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CD151: AHCA – The House Version (American Health Care Act)

May 28, 2017

The American Health Care Act, the Republican plan for a new health care system, passed the House of Representatives at lightning speed. In this episode, get the backstory on the reckless process used to pass the bill, learn how it changed from the original version, and find out how the Congressional Budget Office expects the bill would affect you.

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Bill Outline

H.R. 1628: American Health Care Act of 2017

Bill Outline
Title I: Energy and Commerce

Subtitle A: Patient Access to Public Health Programs

Subtitle B: Medicaid Program Enhancement

Subtitle C – Per Capita Allotment for Medical Assistance

Subtitle D: Patient Relief and Health Insurance Market Stability

Title I: Committee on Ways and Means

Subtitle A: Repeal and Replace of Health-Related Tax Policy

  • Section 201: Starting in 2018, the limits on the amount of advanced-paid tax credits that can be taken back from low income people will be repealed.
  • Section 202: Allows tax credits to be used on “catastrophic-only” health insurance plans that are not listed on the exchanges and prohibits tax credits for any plan that covers abortions.
  • Section 203: Repeals the tax credit for employers with fewer than 25 employees who want to provide health benefits to their employees starting in 2020 and prohibits tax credits for any health plan that covers abortion.
  • Section 204: Reduces the tax penalties for failing to purchase insurance to $0 and back dates it to be effective in 2016.
  • Section 205: Reduces the tax penalties for employers who fail to provide health benefits to their employees to $0 and back dates it to be effective in 2016.
  • Section 206: Delays the start of a tax on insurance companies which charges a 40% excise tax on “Cadillac plans”, which charge premiums more than $10,200/year ($850/month) for individuals until 2026. The 40% is only on the extra premiums charges above the cap.
  • Section 207: Starting in 2017, over-the-counter drugs can be purchased with Health Savings Accounts (HSA).
  • Section 208: Starting in 2017, taxes on money from health savings accounts that is not used for medical expenses will be cut in half (from 20% to 10%)
  • Section 209: Starting in 2017, the $2,500 limit on the amount that can be taken out of an employee’s paycheck for employer health plans that use “flexible savings accounts” is repealed.
  • Section 210: Starting in 2017, repeals a 2.3% tax, paid by manufacturers or importer, on sales of medical devices that are not generally purchased by the general public at retail stores.
  • Section 211: Beginning in 2017, businesses who provide retiree prescription drug benefits that are at least as valuable as Medicare Part D can get a federal drug subsidy. This provision will allow those businesses to deduct the entire cost of providing that coverage even though a portion of the drug coverage is offset by the subsidy they receive.
  • Section 212: People can get a tax deduction for medical care that is not paid for by insurance if those expenses exceed 10% of their gross income; this provision reduces that to 5.8 % starting in 2017.
  • Section 213: No changes are actually made because the text of the new paragraphs are exactly the same as current law.
  • Section 214: Starting in 2020, this bill creates a new tax credit structure tied to age instead of income for people making under $75,000 per year (the credits gradually reduce the more you make over $75,000)
  • Section 215: Starting in 2018, increases the amount than can be put in Health Savings Accounts
    • Individual contribution limit raised from $2,250 to $5,000 per year.
    • Family contribution limit raised from $4,500 to $10,000.
  • Section 216: Starting in 2018, married couples over the age of 55 with high deductible plans will be able to contribute more to joint health savings accounts
  • Section 217: Starting in 2018, if a health savings account is opened within 60 days of a person getting coverage with a high deductible, medical expenses for those 60 days will be eligible for payment from the HSA

Subtitle B: Repeal of Certain Consumer Taxes

  • Section 221: "Repeal of tax on prescription medications"
    • Starting in 2017, a fee paid by pharmaceutical manufacturers and distributors will be repealed
  • Section 222: "Repeal of health insurance tax"
    • Starting in 2017, a fee on large health insurance companies, which is tied to and increases with premium growth rates, would be repealed.

Subtitle C: Repeal of Tanning Tax

  • Section 231: Starting on July 1, 2017, the 10% tax on indoor tanning is repealed.

Subtitle D: Remuneration from Certain Insurers

Subtitle E: Repeal of Net Investment Income Tax

  • Section 251: Starting in 2017, a 3.8% tax on net income from stock market investments over $200,000 will be repealed.

H.R. 2192 - To amend the Public Health Service Act to eliminate the non-application of certain State waiver

Additional Reading

References

Sound Clip Sources

Hearing: House Rules Committee Meeting on Republican Health Care Bill Amendment, House of Representatives, April 6, 2017.

Timestamps & Transcripts

  • 03:48 Rep Jim McGovern: We’re meeting on an amendment affecting millions of people’s healthcare, that came out of a backroom about an hour ago, with no vetting at all. I think the amendment, it was—the text was stamped, I think at 11:24 a.m. We were noticed for this meeting at 11:52. We waived the traditional hour so we can kind of move on with it, but there was no vetting at all, no process whatsoever, just a couple of good old boys with a typewriter, saying maybe this will work.
  • 8:00 Rep Jim McGovern: If you guys want to deal with healthcare, introduce a bill; get co-sponsors on the bill; have the relevant committees—committees like Ways and Means, and Energy and Commerce—do hearings, that’s a radical idea; invite people who know something about this issue—invite patients and patient-advocate groups and doctors and heads of hospitals, and invite some of your friends in the insurance industry—to come up and weigh in on your proposal; then you could do markups. Then get a CBO estimate, and after you get a CBO estimate and it’s marked up, then you come to Rules Committee, and you advance a bill to the floor.
  • 13:40 Rep David Schweikert: If we were to actually have just sort of the top-line math question and say, let’s strip away some of the rhetoric and ideology and just sort of say “math,” when we look at our healthcare-utilization data, it’s functionally a hockey stick. Fifty percent of our population, the healthiest 50 percent, only use about three percent of healthcare costs, but our least healthy—our folks with chronic conditions, our brothers and sisters who really do suffer out there or have multiple issues laddered up—they represent five percent of that population, represents 50 percent of our spending. So you have this situation where we as a society, as a community, we’ve decided that guaranteed issue is out there, so now how do we find premium efficiency, rate efficiency? And as long as we’ve made this decision over here as a society, the fastest, most efficient thing we could do is actually sort of laddering some of that risk at that very top end. Last thing, and this may require a little more diving into it, and looking around, this is a smart committee, so you understand these things, if you were the actuaries building your rate profile, the ability to say we believe providing coverage for this population is going to cost this, you always have to design in a shock absorber because you wake up tomorrow and some people sign up for this coverage who have a chronic condition. The beauty of this type of risk-sharing model is that shock absorber that you have to build into your rate model can be substantially less because your top-end exposure is actually mitigated. So this was an occasion of, was there something we could do for lowering and making much more predictable the rate environment for that individual market, and this, I think, was the most elegant, simple way to get there.
  • 38:55 Rep Alcee Hastings: In the brief time I’ve had to review it, the measure will provide $15 billion for the high-risk pools. Is that correct? All right. The language, specifically, setting it for is, “For the purpose of providing funding for the program there is appropriated, out of any money in the Treasury not otherwise appropriated, $15 billion for the period beginning January 1, 2018”—am I right?—“and ending on December 31, 2026.” So that’s $15 billion over a 10-year period of time. Get it straight, America. If this measure were to become law—there was a conservative gentleman, I can’t pull his name up right now, that said in the great scheme of things, it’s chump change because it simply would not provide the necessary money over the nine-year period of time.
Hearing: Rules Committee Hearing H.R. 1628 and H.R. 2192, House of Representatives, May 3, 2017.

Timestamps & Transcripts

  • 24:05 Rep Jim McGovern: As you mentioned in your testimony, we found out last week that the MacArthur amendment mysteriously exempted Congress from the damaging effects of this bill, and I say mysteriously because nobody seems to know who put the provision in. And as the Vox reporter who uncovered the exemption put it, and I quote, “No one will fess up to putting the Congress exemption in the AHCA amendment.” Apparently, Representative MacArthur, your office told her that the Senate Budget added it, and the Senate Budget said no, in fact they didn’t. So, I guess I’m just curious. My first question is, where precisely did this exemption come from, and who thought that this bill was good enough for American families but not good enough for Congress? Mr. MacArthur, you wrote the amendment; did you put the provision in? Or Mrs. McSally, your bill tries to fix it; do you know anything about how the exemption got in there in the first place? Rep Martha McSally: Want to go? This budget-reconciliation process is not intuitive to really anyone. I mean, this is very arcane, and so as we’ve been going through this process in the House, trying to comply with Senate rules, content can only apply if it’s referred to specific Senate committees. And— McGovern: So somebody consciously knowing that—someone consciously moved the legislation forward without — McSally: So, again, my understanding is in order to comply with these arcane Senate rules of budget reconciliation, where if a matter is going to be referred to some other committee other than the ones that are listed in the original budget resolution, then it’ll no longer be applicable and the budget-reconciliation process doesn’t go forward. So, all I know is I heard it didn’t apply, and I said let’s fix it. McGovern: Who put it in? Who put the exemption in the first place? McSally: Yeah, and it specifically—just to be clear, it specifically related to his amendment. It’s not related to other provisions in the middle. So… McGovern: Yeah, so who put this exemption in in the beginning? Rep Tom MacArthur: Well, first, I don’t believe that members of Congress or our staffs should receive any special treatment, and I don’t think anybody believes that. McGovern: But Mrs. McSally’s bill— MacArthur: Well, as— McGovern: It’s not an amendment, it’s a bill; but it’s just to fix the fact that, is it a drafting error, or did somebody intentionally try to exempt Congress? MacArthur: It’s not an error, but the challenge, as Mrs. McSally has said, the challenge is getting House policy, drafting House policy, to conform with Senate rules. And I had every intention in drafting my amendment that there would be no special exception for Congress. Senate rules required us to accomplish this— McGovern: What Senate rules? Did you talk to the Senate parliamentarian? Who did…? MacArthur: I didn’t personally, but the requirement is because exempting us would require to go to a different committee that we needed to accomplish this through a stand-alone bill, which we have. Mrs. McSally has introduced it. I’m an original co-sponsor. I hope you’ll support the bill. I think it’s worthy of support, and none of us should want to exempt Congress— McGovern: None of us do, but from where we’re sitting, it looks like you guys get your hands caught in the cookie jar and then get exposed and then decided to fix it after a reporter uncovered it. MacArthur: Well, that’s your interpretation. I wouldn’t describe it that way. I think we fixed the issue in the only way that the Senate suggested that we could and that was through a stand-alone bill that was introduced around the same time.
  • 28:56 Rep Jim McGovern: I think anybody who’s watching this is scratching their head, wondering how in the world can Congress be dealing with healthcare issues in a way where we don’t have hearings, where fixes are being worked out in a back room, and we’re just seeing the language for the first time right now, that their input is being pushed aside—American people don’t matter—all so that it could be a vote before we go in recess because the president wants us to. I mean, I think healthcare’s a very personal issue, it’s very important, and people want us to get it right, and I don’t think anybody here believes that we’re getting this right, even those of us with different opinions, in the process that we’re utilizing here. I’ve got to be honest with you, this process, to put it bluntly, is a goddamn mess. I mean, it really is. And I don’t know how anyone can defend it. Fixes upon fixes to fix the fixes to fix the fixes—and it’s going to be brought to the floor tomorrow, and we’re going to have a debate, and that’s how we’re going to serve our constituents? You guys can defend it, and you’ll have to defend it, but I think you’re going to be surprised how upset the American people are going to be.
  • 37:30 Rep Fred Upton: My—our amendment, I should say, is carefully targeted at those states that may seek a waiver. Obviously, there are none today. I don’t know what Governor Scott or the future governor will do. Unknown Speaker: I’ll get to him in a minute. Upton: All right. Well, I know I talked to my governor this morning. He’s not interested in seeking a waiver. Unknown Speaker: Mm-hmm. Upton: I would guess that most governors—maybe all, I don’t know—will not seek a waiver, and in that case, my amendment just covers something if maybe it happens. And one of the reasons why we targeted the money—so it’s $8 billion: it’s a billion the first year; a billion the second year; and two billion, years, each, three, four, and five—because chances are if a governor does take this course, you’ll have fewer at the beginning than at the end. I ask the question, is five billion enough to cover those that might need some help if a governor sought a waiver in that first year, because remember, after the first year they have continuous coverage. Unknown Speaker: That's right. Upton: The answer, not a lot of facts behind it, but the answer was, five billion should probably cover that, in which case a number of us said, well, we want to make sure that it is covered. And that’s why it is eight billion and not five.
  • 40:54 Rep Jim McGovern: Who did you ask? I mean, that’s the whole point of a CBO is because we want to get a nonpartisan— Rep Fred Upton: We don’t have a CBO score. McGovern: Right. So who? Who did you—who gave you these figures? Rep Alcee Hastings: Eight billion. Upton: Who? I'm sorry, who? McGovern: You said you asked— Upton: No, no. I know Mr. Hastings’ had an answer. I didn’t hear what he said. Hastings: No. You asked for the five billion, was that enough. Who? Upton: I asked, I asked— Hastings: And he asked who. Upton: I asked some of the drafters—so I made this proposal—I’m not a lawyer, like you—I asked legislative counsel, I asked a number of staff very tied into the—what is the estimate. They thought five billion would cover it.
  • 51:25 Rep Alcee Hastings: And to predict for you what I think is going to happen in the Senate: I think they take health security a little more seriously and is a more moderate body than we are, and so you can reasonably expect that when you pass this tomorrow on the slimmest of margins that you may never see it again, and you will not see it in the form that it’s in. So let’s just have at it. I’ve had my fun. I hope you continue to have yours, and some of you ain’t going to be here the next time that we meet after 2018. Tell your body I said so.

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