April 10, 2017

Tweaks to the AHCA Potentially Revive ACA Repeal and Replace Efforts

Holland & Knight Healthcare Blog
Miranda A. Franco

In March 2017, Speaker Paul Ryan announced that the House would not vote on the American Health Care Act (AHCA) because it appeared there was not sufficient support to pass the legislation. Members of the conservative House Freedom Caucus opposed the bill because they felt it did not do enough to repeal the Affordable Care Act (ACA). However, some moderate GOP members were concerned with the bill’s impact on coverage.

Following the legislative setback, Republicans are attempting to determine their next steps. Accordingly, White House officials on April 3, 2017, met separately with moderate and conservative Republicans to discuss potential changes to the ACA repeal legislation that may open the door to reviving the bill.  White House officials floated proposals that would allow states to request waivers to opt out of the ACA's community rating provision, which prevents insurers from charging sick consumers high premiums and the essential health benefits provision, which mandates coverage across ten broad categories.

On April 6, 2017, the House Rules Committee advanced another provision in an impromptu meeting. The Committee voted 9-2 to adopt an amendment that creates a risk-sharing fund. The amendment was offered by Gary Palmer (R-Ala.) and David Schweikert (R-Ariz.), members of the Freedom Caucus, and would establish a $15 billion Federal Invisible Risk-Sharing Program from 2018-2026. The program is modeled after Maine’s invisible high risk pool.  In practice, Maine’s pool functioned like a hybrid of a reinsurance program and a high-risk pool. It operated like a reinsurance program in that it helped cover claim costs for individuals with high medical claims in the market. It operated like a high-risk pool in that it only targeted a subset of individuals based on specific conditions.

The Palmer/Schweikert amendment is a bit vague and the structure of it applies only to prospectively-identified eligible individuals, which arguably leaves insurers with tail risk for non-eligible high-costs cases. The risk-sharing program would run as a federal program for the first three years and then states would take over. The amendment also gives the Secretary of Health and Human Services (HHS) considerable discretion on how the program would advance.

Congressional staff and relevant committees will continue to work on the bill during the upcoming two-week congressional recess. The House GOP path forward is still unclear but leadership remains committed to addressing the ACA. A spokeswoman for Speaker Ryan indicated this morning that Ryan “would not hesitate to bring people back from recess, if there is a path forward.” In the interim, lawmakers are also discussing administrative changes to the ACA as well as discussions on other key health policy issues.

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