AMDA – The Society for PALTC Medicine Expresses Concern About ACA Replacement Legislation

March 10, 2017
Policy Snapshot

This week, the House Republicans introduced their legislation to repeal and replace parts of the Affordable Care Act (ACA). The bill, the American Health Care Act, was introduced through a budget process known as reconciliation and focuses on giving states broad flexibility to design programs that best serve their populations and increase access to preventative services.

The Society joined many physician organizations including the American Medical Association, American College of Physicians, American Health Care Association, AARP, and others to voice concerns and opposition to the bill. The Society sent a letter to Congressional leaders expressing concern about the Medicaid provisions in the bill. The letter stated that the Medicaid caps provisions in the bill would “impose rigid limits on the amount of federal funds available to states for Medicaid” and “threaten the millions of people who count on the program for custodial, skilled nursing or community based care.” The Society will work with Congressional leaders as the process moves forward to ensure seniors’ access to care is protected.

Some of the specific proposals of the bill include:

Some of the most significant changes from the bill are to the Medicaid program. The bill would repeal states’ expanded authority to make eligibility determination and repeals the state option to extend coverage to adults above 133% of the federal poverty by the end of 2019.

  • Repeals the requirement that state Medicaid plans must provide the same “essential health benefits” that are required by plans on the exchanges, returning flexibility to the states by the end of 2019.
  • Starting in 2020, it would roll back federal funding for the ACA’s expansion that allowed states to provide Medicaid coverage to all low-income individuals under 138 percent of the poverty level, rather than just the specific categories of poor people (children, pregnant women, elderly, disabled) who were previously eligible. Thirty-one states opted to pursue this ACA provision. People who are covered under the expansion would continue to be funded by the federal government after that, but states would no longer be allowed to enroll anyone under those expanded criteria. And an enrollee who loses eligibility for the expansion program could not re-enroll.
  • Reforms federal Medicaid financing by creating a per-capita cap model (i.e., per enrollee limits on federal payments to States) starting in FY2020.
  • States’ spending in FY2016 would be used as the base year to set targeted spending for each enrollee category (elderly, blind and disabled, children, non-expansion adults, and expansion adults) in FY2019 and subsequent years for that state. Each state’s targeted spending amount would increase by the percentage increase in the medical care component of the consumer price index for all urban consumers from September 2019 to September of the next fiscal year. Starting in FY2020, any state with spending higher than their specified targeted aggregate amount would receive reductions to their Medicaid funding for the following fiscal year.

Tax Credits
Advanceable, refundable tax credits for purchase of state-approved, major medical health insurance would be now be given based on age rather than household income.

  • Under age 30: $2,000
  • Between 30 and 39: $2,500
  • Between 40 and 49: $3,000
  • Between 50 and 59: $3,500
  • Over age 60: $4,000

The credits are additive for a family and capped at $14,000. The credits grow over time by CPI+1. The credits are available in full to those making $75,000 per year ($150,000 joint filers). The credit phases out by $100 for every $1,000 in income higher than those thresholds.

Other Provisions

  • Repeal tax on over-the- counter medications
  • Reduce penalty for individuals to purchase health insurance to zero, essentially repealing the individual mandate tax penalty. The bill would provide a penalty for those who do not maintain “continuous coverage.” Those with a break in insurance coverage of more than 63 days could still purchase insurance without regard to preexisting health conditions, but they would be required to pay premiums that are 30 percent higher for 12 months.
  • Repeal of medical device tax.
  • Increase funding for the Community Health Center Fund, which awards grants to Federally Qualified Health Centers (FQHCs). FQHCs are community-based outpatient facilities that provide health services to medically underserved populations. These health services include comprehensive medical, dental, mental health and reproductive care, in addition to other primary care services.
  • Establish the Patient and State Stability Fund, which is designed to lower patient costs and stabilize state markets. Under these funds, a state may use the resources to help high-risk individuals who do not have access to health insurance coverage offered through an employer, enroll in health insurance coverage in the individual market in the state. Such a market is defined by the state and can provide incentives to appropriate entities to enter into arrangements with the state to help stabilize premiums for health insurance coverage in the individual market, reduce the cost of providing health insurance coverage in the individual market and small group market, and promote access to preventive services, dental care services (whether preventive or medically necessary), vision care services (whether preventive or medically),or any combination of such services, as well as mental health and substance use disorders.

The Society continues to evaluate and monitor developments on Capitol Hill as the process develops. Stay tuned for more updates.