This is the one hundred and tenth issue in our series of alerts for employers on selected topics on health care reform. (Click here to access our general Summary of Health Care Reform and other issues in this series.) This series of Health Care Reform Management Alerts is designed to provide an in-depth analysis of certain aspects of health care reform and how it will impact your employer-sponsored plans.
Seyfarth Synopsis: The epicenter of the health care repeal and replace effort has moved from the House of Representatives to the Senate. After several weeks of drafting behind closed doors, the Senate introduced the Better Care Reconciliation Act (BCRA) a few weeks ago, which faced immediate and heavy criticism. Seeing that he did not have enough votes to move the BCRA forward, Senator Mitch McConnell pulled the bill back to consider certain amendments to appease objections from various law makers. That effort has resulted in BCRA 2.0 released on Thursday, July 13th.
In early May, the House passed the baton to the Senate on the Republicans' repeal and replace efforts. The Senate was almost uniformly disdainful of the House efforts that produced the American Health Care Act ("AHCA"). Even President Trump labelled it a "mean" bill. A small group in the Senate quickly went to work conducting their legislative efforts in secrecy (from fellow Republicans as well as Democrats) and many were holding out hope that the Senate would scrap the AHCA and create meaningful reform. However, the iterations of the Senate health care reform bill eventually released (the latest version of their Better Care Reconciliation Act, or "BCRA", just this week) continue a similar approach as the House bill. The deep cuts to Medicaid remain and the Congressional Budget Office (CBO) score of the (first version of the) BCRA predicts 22 million fewer Americans will have coverage in ten years (as compared to the ACA) -- just slightly better than the 23 million under the AHCA.
Almost immediately Republican Senators were publicly stating their opposition to the BCRA. A few were concerned with the loss of Medicaid coverage that would impact their states, others concerned that the opioid epidemic was not addressed, and still others felt the roll back of the ACA provisions did not go far enough. BCRA 2.0 was released on Thursday, July 13th, to try to meet some of those objections and retain the 50 Republican votes needed to pass.
What Changed from BCRA 1.0 to BCRA 2.0?
Notable changes to the originally-drafted BCRA include:
- Cruz Amendment. Most notably, BCRA 2.0 includes a controversial amendment drafted by Senator Ted Cruz that creates a two-track structure -- one for policies offered on the Exchanges and another for insured policies not on an Exchange. Insurers will be allowed to issue policies that do not cover all essential health benefits and that take into account a person's health status, claims history, and disability condition (that is, take into account pre-existing conditions) as long as they also maintain compliant plans on the Exchanges. As a result, individuals with pre-existing conditions may not have affordable access to coverage except perhaps through the Exchanges. This change could certainly impact the individual market but it also has the potential to impact the group market (e.g., for employers fully-insuring health insurance coverage). BCRA 2.0 attempts to handle this concern by allocating funds to the Exchanges for high-risk claims -- a risk pool approach. What remains unclear is whether this proposal creates two risk pools or a single risk pool (covering both compliant and non-compliant plans). A last minute revision appears to have modified the Cruz amendment to lump both populations into the same risk pool. This change has led to some confusion among insurance carriers and even Senator Mike Lee (who was an ardent supporter of this amendment as originally proposed) as to how this might work.
- Retention of ACA's Taxes on High Earners. BCRA 2.0 also keeps some of the taxes in place that supported the ACA structure. The 3.8% tax on investment income and the 0.9% Medicare tax on high wage earners will remain in place, as will the deduction limit on salaries for insurance company executives.
- Opioid Funding. BCRA 2.0 increases the funding pool for addressing the opioid epidemic from $2 billion to $45 billion.
- Use of HSAs for Premiums. BCRA 2.0 would permit persons to use health savings account balances to pay health insurance premiums.
What's Not Changing from BCRA 1.0?
Notably, in what could be a potential sticking point for moderate Republicans, the funding cuts to Medicaid and per capita cap system stay in place under BCRA 2.0. However, in the event of a public health emergency, state spending on related costs would not count towards the caps. It's unclear whether this tweak would be enough to win over moderate holdouts.
What Happens Next?
The CBO score on BCRA 2.0 has not come out yet. Some in the Senate are suggesting that the Department of Health and Human Services (HHS) should score the bill (or, at the very least, the Cruz Amendment) instead of the non-partisan CBO as it will be a faster process. That suggestion has met with pushback.
If enough Republicans are swayed by the changes in BCRA 2.0 to get 50 votes, the Senate will likely vote next week (or before their August recess). If the 50 votes are not there, Senator Mitch McConnell may be forced to work with Democrats to get a meaningful reform effort off the ground.
As of today, two Senate Republicans (conservative Rand Paul and moderate Susan Collins) have indicated they would not vote to move the bill to the floor for debate. This procedural vote will be crucial, because once the measure moves to the floor, Senator McConnell has more flexibility to cut deals with individual Senators to pick off opposition.
An updated (and necessarily simplified) chart comparing the ACA against the AHCA and BCRA can be found in the document linked below.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.