American Health Care Act of 2017
The American Health Care Act of 2017 (H.R. 1628), referred to by the acronym AHCA and nicknamed variously Trumpcare, Ryancare, Obamacare-Lite, and Republicare, was a United States Congress bill to repeal the Patient Protection and Affordable Care Act (ACA). It was based on a plan first publicly released by House Republicans on March 6, 2017, and the first part of what its proponents claim was a 3-phase plan to repeal the act. The AHCA would have repealed the parts of the Affordable Care Act within the scope of the federal budget, including provisions contained within the Internal Revenue Code such as the individual and employer mandates and various taxes, and also modifications to the federal Medicaid program.
Background[edit | edit source]
The ACA, a major reform of health care in the United States, was passed during the 111th United States Congress. During the 2012 presidential election, Republican nominee Mitt Romney promised to repeal the ACA. After Romney's defeat, the ACA remained in effect for the duration of Obama's presidency despite Republican efforts to repeal it. In the 114th United States Congress, Republicans passed a bill that would have repealed much of the ACA, but the bill was vetoed by President Obama. After winning the 2016 presidential election, President Donald Trump promised to "repeal and replace" the ACA with a new law. The 2016 elections left Republicans in control of the executive and legislative branches of the U.S. government, but with fifty-two seats in the one-hundred member Senate, Republicans would still have to rely on at least some Senate Democrats to overcome a filibuster. However, Senate rules provide for a special budget rule called reconciliation, which allows certain budget-related bills to bypass the filibuster and be enacted with a simple majority vote. Republican leaders were seeking to pass the AHCA through the Senate by using the reconciliation rule.
Overview[edit | edit source]
The act would have allowed states to continue to enroll persons in the ACA Medicaid expansion through January 1, 2020, and would disallow further enrollment after that date. The AHCA will include age-based tax credits for those who earn less than $75,000, or $150,000 for joint filers. The bill would have required insurance companies to cover pre-existing conditions. The AHCA used a standard of 'continuous coverage', defined by a 63-day coverage gap, where an individual who currently has insurance and is changing insurers will not pay a higher rate with their new insurer. Individuals who wished to buy insurance but were outside of the coverage gap would have paid a 30 percent premium surcharge for one year and then return to standard rates. Both healthy and the sick were required to pay the surcharge, which may have caused healthier persons to remain outside of the market, causing overall health care costs to rise (see adverse selection, risk pool).
Views of experts[edit | edit source]
Health care experts from across the political spectrum— liberal, moderate, and conservative —agreed that the House Republican health care bill was unworkable and suffered from fatal flaws, although specific objections varied depending on ideological perspective. Experts agreed that the bill fell far short of the goals laid forth by Trump —"Affordable coverage for everyone; lower deductibles and health care costs; better care; and zero cuts to Medicaid"—because the bill was (1) "almost certain" to reduce overall health care coverage and increase deductibles and (2) would phase out the Medicaid expansion.
Among the key concerns identified by health-care experts were that (1) the tax credits funded at the level proposed in the bill are insufficient to pay for individual insurance, and could lead to Americans dropping out of the health care market; (2) the bill's elimination of the ACA's community rating provision (barring insurance companies from charging older people more than three times what they charge younger people) would increase cost disparities between age groups and would increase premiums for Americans more prone to illness; (3) the dropping of healthy people from the health insurance market (adverse selection) could lead to insurer "death spirals" that would decrease choice; and (4) the phaseout of the Medicaid expansion was likely to result in a loss of healthcare for poorer Americans.
Effect on health coverage and the budget[edit | edit source]
Original CBO estimates[edit | edit source]
- Persons with healthcare insurance coverage would be reduced by 14 million in 2018, 21 million in 2020, and 24 million in 2026 relative to current law.
- The AHCA would reduce the deficit relative to current law by $337 billion over a decade. Approximately $1.2 trillion less would be spent over that time, while $900 billion less in tax revenue would be collected. Medicaid spending would be cut considerably. Taxes on the roughly top 5% of income-earners under current law would considerably drop.
- In negotiations after the initial report, the law was modified such that the CBO estimated the deficit reduction would total about $150 billion over a decade.
- Insurance premiums would rise initially relative to current law, but would be reduced in the future moderately: "Starting in 2020, the increase in average premiums from repealing the individual mandate penalties would be more than offset by the combination of several factors that would decrease those premiums: grants to states from the Patient and State Stability Fund (which CBO and JCT expect to largely be used by states to limit the costs to insurers of enrollees with very high claims); the elimination of the requirement for insurers to offer plans covering certain percentages of the cost of covered benefits; and a younger mix of enrollees. By 2026, average premiums for single policyholders in the nongroup market under the legislation would be roughly 10 percent lower than under current law..."
- Premium changes would vary significantly by age: "Under the legislation, insurers would be allowed to generally charge five times more for older enrollees than younger ones rather than three times more as under current law, substantially reducing premiums for young adults and substantially raising premiums for older people." This would lead to a mix of younger enrollees, one of the reasons for the lower overall premiums over the longer-term.
- Under both current law and the AHCA, CBO assumes the health exchange marketplaces would remain stable (i.e., no "death spiral").
- Social Security expenditures would decrease due to earlier mortality: "CBO also estimates that outlays for Social Security benefits would decrease by about $3 billion over the 2017–2026 period."
- Medicaid expenditures would increase due to reduced access to birth control. "By CBO’s estimates, in the one-year period in which federal funds for Planned Parenthood would be prohibited under the legislation, the number of births in the Medicaid program would increase by several thousand, increasing direct spending for Medicaid by $21 million in 2017 and by $77 million over the 2017–2026 period."
CBO estimates including amendments[edit | edit source]
The Congressional Budget Office released an updated analysis of the bill, including changes found in several amendments on March 23, 2017, concluding that:
- The updated bill would have similar effects on health insurance coverage, differing by no more than half a million in any category in any year over the next decade.
- The bill's impact on health insurance premiums would be approximately the same as was previously estimated.
- The proposed amendments would reduce federal deficits by $150 billion over a decade, compared to $337 billion previously.
- Changes to the Medicaid program would reduce the estimate of savings by $41 billion over a decade.
Other estimates[edit | edit source]
Outside organizations have published analyses of the effect of AHCA passage:
- A Brookings Institution analysis projected that under the AHCA as introduced, 15 million Americans would lose health insurance coverage over 10 years. The Brookings analysis estimated that at least 6 million would lose coverage from the public exchange; 2 million from employer coverage; and 7 million currently covered under Medicaid.
- A Standard & Poor's analysis projected that under the AHCA as introduced, between 6 and 10 million Americans would lose coverage by 2024, with 2 to 4 million losing coverage from the exchange and 4 to 6 million losing coverage under Medicaid.
- David Cutler, professor of applied economics at Harvard University and former administrator at the National Institutes of Health, believed that this figure could be even higher, as many as 20 million people.
- Two reports from the Center for Budget and Policy Priorities concluded that the ACHA would have shifted $370 billion in Medicaid costs to the states, which would have then be forced to cut coverage and services, and would make health insurance far less affordable in high-cost states, particularly 11 states in which tax credit would have been more the halved.
- According to a report viewed by Politico, the White House Office of Management and Budget's own analysis of the AHCA estimated that 26 million people would under AHCA lose coverage over the next decade. According to White House Communications Director Michael Dubke, the analysis tried to use similar methodology as the CBO.
Legislative process[edit | edit source]
The two bills that constituted the AHCA were introduced into the House Energy and Commerce Committee and the House Ways and Means Committee on March 8, 2017 and passed both committees the next day. Both committees approved the AHCA on a party-line vote without a CBO report, prompting criticism from Democrats. House Minority Leader Nancy Pelosi argued that the bill should not proceed through Congress until the CBO completed its analysis of the bill. Representative Richard Neal, the ranking Democratic member of the House Ways and Means Committee, stated: "To consider a bill of this magnitude without a CBO score is not only puzzling and concerning, but also irresponsible." Trump administration officials, including budget director Mick Mulvaney and economic adviser Gary Cohn, preemptively attacked the CBO, with Cohn saying that the CBO's score would be "meaningless." According to David Lawder of Reuters, these criticisms from the White House are unusual: "Prior administrations, both Republican and Democratic, have steered clear of attacking the credibility of the agency, which many lawmakers regard as a neutral arbiter."
The bill next went to the House Budget Committee, which passed it on March 16 by 19 to 17 votes, with three Republicans from the conservative Freedom Caucus joining Democrats in opposition. It next went to the Rules Committee, which sets the terms of the debate before a bill comes to the full House. A House vote was initially scheduled for March 23, but was delayed for at least a day after Republican leaders were unable to find enough votes for passage. On March 24, with both moderate and far-right Republican lawmakers opposing the bill, Speaker Ryan and President Trump chose to withdraw the bill from consideration rather than go through with a full House vote that would have failed.
The comparatively "lightning fast" legislative movement for the AHCA through the House was in contrast to the Affordable Care Act, which took months of negotiations, committee markup, and debate before passage in 2010. The quick process prompted complaints from Democrats "that the Republicans were rushing to approve a repeal bill without hearing from consumers, health care providers, insurance companies or state officials — and without having estimates of the cost or the impact on coverage from the Congressional Budget Office."
Division among House Republicans and withdrawal of bill[edit | edit source]
In the days leading up to the vote, which was originally scheduled for March 23, 2017, there was increased division among House Republicans over the replacement, causing concerns among Republican Party leadership over having the votes needed to pass the bill. Among Republican defectors from the bill, the largest opposition came from members of the House Freedom Caucus, which consists of some of the most conservative members in the House. The Freedom Caucus members, among their primary objections to the bill, were not convinced that the healthcare replacement effectively abolished some elements of the Affordable Care Act, most prominently the essential health benefits. To achieve success in the House, Republicans could not afford more than twenty-one members of their own party voting against the bill, and several days before the vote, dissent within the party, largely from the Freedom Caucus, was a significant threat to its passage. Beyond the conservative members of the Freedom Caucus, there was continued opposition to the bill from more moderate Republicans in the House, such as from members of the centre-right Tuesday Group, where there were concerns about loss of coverage and the potential of rising insurance costs.
Amid the division between the Republicans, the party leadership, which was led by House Speaker Paul Ryan, attempted to ease concerns among the Freedom Caucus and others. President Trump also held numerous meetings with Republicans in the House leading up to the vote, though after negotiations with the Freedom Caucus over the ACA's essential health benefits, there was still a considerable amount of opposition from moderates and members of the Freedom Caucus alike. On the day of the scheduled vote, which coincided with the seven-year anniversary of the ACA's signing into law, party leadership continued to struggle with getting the required votes for the bill, and the vote was rescheduled for the following day, March 24, 2017, as requested by the White House.
The night before the rescheduled vote, President Trump, in a final effort to negotiate with those opposing the bill, announced to the House Republicans that the vote the following day would be their only chance to repeal the Affordable Care Act, a goal long sought after by Republicans in Congress. The following morning the bill was brought to the House floor after being approved by the House Rules Committee for four hours of debate preceding the vote, which was expected in the afternoon. It was reported that a couple hours before the expected vote, Ryan made a sudden visit to the White House to meet with Trump, in which Ryan told Trump that the bill did not have enough votes to pass the House. Shortly after the time of the expected vote it was announced that the Republicans were withdrawing the AHCA from consideration, a decision made after Ryan meet with Trump. Following the withdrawal, Ryan stated in a press conference that the country is "going to be living with Obamacare for the foreseeable future", while Trump said that it was tough to pass the bill without support from Democrats; Ryan and Trump both said they were going to move forward on other policy issues.
Reaction[edit | edit source]
President Trump endorsed the bill after its release, calling it "our wonderful new Healthcare Bill" on Twitter. Speaker of the House Paul Ryan referred to the bill as a "conservative wish list" that would provide for "monumental, exciting conservative reform." Economist Douglas Holtz-Eakin described the AHCA as "a good start."
But conservative members of the Republican Party quickly raised skepticism about the proposed reform as they would prefer a complete repeal of the PPACA. The White House sent Mick Mulvaney, executive of the Office of Management and Budget, to convince members of the House Freedom Caucus to support the legislation. According to numerous reports, Mulvaney was unsuccessful. Shortly after the meeting caucus chairman Mark Meadows said, "No new position tonight. Our position is the same. We believe we need to do a clean repeal bill."
A number of conservative groups have also criticized the bill for not being enough of a repeal, calling it "Obamacare 2.0." The Koch brother-supported organizations Americans for Prosperity and Freedom Partners have indicated their intention to put together a multi-million dollar fund in support of re-election campaigns for conservative lawmakers who take a stand against the bill.
The AARP released a statement opposing the bill. Stating, "On top of the hefty premium increase for consumers, big drug companies and other special interests get a sweetheart deal." The American Medical Association released a statement opposing the bill. America's Essential Hospitals, American Hospital Association, Association of American Medical Colleges, Catholic Health Association of the United States, Children's Hospital Association, Federation of American Hospitals, and National Association of Psychiatric Health Systems also stated their opposition in a joint letter. Conservative groups, including Heritage Action, the Cato Institute, Americans for Prosperity, FreedomWorks, and the Tea Party Patriots all oppose the bill.
Progressive groups, including MoveOn.org, American Bridge, the Center for American Progress, and Our Revolution, were resolutely opposed to the bill, as expected. Economist and New York Times columnist Paul Krugman stated that the bill's "awfulness is almost surreal," writing that what Republican congressional leadership "came up with instead was a dog's breakfast that conservatives are, with some justice, calling Obamacare 2.0. But a better designation would be Obamacare 0.5, because it’s a half-baked plan that accepts the logic and broad outline of the Affordable Care Act while catastrophically weakening key provisions." Despite his vow not to get involved into day-to-day politics former President Obama became a part of it on March 23, 2017 (the seventh anniversary of his signature health care law and one day prior to replace it with American Health Care Act) by hailing among other things 20 million more people insured, preexisting conditions covered, young people staying on their parents' plans until 26, lowered costs for women's health care and free preventive care as progress due the Affordable Care Act.
Comparison between ACA and AHCA[edit | edit source]
The following table describes major differences and similarities between the ACA and the AHCA, as originally proposed in the House
|Insurance mandates||Individual mandate
Employer mandate on larger companies
|No individual or employer mandate|
Insurers can impose a one year 30% surcharge on consumers with a lapse in coverage
|Aid for insurance consumers||Income-based subsidies for premiums that limit after-subsidy cost to a percent of income
Tax credits for out-of-pocket expenses
|Age-based refundable tax credits for premiums, phased out for higher incomes|
No tax credits for out-of-pocket expenses
|Medicaid||Matching federal funds to states for anyone who qualifies
Expanded eligibility to 138% of poverty level income
|Federal funds granted to states based on a capped, per-capita basis starting in 2020|
States can choose to expand Medicaid eligibility, but would receive less federal support for those additional persons
|Premium age differences||Insurers can charge older customers up to three times as much as younger customers||Insurers can charge older customers up to five times as much as younger customers|
|Health Savings Accounts||Individuals can put $3,400 and families can put $6,750 into a tax-free health savings account||Individuals can put $6,550 and families can put $13,100 into a tax-free health savings account|
|"Cadillac" tax||Cadillac tax on high-cost employer plans implemented in 2020||Cadillac tax on high-cost employer plans implemented in 2025|
|Other taxes||3.8% tax on investment income
0.9% tax on individuals with an income higher than $200,000 or families with an income higher than $250,000
|Repeal of both taxes|
|Essential health benefits||Insurers are required to offer ten essential health benefits||Private plans are required to offer the ten essential health benefits.|
Some Medicaid plans are not required to offer mental health and substance abuse benefits
|Dependents staying on plan|
|Annual and lifetime limits|
See also[edit | edit source]
- 2017 Patient Protection and Affordable Care Act replacement proposals
- Efforts to repeal the Patient Protection and Affordable Care Act
- World's Greatest Healthcare Plan of 2017
References[edit | edit source]
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- "American Health Care Act of 2017: Report of the Committee on the Budget, House of Representatives, to accompany H.R. 1628, together with Minority Views" (H.Rpt. 115-52, March 20, 2017), an 814-page report that includes section-by-section analysis, arguments for and against (by Republicans and Democrats), and the cost estimates from the non-partisan Congressional Budget Office (CBO).
- Media related to American Health Care Act of 2017 at Wikimedia Commons
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