Last week, the House of Representatives passed the American Health Care Act of 2017 (AHCA) by a vote of 217-213, with 20 Republicans joining all 193 Democrats in voting against it. The bill was first proposed in March but postponed by House leaders because it lacked enough votes to pass, largely the result of opposition from GOP moderates and members of the House Freedom Caucus—the most conservative group of GOP lawmakers—as well as a Congressional Budget Office (CBO) score that concluded that 24 million fewer people would be insured in 2026 relative to current law. An amendment to the bill proposed in late April brought the two House Republican factions closer together, and the bill passed narrowly on May 4.
The legislation now heads to the Senate for consideration, where its fate remains uncertain.
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A “rocky road ahead” for the AHCA
Molly Reynolds, fellow in Governance Studies, examines three weaknesses in House Republicans’ approach to passing the American Health Care Act, including the fact that the House Freedom Caucus’ influence “may be more limited on other bills not handled through the special budget reconciliation process.” The AHCA, Reynolds writes, “faces a potentially rocky road ahead in the Republican-controlled Senate, for both policy and procedural reasons.” Listen to Reynolds discuss this topic in a recent episode of our “5 on 45” podcast:
Senior Fellow Sarah Binder writes that “far from unifying Republicans behind a strong president, [the AHCA bill] may end up driving them apart.” She points to Republican infighting to get the bill passed through the House of Representatives, and also why this kind of deal-making results in bills that cannot pass the Senate. “Whatever he now says,” Binder writes, “Mr. Trump has allowed far-right conservatives to undermine his legislative agenda on a signature item from his campaign.”
Effects of key AHCA amendments
One of the key provisions in the AHCA’s second iteration is an amendment proposed by Reps. Tom MacArthur and Mark Meadows that would allow states to waive the “essential health benefit” regulations that require insurers to cover a certain set of services in individual and small-group markets. Matt Fiedler, a fellow in Economic Studies, examines the MacArthur Amendment and explains how it could weaken these ACA protections for people insured through large-employer health plans. “A single state’s decision to weaken or eliminate its essential health benefit standards,” Fiedler argues, “could weaken or effectively eliminate the ACA’s guarantee of protection against catastrophic costs for people with coverage through large employer plans in every state,” because, he says, the ACA’s ban on annual and lifetime limits “only applies with respect to care that is considered essential health benefits.”
Listen as Fiedler discusses the AHCA in this recent 5 on 45 episode:
Fiedler also commented on another amendment made to the second iteration of the AHCA—one allowing states to waive the “community rating” requirement, which under the ACA bars insurers from setting health premiums based on health status. “At first glance,” Fiedler observes:
it might appear that the community rating waivers allowed under this amendment would only allow insurers to charge premiums based on health status to people with a recent gap in coverage. Even that approach would significantly weaken community rating since coverage gaps are common, including for people with pre-existing conditions. In fact, however, the framework created by the waiver would allow states to effectively eliminate community rating protections for all people seeking individual market coverage, including people who had maintained continuous coverage.
“Contrary to appearances,” Fiedler concludes, “the new MacArthur amendment would, in effect, allow states to completely eliminate community rating. In so doing, the amendment could seriously jeopardize both financial security and access to care for people with serious illnesses.”
Finally, Fiedler, joined by Loren Adler and Tim Gronniger, examine the provision in the AHCA that would change Medicaid’s financing structure with respect to how the federal government and states share costs. The authors explore five conclusions about the new Medicaid cap under AHCA.
Analysis of CBO and JCT scores
The Congressional Budget Office’s March 13 assessment of the first iteration of the AHCA bill concluded that, among other findings, the act would increase the number of uninsured by 24 million over 10 years relative to current law. The CBO’s analysis gave opponents of the measure in both parties reasons to stand against it, and the measure was pulled from consideration by GOP leadership. One of the chief criticisms of the second iteration of the AHCA that was passed by the House of Representatives was that GOP leaders did not wait for the Congressional Budget Office (CBO) to issue a new score on the amended bill. Steven Lieberman, a nonresident fellow with the Center for Health Policy at Brookings, explored the CBO analysis in detail and how that agency and Congress’ Joint Committee on Taxation (JCT) do their work. “Given the magnitude of our fiscal challenges—the growing and ongoing imbalance between revenues and spending, resulting in massive increases in debt held by the public,” Lieberman writes, “the importance of having non-partisan, expert, analytic institutions will only grow.“
Making health care reform work
Experts from the Health Policy Center at Brookings argue that the Trump administration and Congress are fostering “intense uncertainty” on the rules of the health care markets by not committing to funding the Affordable Care Act’s cost-sharing reduction subsidies or enforcing the individual mandate. They say that the health exchanges “are actually evolving into viable markets,” and that the Trump administration “could clearly lay out its intentions to enforce the individual mandate and pay cost-sharing subsidies, or Congress could appropriate the money to fund the cost-sharing reduction subsidies.”
One of the stumbling blocks for the AHCA’s first round was the structure of a subsidy for private coverage. As Senior Fellow Stuart Butler explained, a refundable tax credit for purchasing private health insurance would have been available to households that pay no income tax, which could be seen as a new entitlement, and thus anathema to many House conservatives. Butler argued that to create a better policy design to help lower-income families afford private insurance (as opposed to public, or government-provided insurance), “there has to be a subsidy that is available to non-taxpayers as well as taxpayers, that reflects local costs, and that provides most help for low-income households.”
After Republican House leaders pulled the first iteration of the American Health Care Act in late March, Senior Fellow Henry Aaron wrote that the legislation would not have addressed the major problems in the Affordable Care Act, including some people having large insurance costs and the lack of enough insurers in some places. Instead, Aaron argued that “Trump and Republicans should devote themselves to correcting acknowledged flaws in Obamacare, not to sabotaging it,” and offered a set of “improvements” to the existing structure that “would advance Republican objectives and help politically red states.”