American Health Care Act of 2017


The American Health Care Act of 2017 was a bill in the 115th United States Congress. The bill, which was passed by the United States House of Representatives but failed the United States Senate, would have partially repealed the Affordable Care Act.
Republican Party leaders had campaigned on the repeal of the ACA since its passage in 2010, and the 2016 elections gave Republicans unified control of Congress and the presidency for the first time since the ACA came into effect. Upon the start of the 115th Congress, Congressional Republicans sought to pass a partial repeal of the ACA using the reconciliation process, which allows legislation to bypass the Senate filibuster and pass with a simple majority in the Senate. With the support of President Donald Trump, House Republicans introduced the AHCA in early 2017, and the bill passed the House in a close vote on May 4, 2017. All House Democrats, along with several members of the centrist Tuesday Group and some other House Republicans, voted against the AHCA. The bill would have repealed the individual mandate and the employer mandate, dramatically cut Medicaid spending and eligibility, eliminated tax credits for healthcare costs, abolished some taxes on high earners, and altered rules concerning pre-existing conditions and essential health benefits.
Senate Republicans initially sought to pass the Better Care Reconciliation Act of 2017, a healthcare bill containing provisions largely similar to those of the AHCA. The BCRA was never voted on in its original form due to opposition from several Republican senators. Senate Majority Leader Mitch McConnell instead sought to pass the Health Care Freedom Act, which was colloquially referred to as a "skinny repeal" by Republicans since it would only repeal the individual mandate and the employer mandate. On July 27, the Senate rejected the HCFA in a 51-to-49 vote, with Republican senators Susan Collins, Lisa Murkowski, and John McCain joining with all Senate Democrats in voting against it. In September 2017, some Republican senators pushed a renewed effort to repeal the ACA, but their bill never received a vote in the Senate. The 115th Congress ultimately did not pass an ACA repeal bill, though it did pass the Tax Cuts and Jobs Act of 2017, which repealed the individual mandate. The AHCA was a significant issue in the midterm elections the following year, which saw the election of a Democratic House majority and defeat of several of the bill's supporters for re-election. Members of Congress who voted for the AHCA were more likely to lose their re-election bids.
The nonpartisan Congressional Budget Office projected that the AHCA would have increased the number of uninsured people by 23 million over 10 years, but would have decreased the federal budget deficit by $119 billion over the same period. Polling consistently showed that the AHCA was deeply unpopular with the American population during and after its evaluations in Congress. Business Insider stated that the AHCA was "the least popular major bill in decades", and major medical organizations, including the American Medical Association and the American Academy of Pediatrics, strongly condemned the bill and excoriated its supporters in Congress.

Background

The ACA, a major reform of health care in the United States, was passed in 2010 by the 111th Congress and signed by President Barack Obama in 2010 after nearly a year of bipartisan debate. The ACA draws from many conservative ideas proposed by The Heritage Foundation in the 1980s and 1990s, which included a mandate that all have coverage to prevent "free riders", subsidy tax credits, and Medicaid reform. Heritage proposed funding program costs by taxing health insurance premiums paid by employers on behalf of workers, which would have affected all workers covered by employers, while ACA primarily relied on tax rate increases on roughly the top 5% of households.
From Obama's inauguration in January 2009 until the November 2010 elections, both houses of Congress and the presidency were controlled by the Democratic Party. During the 2012 presidential election, Republican nominee Mitt Romney, running against Obama, promised to repeal the ACA, despite its similarity to Romneycare. After Romney's defeat, the ACA remained in effect for the duration of Obama's presidency despite Republican efforts to repeal it. In the 114th Congress, Republicans passed a bill that would have repealed much of the ACA, but the bill was vetoed by Obama. After winning the 2016 presidential election, President Donald Trump promised to "repeal and replace" the ACA with a new law. The 2016 elections left Republicans in control of the executive and legislative branches of the U.S. government, but with 52 seats in the 100-member Senate, Republicans would still have to rely on at least some Senate Democrats to overcome a filibuster. However, Senate rules provide for a special budget rule called reconciliation, which allows certain budget-related bills to bypass the filibuster and be enacted with a simple majority vote. Republican leaders were seeking to pass the AHCA through the Senate by using the reconciliation rule.
In 2015, U.S. health care costs were approximately $3.2 trillion, or nearly $10,000 per person on average. Major categories of expense include hospital care, physician and clinical services, and prescription drugs. U.S. costs in 2016 were substantially higher than other OECD countries, at 17.2% GDP versus 12.4% GDP for the next most expensive country. For scale, a 5% GDP difference represents about $1 trillion or $3,000 per person. Some of the many reasons cited for the cost differential with other countries include: Higher administrative costs of a private system with multiple payment processes; higher costs for the same products and services; more expensive volume/mix of services with higher usage of more expensive specialists; aggressive treatment of very sick elderly versus palliative care; less use of government intervention in pricing; and higher income levels driving greater demand for health care. Healthcare costs are a fundamental driver of health insurance costs, which leads to coverage affordability challenges for millions of families. There is ongoing debate whether the current law and the Republican alternatives do enough to address the cost challenge.

Overview

Both the Republican House AHCA and Senate BCRA bills have proposed major reforms relative to current law that would substantially reduce the number of persons covered, moderately lower the budget deficit over a decade, reverse the tax increases on the top 5%, dramatically cut Medicaid payments that benefit lower-income persons, and expand choice by allowing lower quality insurance to be purchased at lower prices for the young and middle-aged.
Key provisions of the Republican Senate BCRA take effect over several years and include:
  • Eliminate employer and individual mandates and related penalties, substituting a one-time premium increase of 30% for persons that were without coverage previously for a specified time period.
  • States would be allowed more flexibility in establishing essential health benefits.
  • Change tax credit/subsidy formulas used to help pay for insurance premiums and eliminate a "cost-sharing subsidy" that reduced out-of-pocket costs.
  • Provide funding to health insurers to stabilize premiums and promote marketplace participation, via a "Long-Term State Stability and Innovation Program" with features analogous to a high-risk pool.
  • Reduce income ceiling used for Medicaid eligibility and substitute a tax credit for those below 100% of the poverty line.
  • Reduce Medicaid payments relative to current law, by capping the growth in per-enrollee payments for non-disabled children and non-disabled adults, by using a lower inflation index.
  • Repeal taxes on high-income earners established under ACA/Obamacare, repeal the annual fee on health insurance providers, and delay the excise tax on high premium health plans.
  • Allow insurers to charge premiums up to five times as much to older people vs. young people, instead of three times, unless the state sets a different limit.
  • Remove federal cap on the share of premiums that may go to insurers' administrative costs and profits.
Public opinion regarding the Republican House and Senate bills was very negative, with approval ratings between 12 and 38%, and disapproval ratings between 41% and 62%, measured between March and June 2017. Views were split along party lines. For example, the monthly Kaiser Family Foundation health tracking poll for May 2017 indicated that:
  • More view the Republican AHCA unfavorably than favorably.
  • Views are split along party lines, with % in favor of AHCA: Democrats 8%, Independents 30%, Republicans 67%.
  • Although historically more people viewed the current law unfavorably than favorably, in May 2017 more had a favorable view than unfavorable.
  • More favorably view the ACA/Obamacare than the Republican AHCA.
Health care experts from across the political spectrum – liberal, moderate, and conservative – agreed that the House Republican health care bill was unworkable and suffered from fatal flaws, although specific objections varied depending on ideological perspective. Experts agreed that the bill fell far short of the goals laid forth by President Donald Trump during his 2016 campaign – "Affordable coverage for everyone; lower deductibles and health care costs; better care; and zero cuts to Medicaid" – because the bill was "almost certain" to reduce overall health care coverage and increase deductibles and would phase out the Medicaid expansion. Among the key concerns identified by health-care experts were that the tax credits funded at the level proposed in the bill are insufficient to pay for individual insurance, and could lead to Americans dropping out of the health care market; the bill's elimination of the ACA's community rating provision would increase cost disparities between age groups and would increase premiums for Americans more prone to illness; the dropping of healthy people from the health insurance market could lead to insurer "death spirals" that would decrease choice; and the phaseout of the Medicaid expansion was likely to result in a loss of healthcare for poorer Americans.