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Health Reform

On March 6, 2017, House Republicans released the much-anticipated American Health Care Act (“AHCA”) bill that would effectively replace the Patient Protection and Affordable Care Act (the “ACA”), which is currently responsible for covering approximately 20 million individuals through a combination of health insurance offered through state-based and federally-run Exchanges and the expansion of healthcare coverage.

One of President Trump’s policy promises has been that “On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.” Now that President Trump is in office, and Republicans control the legislative branch of the government, members of Congress are actively working through the legislative process to repeal and replace the ACA.

In fact, the AHCA passed by the House Energy and Commerce Committee and the House Ways and Means Committee on March 9, 2017 and passed the House Budget Committee on March 26, 2017.  The AHCA is proceeding to the Rules Committee, which will set the terms of the debate before the bill goes to the full House.  Upon passage by the House, the bill will move to the Senate under budget reconciliation rules.

Although the AHCA is moving swiftly through the necessary processes, the bill itself has received mixed reviews from individuals and lawmakers on both sides of the aisle. On March 13, 2017, the Congressional Budget Office (“CBO”), the nonpartisan agency of economists and statisticians, released its analysis of AHCA.  The CBO report purports that the following would result if the AHCA was passed in its current form:

  • Effects on the Federal Budget:
    • Enacting the legislation would reduce federal deficits by $337 billion over the 2017-2026 period with $323 billion in on-budget savings and $13 billion in off-budget savings.
    • The biggest savings would come from reductions in outlays for Medicaid and from the elimination of the ACA’s subsidies for nongroup health insurance.
    • The largest costs would come from repealing many of the changes the ACA made to the Internal Revenue Code and from the establishment of a new tax credit for health insurance.
  • Effects on Health Insurance Coverage:
    • In 2018, it is estimated that 14 million more people would be uninsured under the proposed legislation compared to current law.
    • Some individuals—whom are currently covered by insurance under current law to avoid paying penalties—would choose not to have insurance under the new law.
  • Effect on Premiums:
    • The new law would likely increase the average premiums in the nongroup market prior to 2020 and lower average premiums thereafter (compared to projections under current law).
    • According to CBO and JCT’s estimates, average premiums for single policyholders in the nongroup market would be 15 to 20 percent higher than under current law (due to the elimination of individual mandate penalties inducing fewer comparatively healthy individuals to sign up).
  • Estimated Cost to the Federal Government:
    • Enacting the legislation would decrease federal deficits by $337 billion over the 2017-2026 timeframe.
    • Such change would result from a $1.2 trillion decrease in direct spending.
  • Other Budgetary Effects of Health Insurance Coverage Provisions:
    • Due to the insurance coverage provisions of the AHCA would increase the number of uninsured people and decrease the number of individuals with Medicaid coverage relative to the numbers under current law, CBO estimates that Medicare spending would increase by $43 billion over the 2018-2026 period.

The full CBO report can be found here.

            In addition to the CBO’s report, numerous other groups and individuals have been critical of the proposed legislation.  For instance, the American Medical Association voiced concern that the legislation would cause millions of Americans to lose health insurance coverage, and numerous hospitals and health systems collectively indicated that they were concerned that the legislation, as drafted, would result in a substantial reduction in the number of Americans able to buy affordable health insurance or maintain coverage under the Medicaid program.

            We will continue to watch as the AHCA progresses through the legislature and provide additional details as they become available.

For more information about this topic, please contact Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. at (248) 996- 8510 or by email at adresevic@thehlp.com or ckalmowitz@thehlp.com.

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