What You Need to Know About House Republicans’ “Replace” Legislation

Below please find some quick fast facts on House Republicans’ “repeal-and-replace” legislation, introduced on Monday evening. (The Energy and Commerce title is here, and the Ways and Means title is here.)

What’s changed since the leaked discussion draft, dated February 10?

Several provisions have been revised, updated, deleted, or added in the intervening three weeks:

  • Increase in funding for community health centers, from $285 million to $422 million;
  • Revision to the repeal of Disproportionate Share Hospital (DSH) cuts—the cuts are restored two years sooner for states that have not expanded Medicaid under Obamacare (in the prior draft, the cuts were restored immediately for all states);
  • Several new Medicaid program integrity provisions, including those prohibiting lottery winners from retaining benefits, restricting retroactive eligibility, prohibiting presumptive eligibility for individuals who cannot provide proof of citizenship, and requiring states to make eligibility re-determinations every six months in many cases;
  • A $10 billion pool of funding ($2 billion per year for calendar years 2018 through 2022) for states that did not expand Medicaid under Obamacare;
  • Change to the inflation formula (medical inflation, instead of medical inflation plus one percent) for Medicaid per capita caps;
  • Change to the Patient and State Stability Fund, including a change to the title (previously called the State Innovation Grant program), language permitting CMS to intervene in a state if a state declines to apply for grant funding, and change in the formulae and criteria, which generally focus more upon achieving stability (based on insurers’ medical loss ratios)—the funding levels remain unchanged, at $100 billion from 2018 through 2026;
  • Removal of language allowing states to set their own essential health benefits, including both benefit mandates and cost-sharing standards;
  • Addition of language repealing actuarial value standards;
  • Removal of language requiring HHS to verify special enrollment periods, codifying a change proposed by the Department in regulations last month;
  • Removal of language permitting the perpetual offering of “grandmothered” health insurance plans—that is, plans purchased after Obamacare’s enactment, but prior to its major insurance regulations taking effect in 2014;
  • Prohibition on “grandmothered” plans receiving Obamacare subsidies in 2018 and 2019—although individuals in grandfathered plans (i.e., those purchased prior to Obamacare’s enactment) and coverage purchased off of Exchanges could qualify for subsidies;
  • Delayed repeal of Obamacare’s tax increases until 2018, as opposed to 2017 in the leaked discussion document;
  • Repeal of the Obamacare “Cadillac tax” only until 2025;
  • Removal of repeal of Obamacare’s economic substance doctrine tax increase;
  • Means testing to the refundable tax credit—individuals with incomes below $75,000, and families with incomes below $150,000, would qualify for the full credit, while individuals with incomes above $215,000, and families with incomes above $290,000, would not qualify for the credit; and
  • Removal of a cap on the exclusion for employer-provided health insurance.

What’s changed since the reconciliation legislation passed in 2015/2016?

  • Longer transition period (three years, instead of two)
  • Expansion of Obamacare subsidies during the transition period
  • Medicaid expansion remains, albeit at state option and with enhanced funding sunset for beneficiaries who enroll after January 2020
  • Elimination of repeal of risk corridors and reinsurance
  • Delay of repeal of Obamacare taxes (take effect next year, not this year, and “Cadillac tax” repeal sunsets in 2025)
  • Elimination of repeal of economic substance doctrine

What remains since the reconciliation legislation passed in 2015/2016?

  • Repeal of prevention “slush fund”
  • Defunding of certain Medicaid providers, which will eliminate federal funding for Planned Parenthood for one year
  • Repeal of Exchange subsidies (albeit delayed)
  • Repeal of enhanced federal funding for Medicaid expansion (albeit delayed, and with a phase-out/freeze instead of a funding “cliff”)
  • Repeal of DSH cuts (albeit delayed/modified)
  • Elimination of individual and employer mandate penalties
  • Repeal of most of Obamacare tax increases (albeit delayed)

What major parts of Obamacare does the bill repeal?

  • Prevention “slush fund”
  • Exchange subsidies, beginning in 2020
  • Enhanced federal match for states that expanded Medicaid, beginning with individuals enrolled after January 1, 2020
  • Actuarial value standards
  • The individual and employer mandates (penalties set to zero) effective December 31, 2015—mandates would not apply to 2016 tax filings currently taking place
  • All tax increases, except for 1) the economic substance doctrine (not repealed at all); 2) the “Cadillac tax” on high-cost health plans (repealed only until 2025)

What major parts of Obamacare does the bill NOT repeal?

Entitlements

  • Exchange subsidies revised and expanded (extended to off-Exchange populations) through 2020
  • Exchange subsidies would expire in 2020—one year later than the 2015/2016 reconciliation bill
  • Medicaid expansion available to states as an optional population beginning in 2020—the prior 2015/2016 reconciliation bill repealed categorical eligibility for able-bodied adults entirely

Tax Increases

  • “Cadillac tax”—only repealed until 2025
  • Economic substance doctrine
  • Other tax increases (except the employer and individual mandates) not repealed immediately

Major Insurance Regulations

  • Pre-existing conditions (the bill modifies the existing requirements, by allowing insurers to vary premiums by up to 30 percent for those without continuous coverage)
  • Community rating by age (the bill expands existing rate bands, and permits states to opt-out of the federal standard if they so choose)
  • Under-26 mandate
  • Essential health benefits, including limits on out-of-pocket expenses
  • Prohibition on annual and lifetime limits
  • Medical loss ratio requirements
  • Preventive service mandate (including coverage of contraception)
  • Insurance Exchanges
  • Risk corridors and reinsurance

ALL the Medicare savings