5 Better Care Bill Revision Highlights for Agents

Alaska could get an extra $1.3 billion over 10 years

Sen. Ted Cruz, R-Texas (Photo: Cruz) Sen. Ted Cruz, R-Texas (Photo: Cruz)

The new version of the Senate's Affordable Care Act change bill could strip many federal rules from the off-exchange individual major medical market, and nudge the public health insurance system to focus on serving people with health problems.

The Senate Budget Committee posted a copy of the Better Care Reconciliation Act bill update today on its website. A copy of the bill is available here

Most of the new version of the bill is similar to the version Senate leaders posted on June 22.

(Related: Senate Republicans Unveil Health Care Plan)

Some of the major changes include:

  • Extra cash for Alaska.

  • Retention of at least three Affordable Care Act taxes.

  • Addition of a federal oversight system for multi-state small business association health plans.

  • Tougher continuous coverage ownership requirements for people who want to buy major medical coverage.

  • An off-exchange health plan proposal, championed by Sen. Ted Cruz, R-Texas, that could lead to a dramatic split between the on-exchange and off-exchange individual major medical markets.

Like other bills that have received significant national media coverage in recent months, the bill would simply change some parts of the Affordable Care Act. The bill would not repeal either the Patient Protection and Affordable Care Act of 2010, or any of the health-related provisions of the Health Care and Education Reconciliation Act of 2010. The bill would leave many sections of the Affordable Care Act unchanged.

The future of the new version of the bill is uncertain. Most of it is similar to the version released in June. Supporters had trouble attracting enough Republican votes in the Senate to pass that version of the bill.

Here's a look at some of the differences between the new version of the Better Care bill and the old version. We've used bill section numbers to show where you to look for yourself in most cases, but we've used PDF page numbers in cases in which the section numbering seems confusing.

1. Alaska

Bill drafters have kept Section 106. That section would provide $132 billion for calendar years 2019 through 2026 to promote stability and innovation in the commercial health insurance market.

Section 106 would change Section 2105 of the Social Security Act to create new short-term and long-term stability and innovation funds.

On page 13 of the PDF of the new draft, the revisers have added a provision describing how the Centers for Medicare and Medicaid Services should distribute the long-term stability and innovation cash. The provision calls for the CMS administrator to use 1% of the $133 billion in long-term stability cash to support "health insurance issuers in states where the cost of insurance premiums are at least 75% higher than the national average."

Sen. Lisa Murkowski, R-Alaska (Photo: Murkowski)

Sen. Lisa Murkowski, R-Alaska (Photo: Murkowski)

Alaska appears to be the only states where health insurance premiums are at least 75% higher than the national average.

Sen. Lisa Murkowski, R-Alaska, has been one of the Senate moderates expressing reservations about colleagues' efforts to change the Affordable Care Act. In the past, she has suggested that she would not vote for an Affordable Care Act change bill simply because it provided extra money for Alaska. She has not yet commented on the new version of the Senate bill.

2. Tax Retention

Traditional Senate rules make changing Affordable Care Act tax, penalty and spending provisions much easier than changing other provisions.

Many Republican lawmakers would like to at least eliminate all Affordable Care Act taxes and penalties.

The earlier version of the Better Care bill would at least temporarily eliminate all Affordable Care Act taxes and penalties. For procedural reasons, the bill would eventually bring the "Cadillac plan tax," the Affordable Care Act tax on high-cost health benefits packages, back.

The new version of the bill would keep three Affordable Care Act tax provisions.

In the earlier version of the bill, Section 117 would have eliminated the Medicare surtax, Section 119 would have eliminated the net investment income tax, and Section 120 would have eliminated the health insurance company executive compensation provision.

3. New Multi-State Association Health Plan Oversight

The old version of the Better Care bill included a provision creating new multi-state small employer association health plans. The plans would be domiciled in just one state, but the old version of the bill did not say much about how the plans would be regulated.

The new version, on page 138 of the PDF, calls for the secretary of the U.S. Department of Labor to conduct periodic reviews of the multi-state plan sponsors, and to work with a plan's state of domicile in connection with enforcement efforts.

4. Waiting Periods

The current law lets people apply for individual major medical coverage during an annual open enrollment period, or, in some cases, during a special open enrollment period, without going through medical underwriting.

The American Health Care Act bill, the Affordable Care Act bill the House passed in May, would let a health insurer charge extra premiums for about a year if a new enrollee had gone without creditable major medical coverage for a period of more than 63 days.

The Better Care bill version released in June did not include a continuous coverage provision.

The new Better Care bill version includes a tough continuous coverage provision, in Section 206.

If a consumer who applied for coverage during an annual open enrollment period had failed to keep creditable major medical coverage in place during the previous 12 months, the consumer would have to go through a 6-month waiting period before the new coverage started paying benefits.

That means that, in effect, a consumer with a significant break in health coverage would have to pay for 12 months of coverage, and go without any major medical coverage for six months, to get six months of major medical coverage.

Section 206 appears to require an issuer to impose the six-month waiting period, even if the issuer would prefer to start providing benefits earlier.

Section 206 does not say whether a plan could pay for some care, such as preventive care, or care meant to prevent expensive complications of conditions such as diabetes, during the waiting period.

The provision includes one exception for people coming in through open enrollment periods: If their new coverage will take effect immediately after the old coverage expires, they need not go through a six-month waiting period, even if they had a gap in coverage in the previous 12 months.

5. Section 301(b) Off-Exchange Health Insurance Policies

Section 301 adds a Consumer Freedom Option plan provision to the Better Care bill.

Sen. Ted Cruz has proposed offering the plan as a way to make coverage more affordable for consumers who cannot qualify for Affordable Care Act public exchange subsidies and may not need the rich benefits that an Affordable Care Act-compliant plan must provide.

The text of the new Better Care bill version makes the nature of the requirements that apply to Section 301(b) plans tricky for a lay reader to interpret quickly, because the text refers to the exemptions by statutory number, without describing what the existing rules, or the proposed changes, are.

A Section 301(b) plan appears to be:

  • Subject to some Affordable Care Act major medical rules, such as the rules requiring an issuer to provide a Summary of Benefits and Coverage notice, and to abide by federal claim denial appeal and review rules.

  • Free from Affordable Care Act medical underwriting restrictions.

  • Free from the Affordable Care Act preventive services coverage mandate, which now requires a non-grandfathered major medical plan to cover a standard package of preventive services, such as checkups, without imposing co-payments or deductibles on the patients.

  • Free from most of the Affordable Care Act essential health benefits package coverage rules.
  • Subject to state underwriting rules and benefits mandates.

An insurer or managed care company could offer a Section 301(b) plan in a market if it also offered at least one gold plan and at least one silver plan through that market's public health insurance exchange program.

Section 301 would set aside $70 billion of the Better Care long-term health insurance stability and innovation money to support states with Section 301(b) plan programs.

The secretary of the U.S. Department of Health and Human Services would prioritize use of the $70 billion mainly to provide extra cash for "high-risk individuals" using public health insurance exchange plans in markets that also offer access to Section 301(b) plans.

A state could not use any federal subsidy money to help the people using the off-exchange Section 301(b) plans.

Because the off-exchange Section 301(b) plans could use medical underwriting, and limit benefits, people with health problems would probably gravitate toward using public health insurance exchange pulls.

The $70 billion in subsidies for high-risk exchange plan users could also pull enrollees toward the exchange system, by decreasing the net out-of-pocket premium costs for exchange plan users.

--- Related: Cruz Pitches GOP Leaders to Allow Cheap Insurance in Health Bill

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