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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Title I: Energy and Commerce
Subtitle A: Patient Access to Public Health
Subtitle B: Medicaid Program Enhancement
Section 111 : Reduces Medicaid funding
Section 112: Ends the Medicaid expansion...
Section 114: Prevents Medicaid for lottery winners
Section 115: Gives $10 billion extra over five years to the
Section 116: Forces States to verify Medicaid eligibility every
six months and gives them more enforcement money
Section 117: Allows States deny people Medicaid if they are not
participating in "work
- The State decides how long the person has to work for in order
to get Medicaid
- The State can't deny Medicaid to...
- Pregnant women or to women who have had a baby within the last
- Kids under age 19
- Only parents with kids under the age of 6 or a disabled
- Gives the States more money for enforcement
Subtitle C – Per Capita Allotment for Medical
Section 121: Caps Medicaid funding on a per capita basis.
Subtitle D: Patient Relief and Health Insurance Market
Section 131: Repeals the lower out-of-pocket limits for
low-income people effective in 2020
Section 132: Creates a
"Patient and State Stability Fund" to be administered by the
Secretary of Health and Human Services to give money to the States
until the end of 2026.
can be used for:
- The fund is
appropriated with $15 billion per year until 2020 and $10
billion per year until 2026.
- There will be an extra $8 billion a year put into the fund from
2018-2023 to pay for increased premiums and out-of-pocket costs of
people in States that get a
- In order to receive money from the Federal fund,
States will have to match an increasing percentage, starting
with 7% in 2020 increasing to 50% by 2026
- An extra $15 billion
"Federal Invisible Risk Sharing Program" will go directly to
health insurance companies.
- The rules in terms of whose claims will be paid for, the
percentage of their premiums that would be paid, and the dollar
amount at which the government will starting covering the insurance
companies' costs will be determined by the Secretary of Health and
Section 133: Starting in 2019, people who purchase insurance
after a coverage gap of 63 days will be charged a 30% penalty for a
year. The insurance companies get to keep all the extra money.
Section 134: The requirements that bronze, silver, gold,
platinum level plans exist and must cover certain percentages of
expenses and “essential
health benefits” are repealed effective January 1, 2020.
Section 135: Allows insurance companies to charge older people
five times more than younger people (they’re currently allowed to
charge three times more)
Section 136: Starting in 2018, States can apply for a waiver
for the individual and small group insurance plans from the
health benefits” requirements and instead allow States to
determine what essential health benefits need to be covered by
Section 137: Health insurers can't set rates based on gender
and "Nothing in this act shall be construed as permitting health
insurance issuers to limit access to health coverage for
individuals with preexisting conditions."
Title I: Committee on Ways and Means
Subtitle A: Repeal and Replace of Health-Related Tax
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
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
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
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
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
- 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
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.
The most important part of the Republican health bill is mostly
getting ignored by Matthew Yglesias, Vox, May 9, 2017.
GOP Health Bill Leaves Many 'Pre-Existing Condition' Protections Up
To States by Bram Sable-Smith, NPR, May 8, 2017.
The 4 Big Changes To Health Care In The Latest GOP Bill by Anna
Maria Barry-Jester, FiveThirtyEight, May 2, 2017.
The MacArthur Amendment Language Race in the Federal Exchange and
Risk Adjustment Coefficients, Health Affairs, April 25,
Gripes About Obamacare Aside, Health Insurers Are in a Profit
Spiral by Jeff Sommer, The New York Times, March 18, 2017.
Health insurance industry rakes in billions while blaming Obamacare
for losses by Amy Martyn, Consumer Affairs, November 1,
Health Care Legislation Eliminates Tax Deduction Related to
Medicare Part D Subsidy - Potential Accounting Impact This
Quarter, Deloitte, March 31, 2010.
More Americans Went Uninsured in 2009 Than in 2008 by Elizabeth
Mendes, Gallup, January 8, 2010.
Sound Clip Sources
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
- 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.
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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