Better Care Reconciliation Act (BCRA) - Senate ACA Repeal and Replace Plan

What You Need to Know About the Senate's New Health Care Bill

The Senate’s take on the American Health Care Act (AHCA), which they’re calling the “Better Care Reconciliation Act,” was finally released yesterday, after much debate both around its contents and the relative secrecy with which the bill has been drafted. And now that it's out in the open, we can shine a light on it and see what it means for health care reform in the U.S.

Overall, the bill is relatively similar to the AHCA, which passed the House last month. For example, the language pertaining to health savings accounts (HSAs) is identical (more on that below). Likewise, the major components of the Senate bill are focused on Medicaid, the individual market subsidies, essential health benefits and tax cuts. It’s the details within these policy areas that have changed and could ultimately determine whether the law makes it out of the Senate and to President Trump’s desk.

Before we dig into those, it's important to remember that nothing has changed yet. The ACA is still the law, and all of its requirements, subsidies and taxes still apply. The Better Care Reconciliation Act (BCRA) is just a bill and will be until there’s 1) a vote, and 2) agreement among Senate and House Republicans (Democrats have already voiced their opposition) on the final language of the bill if the Senate version passes that chamber.

So here’s what you need to know if you are an employer, broker, employee, individual or other interested party:

Fewer Americans would have insurance 

While a CBO score is still forthcoming as of this writing, the Senate bill would likely net similar numbers of newly uninsured -- something in the range of 20-25 million. It delays key draw-downs of ACA coverage until at least 2020, but the net result by about 2025 is virtually the same in terms of how many would lose coverage. The number of uninsured went down under the ACA. Only the most optimistic supporters of reform believe the number will go down under either the AHCA or BCRA.

Medicaid and its recipients would be deeply impacted

The BCRA would likely take the Medicaid rollback further than the AHCA because it would not only roll back the increases that were made under Obamacare’s Medicaid expansion in about half of the states, but it would cap annual increases based solely on the Consumer Price Index (CPI). Since the CPI grows at a slower rate than medical trend, states would be getting fewer real dollars year over year for their Medicaid programs. So whereas the AHCA rolled back the ACA’s Medicaid expansion but didn’t touch the funding model for existing Medicaid, the BRCA would reduce Medicaid significantly.

Subsidies for individual plans would be rolled back but remain income-based

The Senate bill provides larger subsidies and keeps the income-based structure of the ACA, as opposed to the House’s age-based subsidy structure. Maintaining the income-based subsidy structure may keep costs lower than under the House plan in the short run, but 1) it limits subsidies to those making 350 percent of federal poverty level (FPL) as opposed to the ACA’s 400 percent, and 2) it rolls back the cost-sharing subsidies that currently reduce real costs (premium and out-of-pocket) for those who qualify.

The changes would likely be “good” for young, healthy people, but have a significant impact on older and less healthy people. Larry Levitt of the Kaiser Family Foundation pointed out that, under the ACA, “a 60-year-old at 351 percent of FPL gets a premium subsidy of $17,990 per year.” Under the Senate plan, they would get nothing. All in all, the majority of those in the individual market would stand to get worse coverage at higher costs.

Employees may rely more on employers again 

The general themes of removing money from public sources of coverage could lead to more employees turning to their employers for coverage -- coverage which they may be unable to afford even if their employers offer it.

The Employer Mandate would go away

Overall, there are few changes in the BCRAl that would impact employers directly. The largest, consistent with the House version, is the repeal of the ACA's Employer Mandate. This repeal would mean that employers would no longer be required to provide health insurance for 95 percent or more of workers who maintain an average of 30 hours per week or more. Practically speaking, broad-based employer coverage would be maintained. There might just be some companies and industries that choose to remove coverage they were required to expand under the ACA.

Lookback reporting would (likely) go away

With the Employer Mandate gone, employers would likely no longer be required to provide “lookback” reporting data to the IRS, since they would no longer be on the hook for penalties of non-coverage to employees.

1094C/1095C reporting would (likely) stay

While the lookback reporting may go away, it’s likely that 1094C/1095C reporting would remain, since there would still be individual plan subsidies and thus the need to qualify individuals as eligible or ineligible based on whether they get employer-based coverage.

HSA amounts would be increased

The language and updates to the House bill regarding HSAs have carried over, unchanged, to the Senate bill. It would change the annual HSA contributions to line up with maximum out-of-pocket amounts. This change is positive for the growing number of employees and individuals with HSA-eligible high-deductible health plans (HDHPs).

In Benefitfocus’ recent State of Employee Benefits report for 2017, we found that more than 60 percent of large employers (1,000+ employees) offer at least one HDHP and that roughly 2 in 5 employees elected an HDHP in 2017. And this group is putting more and more money away into HSAs to cover regular and unforeseen medical expenses. The contribution limit increases should help them be more prepared to manage expenses on the unforeseen side of the spectrum.

The "preexisting conditions" clause of the AHCA is gone

One of the largest public flashpoints of the House's AHCA, thanks in no small part to Jimmy Kimmel's impassioned recounting of the birth of his son, was the plan to roll back protections to those with preexisting conditions to not have to pay more for insurance. Republicans took a lot of heat for the clause. GOP Senator Bill Cassidy of Louisiana even went on Jimmy Kimmel's show and said he would apply a "Jimmy Kimmel Test" to his vote on health care reform in the Senate (update: he tentatively likes the BCRA), that he wouldn't allow for discrimination based on preexisting conditions. So, it will generally be seen as good news that the Senate bill dropped the clause. But...

Essential health benefits may change

The Senate bill also seems to allow states to repeal Essential Health Benefits mandated by the ACA, including things like maternal care and mental health care. It would be at a state’s discretion to remove these kinds of coverage. It could also give states a loophole for not covering preexisting conditions of various kinds — although a more detailed analysis is necessary to know for sure.

poll released by the IFEBP last fall showed that nearly three in four employee benefits professionals support essential health benefits, and more than four in five support mental health benefits in particular. Numbers are similar in polls of the general public.

What's next?

Now that you know a bit about the bill, and that it’s not law yet, what do we know about its chances?

If we were going strictly on public perception, it would lose for sure. Republican efforts at “repeal-and-replace” have not been popular, and the Senate updates aren't likely to change that perception. The IFEBP poll mentioned above showed that 69 percent of employee benefits professionals support government-provided subsidies.

Even more tellingly, a New York Times analysis of polls showed that there is not a single state for which there is majority support for the AHCA. The state most in support of it, according to the analysis, is Oklahoma at 38 percent support and 46 percent opposed.

But the AHCA was pronounced dead before (in March) and came back to life (in May), so while passage is certainly not a foregone conclusion, neither is defeat. Senator Mitch McConnell is pushing to have a vote before the July 4 recess. That timeline means that this next week is likely when we’ll see something happen.

Stay tuned!

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