax” on high-value insurance would be delayed until 2019, and – presumably for budgeting reasons – the bill would bring that tax back on the books in 2026.
What happens next?
The summaries above represent just a few of the top-line provisions in a very complex piece of legislation. As more details emerge, and as any of the above provisions change, we’ll keep advocates up to speed.
In the meantime, given the significant implications of the Senate bill for health centers and the patients we serve, it is time to make your voices heard. Visit the Health Center Advocacy Network to take action and weigh in with your Senators today.