The American Health Care Act: Overview

KEY ISSUES

American Health Care Act | Insurance Company Mandates | Medicaid Expansion | Tax Credits | Senate Parliamentarian | F.A.Q.

Below you’ll find a summary of information on the American Health Care Act, the GOP’s failed attempt to fully repeal and replace ObamaCare. In the following information you’ll learn why the GOP’s plan fails, how it leaves in place some of the worst parts of Obamacare, and how this unsustainable bill would continue the havoc caused by ObamaCare on our healthcare system. If we want to help President Trump keep his promises to the American people and not take the blame for the failure of our healthcare system, we must do everything in our power to stop this terrible piece of legislation.

The Congressional Republican leadership has unveiled its long-awaited “ObamaCare Repeal Bill.” While it has several good elements, it does not live up to the GOP leadership’s promise to repeal ObamaCare, “root and branch.” Enacting it in its current form would leave key elements of ObamaCare in place, and would likely aggravate, rather than reduce, skyrocketing premium costs.

  • Speaking to the Conservative Political Action Conference on March 15, 2013, Senator Mitch McConnell said, “ObamaCare should be repealed root and branch.” Almost four years later to the day, the congressional GOP leadership introduced “The American Health Care Act.”
  • The draft legislation contains several good items, but fails to repeal ObamaCare “root and branch.” Worse, it leaves in place the very elements of ObamaCare that are driving premium costs higher (Insurance mandates, advanceable, refundable tax credits, Medicaid expansion).
  • The draft legislation effectively repeals ObamaCare’s individual mandate (the requirement that everyone who doesn’t get insurance from his employer must purchase it on his own) and employer mandate (the requirement that every business with at least 50 employees must make health care available to its employees).
  • The draft legislation repeals ObamaCare’s subsidies for those who purchase health insurance on the ObamaCare exchanges, beginning in 2020, but replaces them with a new advanceable, refundable tax credit available to those who don’t receive health care benefits from their employer.
  • The draft legislation repeals ObamaCare’s Medicaid expansion, beginning in 2020, and significantly reforms the Medicaid program, effectively ending its status as an “entitlement.” Instead of its open-ended commitment, Medicaid funding would be capped on a per-capita basis, saving $880 billion over 10 years.
  • According to the Congressional Budget Office estimate, these savings – ending the subsidies and the Medicaid expansion – combine for a $1.2 trillion reduction in federal spending over 10 years.
  • The draft legislation repeals almost all of ObamaCare’s tax increases. The Congressional Budget Office scores it as an $883 billion tax cut over 10 years.
  • Consequently, the Congressional Budget Office score says the draft legislation would reduce the federal deficit by $337 billion over 10 years.
  • The draft legislation virtually doubles the size of the maximum contributions to Health Savings Accounts, increasing them to $6,550 for individuals and $13,100 for families, beginning in 2018.
  • Unfortunately, the draft legislation doesn’t do anything about the insurance company mandates that are driving up premium costs – principally, “Guaranteed Issue” (the requirement that insurance companies provide health insurance to all, including those with pre-existing conditions), “Essential Health Benefits” (federal mandates that require every insurance policy to contain certain kinds of coverage, whether the policy-holder wants it or not), and “Community Rating” (which replaces individual risk evaluation in the writing of a policy and replaces it with pricing based on age and geography).
  • Congressional GOP leaders say they cannot repeal those provisions in the reconciliation because they are policy changes that do not have a direct effect on federal taxes or spending, and therefore do not qualify for inclusion in a reconciliation bill (but there is a way to override the Senate Parliamentarian – who is an unelected Senate staffer).
  • Seven years of experience with ObamaCare shows that these mandates on insurance companies have led to significantly higher costs for insurance, which has led to significantly higher federal outlays for the subsidies used to pay for that insurance. By any reasonable standard, they should qualify for inclusion in a reconciliation bill. But Republican leaders won’t even try to include them in the reconciliation bill.
  • Our allies in the Congress fear that a termination of the Medicaid expansion that does not happen until 2020 is a termination of the Medicaid expansion that will never happen. They fear a future Congress could, and likely would, repeal that provision in 2019, before the 2020 elections, to prevent negative headlines about people being “thrown off” Medicaid.
  • In the meantime, not terminating ObamaCare’s Medicaid expansion until 2020 could encourage states that have not yet opted to expand to do so immediately, further swelling the Medicaid rolls.
  • While the draft essentially repeals the legal requirement that people who don’t get health insurance from their employer must purchase it on their own, it contains a new one-year 30% surtax on premiums for people who let their coverage lapse for 63 days as a means to encourage people to get and maintain coverage.
  • If the draft legislation is enacted in its current form, it will likely lead to higher costs for insurance, not lower. It will actually make the problem worse, not better.

Other issues about the American Health Care Act that you should know about:

  • Why insurance company mandates will continue to drive up the cost of health insurance.
  • Why leaving Medicaid expansion in place until 2020 could encourage states who have not yet expanded Medicaid to do so immediately. (Remember we fought Medicaid expansion in 2012-2013)
  • How the new “advanceable, refundable tax credits” are essentially the ObamaCare subsidies by another name.
  • How Vice President Pence, as President of the Senate, could override the ruling of the Senate Parliamentarian – an unelected, Senate staffer – to include the full repeal of Obamacare in a reconciliation bill. (Remember, the Senate passed ObamaCare through reconciliation)

Download PDFs:

American Health Care Act One Pagers
American Health Care Act Summary
American Health Care Act Insurance Company Mandates
American Health Care Act Medicaid Expansion
American Health Care Act Advanceable, Refundable Tax Credits
American Health Care Act: Overriding the Senate Parliamentarian