CHA News Article

U.S. Senate Releases ACA Repeal and Replace Legislation
Hospital leaders invited to join call with Sens. Feinstein and Harris tomorrow

The Republican majority in the U.S. Senate today released its draft legislation to partially repeal and replace the Affordable Care Act (ACA). Tomorrow at 2 p.m. (PT), Sens. Dianne Feinstein and Kamala Harris will host a telephone conversation about the legislation. Hospital leaders who wish to participate in the call should RSVP by to Kamala_HarrisLA@harris.senate.gov. Dial in information will be sent tomorrow.

Like the House version, the American Health Care Act (AHCA), the Senate bill — the Better Care Reconciliation Act of 2017 — makes drastic cuts to the Medicaid program and will significantly reduce the number of people who will have health coverage. The Medicaid changes will reduce overall spending by 25 percent through a phase down of enhanced federal funding for Medicaid expansion and through the introduction of per-capita caps. The measure also reduces federal support for those purchasing individual insurance policies, repeals the coverage mandate, provides funding for some market stabilization efforts, and gives states additional authority to pursue waivers and flexibility for their Medicaid programs.

While the Senate bill delays the withdrawal of enhanced federal funding for the Medicaid expansion population by one year beyond the AHCA, it also requires more aggressive Medicaid per-capita spending limitations beginning in 2025. Together with scaled-back subsidies and changes to consumer protections access to coverage will likely decline. The Congressional Budget Office’s estimate on coverage and overall savings is due early next week. 

CHA continues to analyze the impact the bill would have on California hospitals and the patients they care for. More details will be made available in the coming days, and CHA will host a webinar for members on Friday, June 30. Following is a summary of the legislation’s key provisions.

Medicaid

  • Maintains the enhanced match for the Medicaid expansion population until Jan. 2021 and phases out the enhanced match over three years. The AHCA ends the enhanced match on Jan. 2020, without a phase out.
  • Limits Medicaid spending through per capita caps or block grants 
  • The Medicaid growth rate would be the same (the Consumer Price Index-Medical) as in the AHCA until 2025, when the growth rate will be based on the CPI Urban rate, a lower benchmark. 
  • States can chose eight consecutive quarters between the first quarter of fiscal year 2014 and the third quarter of fiscal year 2017 for their base payments; the AHCA uses calendar year 2016.  
  • Disabled children would not be included in the cap calculation.
  • States can impose work requirements for Medicaid beneficiaries who are not elderly, pregnant or disabled.
  • Reduces the current limit on provider taxes to 5 percent in 2025 through a five-year phase down from the current 6 percent 
  • Requires eligibility redeterminations every six months like the AHCA 
  • Funds the ACA cost sharing subsidies through 2019 but then repeals them
  • Maintains the Medicaid disproportionate share hospital (DSH) cuts for expansion states, with no Medicaid DSH cuts for non-expansion states. The AHCA limited DSH cuts to expansion states to two years. Unlike the AHCA, the BHCA does not require expansion states to absorb the non-expansion states’ cuts and gives non-expansion states the opportunity for extra payments if their Medicaid rates are below the national average.

Market Reforms

  • Repeals the ACA’s mandates
  • Establishes waivers from insurance regulations, including the essential benefits package and actuarial value
  • Unlike the AHCA, does not allow states to opt out of community rating; therefore, it does not permit insurers to charge more for those with pre-existing conditions.

Taxes

  • Repeals most of the ACA taxes, except the “Cadillac tax,” which is delayed until 2025
  • Maintains the ACA’s income-related tax credits in 2018 and 2019, but then reduces eligibility to those under 350 percent of the federal poverty level and ties them to a bronze plan. The AHCA’s subsidies are age related.

Other Provisions

  • Eliminates the ACA’s Prevention and Public Health fund in 2018; the AHCA eliminates it in 2019.
  • For opioid funding, the bill authorizes $2 billion for fiscal year 2018 to provide grants to states to support substance use disorder treatment and recovery support services for individuals with mental or substance use disorders. The AHCA called for $45 billion over 10 years.
  • Creates a stabilization fund for states to strengthen their individual insurance markets
  • Establishes a $62 billion state innovation fund to help high-cost and low-income individuals buy health insurance

Commands