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H.R. 1628: 5 AHCA change highlights for agents

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House leaders have created what they hope is the final version of the American Health Care Act budget measure and given it a bill number, H.R. 1628.

Related: Ryan plans tweaks to health care bill to help older people

Members of the House Rules Committee, a powerful panel that determines how a bill comes up on the House floor, are preparing to begin going over H.R. 1628 and several proposed amendments at 10 a.m. Eastern Daylight Time Wednesday — tomorrow. The bill could reach the floor Thursday.

The committee has posted information about the bill and the proposed amendments here.

In theory, H.R. 1628 could sail through the committee. Republicans outnumber Democrats on the committee 9 to 4, and most Republicans have said that they oppose the ACA.

But Republicans have just 237 seats in the House. If all Democrats vote against H.R. 1628, supporters will need 216 votes to pass the bill.

Some moderate Republicans have argued that the current version is too tough on state Medicaid programs, or that a replacement for the ACA premium tax credit included in the bill would make coverage too expensive for adults ages 50 to 64.

Some of the more conservative Republicans, including many affiliated with the Freedom Caucus, say H.R. 1628 is too much like “Obamacare lite.” The Freedom Caucus has not taken an official position on the bill, but, today, some caucus members were still openly opposing the bill. Rep. Mark Meadows, R-N.C., the chairman of the caucus, today told The Hill, a Washington newspaper, that he believes there are still enough caucus members who oppose the bill to block passage.

Related: Freedom Caucus keeps heat on would-be ACA changers

Reps. Greg Walden, R-Ore., and Rep. Kevin Brady, R-Texas, the lawmakers trying to shepherd the Affordable Care Act overhaul bill through the House, have introduced two batches of changes, or managers’ amendments, in an effort to improve the bill and increase support.

One of the managers’ amendments would make what Walden and Brady say are minor corrections and other technical changes. The other amendment would make policy changes, in an effort to attract support from House Republican moderates and conservatives who have expressed concerns about the bill.

Many of the provisions in the “policy changes” amendments would make tax relief provisions in the underlying bill take effect faster. Some, such as a move to kill the ACA tanning salon tax six months earlier than in the underlying bill, would have little direct effect on most health insurance agents and clients (other than those with many clients who own or work for tanning salons).

Some of the other provisions could have a more obvious effect on the health insurance community. Even if the managers’ policy changes amendment fails, or H.R. 1628 fails, some of the provisions in the proposed amendment could come back later, in other legislation.

Continue on for a look at five of those changes.

Medicaid has turned into a gorilla in the individual major medical market. (Photo: Thinkstock)

Medicaid has turned into a gorilla in the individual major medical market. (Photo: Thinkstock)

1. Competition from Medicaid

Medicaid and the Children’s Health Insurance Program are now formidable competitors in the individual and family coverage market. They now cover about 68 million people, or more than one-quarter of all U.S. residents. They serve about three times as many enrollees as issuers of commercial individual and family coverage, and many of the enrollees are working people are earn more than the federal poverty limit.

The AHCA drafters want to get away from existing Medicaid funding formulas and the ACA Medicaid expansion. H.R. 1628 calls for limiting when states can begin using the ACA Medicaid expansion program, and shifting to a new funding formula that would provide a flat amount of cash per enrollee served.

The Congressional Budget Office predicted the original version of AHCA could cut total 2026 Medicaid and CHIP enrollment by 19 million people, to 57 million.

Related: CBO sees AHCA cutting $337 billion from the deficit

Some of the provisions in the managers’ policy changes amendment speed up Medicaid enrollment cuts and put more moderately low income people in the market for commercial coverage options.

One provision would eliminate the ability for a state to expand its Medicaid program at the end of 2017. The original version of AHCA would give states until the end of 2019 to expand Medicaid.

But another provision would give people enrolled in Medicaid expansion coverage before Dec. 31, 2019, “grandfathered status.” Their states could get enough cash to pay 90 percent of their Medicaid costs as long as they were enrolled in Medicaid.

The Medicaid expansion grandfathering status provision could cut the number of moderately low income adults shopping for commercial coverage. 

2. Medical expense tax deduction

Even many agents who have nothing whatsoever to do with health insurance may have clients with enough medical bills to want to deduct their medical expenses from taxable income.

The authors of the ACA raised some of the cash to pay for ACA programs by requiring people to have medical expenses equal to 10 percent of adjusted gross income before they can take that deduction. The pre-ACA threshold was 7.5 percent.

The H.R. 1628 managers’ policy changes amendment would cut the income threshold for the medical expense deduction to 5.8 percent of income.

The change “will provide additional support for Americans with high health costs,” according to an amendment summary provided by the Rules Committee. 

The H.R. 1628 manager's amendment would speed up relief for health account users who want to use their accounts to pay for over-the-counter drugs. (Photo: Allison Bell/LHP)

The H.R. 1628 manager’s amendment would speed up relief for health account users who want to use their accounts to pay for over-the-counter drugs. (Photo: Allison Bell/LHP) 

3. Over-the-counter drugs

The Affordable Care Act created a new headaches for clients with health savings accounts and flexible spending accounts: They must get a prescription for over-the-counter drugs before they can use account funds to pay for the OTC drugs without facing a penalty.

The original version of H.R. 1628 would repeal that ACA change in 2018.

The managers’ policy changes amendment would repeal the change this year.

4. Flexible spending accounts

The original version of H.R. 1628 would repeal the current $2,600 cap on FSA contributions for tax years beginning Jan. 1, 2018. Employers could set their own contribution limits.

The managers’ policy changes amendment would make the change effective for tax years starting after Dec. 31, 2016.

5. Cadillac plan tax

The original version of H.R. 1628 could postpone the scheduled start date of the ACA “Cadillac plan tax” on high-cost health plans to 2025.

The managers’ policy changes amendment could push the state date to 2026.


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