By Rachel Morgan and Haley Nicholson
Senate Republican leaders late last week released a working draft of a Senate version of the American Health Care Act entitled the Better Care Reconciliation Act of 2017. Senate leaders are anticipating the package will be considered on the floor of the chamber sometime this week. It remains unclear if there are 50 votes committed to pass the bill.
A major point of contention among Republican Senators relates to the proposed three-year phaseout of the Medicaid expansion, which Republican moderates wished to see extended.
Following are some highlights of the Senate language. For a more thorough overview of the Senate bill, visit our web page.
Repeal of Taxes: The Senate version repeals many of the Affordable Care Act (ACA) provisions that imposed new taxes including those on indoor tanning services, the medical device tax, the annual fee on certain health insurers, and manufacturers or importers of branded prescription. It also lifts the prohibition on using tax-advantage funds for over-the-counter medications.
Treatment of Premium Tax Credits:The bill would make changes to the premium tax credit eligibility criteria by changing the income eligibility to up to 350 percent of the federal poverty level from the current 100 to 400 percent. It also makes changes to the eligibility criteria applicable to certain aliens, and prohibits people with access to employer sponsored coverage from becoming eligible for the credit.
State Stability and Innovation Program: Appropriates $15 billion for fiscal years 2018 and 2019 and $10 billion for FY 2020 and FY 2021 to the administrator of the Centers for Medicare and Medicaid Services (CMS) to fund arrangements with health insurance issuers to address disruptions in coverage and access and to respond to urgent health care needs within states. This new section would establish a Long-term State Stability and Innovation Program. Under the program, states would be required to apply to the CMS administrator to receive federal funding to carry out activities including establishing a mechanism to provide financial assistance for enrolling high-risk people in the individual market who are anticipated to have high health care utilization, to stabilize premiums, or help reduce out-of-pocket costs.
The ACA Medicaid Expansion: The Medicaid provisions in the Senate language would codify the ACA Medicaid expansion as optional for states after Dec. 31, 2019, and it adds a new Medicaid optional eligibility group beginning Jan. 1, 2020. The language repeals the state option to extend coverage to nonelderly individuals above 133 percent of the federal poverty level by specifying an end date of Dec. 31, 2017.
For states that implemented the ACA Medicaid expansion as of March 1, 2017, the Senate bill maintains the current matching rate for newly eligible beneficiaries through calendar year 2020. The matching rate phases down to 85 percent in CY 2021, 80 percent in CY 2022, and 75 percent for CY 2023. If a state’s regular Federal Medical Assistance Percentages (FMAP) rate is higher than the newly eligible matching rate, the state’s FMAP will apply. The enhanced FMAP will not apply after CY 2023. States that implement an expansion after Feb. 28, 2017, will not be eligible for the new matching rate.
Essential Health Benefits: The ACA provisions applying to the essential health benefits will not apply after Dec. 31, 2019.
State Option to Impose a Work Requirement: Permits states to require non-disabled, nonelderly, nonpregnant individuals to satisfy a work requirement as a condition for receipt of Medicaid medical assistance. Provides an enhanced federal match for administrative activities to implement this requirement.
Alters Medicaid Financing Structure—Changes the Medicaid financing structure to a per-capita-cap model starting FY 2020. Each state’s spending during the state’s selected base period would be the base to set target spending for each enrollee category in FY 2019 and subsequent years for that state. As in the House version, the Senate bill imposes a penalty for excess aggregate spending for a fiscal year that results in a reduction of the quarterly Medicaid payments by one-quarter of the previous year payments.
It also provides states the option to participate in the Medicaid Flexibility Program, which allows states the option to receive a block grant instead of the per-capita-cap funding for nonelderly, nondisabled, nonexpansion adults.
Waivers for State Innovation—Modifies the specified provisions that can be waived under a 1332 waiver. It amends the criteria—related to coverage, affordability, comprehensiveness, and federal-deficit neutrality—a state’s plan would have to meet in order for the Secretary to approve a 1332 waiver. Instead, the draft bill would require the secretary to grant a state’s waiver request unless the secretary determines that the state’s plan, to be implemented in place of the waived provisions, would increase the federal deficit.
Rachel Morgan is the senior committee director for the NCSL Standing Committee on Health and Human Services. Haley Nicholson is a senior policy specialist in NCSL's State-Federal Relations division.