The WasteWatcher: The Staff Blog of Citizens Against Government Waste

House Passes the American Health Care Act, Senate Up Next

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact

On May 4, 2017, the House of Representatives passed H.R. 1628, the American Health Care Act (AHCA) by a vote of 217 to 213.  Only Republicans voted for the legislation; 20 Republicans and 193 Democrats voted no.  The final bill was a modified version of the legislation that the Republican leadership pulled from consideration in late March.  The Congressional Budget Office is expected to provide a score by the end of May.  From there, the bill is scheduled to move to the Senate for consideration, although that body appears to be prepared to write its own legislation.

Although many in the House would have liked to repeal all of the Affordable Care Act (ACA or Obamacare), that could not occur under Budget Reconciliation, the legislative process that is being used to pass H.R. 1628.  As explained in a prior Citizens Against Government Waste commentary, only taxing, spending, and the debt limit can be considered under reconciliation.  The advantage of using this maneuver is that only a simple majority in the Senate is required to pass a bill, thus avoiding a filibuster, which takes 60 votes to stop.  The Republicans control 52 seats in the Senate, and no Democrats will support the repeal of Obamacare.

The AHCA repeals many provisions in Obamacare and makes significant and positive changes to current law such as returning some power over health insurance to the states and reforming Medicaid.  The highpoints include:

  • Repeals of the individual and employer mandate penalty taxes.However, if an individual did not have insurance coverage for more than 63 consecutive days or longer within 12-month look back period, that person must pay a 30 percent premium surcharge when applying for new insurance.
  • Repeal of the taxes on medical devices, pharmaceuticals, and health insurance, all of which have helped to drive up costs.
  • Obamacare community rating age ratios are changed from 3:1 to 5:1.States can submit waiver applications to the Department of Health and Human Services (HHS) that will allow them to reformulate health benefits for insurance coverage in the individual or small group market, provided the states can show that doing so will improve health insurance access by lowering premium costs, increasing the choice of health plans, or expanding enrollment.  The four actuarial value metal tiers sunset at the end of 2019.
    • Under Obamacare, adjusted community rating permitted insurance companies to adjust their insurance premium costs based on only four factors:  individual as opposed to family enrollment, geographic area, age, and tobacco use.  For age, the rating ratio is 3:1; in other words, an insurer could not charge an older adult more than three times the rate of a young person.  This policy is a major reason why younger people stayed away from purchasing insurance under Obamacare.  They had to pay much more for their premiums even though they were healthy and less likely to use healthcare than an older person.  In 2018, AHCA would change the ratio to 5:1.  According to health economists, this range is closer to the true cost of care between the younger and older Americans.  States have the option to keep the ratio at 5:1 or set their own.
    • While the ten essential benefits required under Obamacare remain, the AHCA give the states flexibility to change these requirements by submitting waivers in 2020.  There have been a lot of false accusations about what the waivers will or will not do; for example, that rape victims would be considered to have a pre-existing condition and therefore find it difficult to get care under AHCA.  This is not true.  House Republicans provided a link addressing the Myths and Facts concerning the waivers.
  • There will be $138 billion in funding to the states via the Patient and State Stability Fund and the federal Invisible Risk Sharing Program, which will help to stabilize the individual health insurance market.States will be given the ability to find the best way to lower costs for their citizens, such as those with low-incomes, special health needs, and pre-existing conditions.
    • The Invisible Risk Sharing Program is based on a policy that was established in Maine that helped people with pre-existing conditions purchase health insurance.  However, unlike most high-risk pools, an individual was not removed out of the traditional health insurance market.
  • The most substantial reforms to Medicaid since the program was enacted in 1965 include putting the program on a budget and stopping the open-ended federal matching payment.Currently, Medicaid represents 17 percent of all healthcare dollars, is bankrupting states, and is rife with waste, fraud, and abuse.  ACHA prevents more states from expanding Medicaid to adults above 138 percent of the federal poverty level in 2017.  For the states that did expand Medicaid, the enhanced Federal Medical Assistance Percentage matching rate of 90 percent will sunset in 2020 except for those enrollees who were in the program by the end of 2019 and remain eligible and enrolled.  It modernizes financing of the program by utilizing a per capita allotment funding mechanism that would start at the average cost of an enrollee in the states in 2016.  That amount would then rise at the consumer price index for medical care (CPI-M) plus a percentage depending on the state.  States are also allowed to choose a block grant, which would allow states to innovate and deliver better healthcare for their citizens.  States can require individuals who are not pregnant, disabled, or elderly to work for their Medicaid coverage benefit.
  • Contributions to Health Savings Accounts (HSAs) are nearly doubled, catch-up contributions are allowed, and flexibility has been expanded. 
  • Starting in 2020, Obamacare income-based tax credits are replaced with advanceable, refundable tax credits to help all low- and middle-income individuals and families to purchase health insurance in the individual market.Family credits are capped at $14,000 per year. The refundable tax credits are available in the full amounts to individuals making up to $75,000, or $150,000 for joint filers, and are adjusted at the CPI+1.The credits begin to phase out after $75,000.The amount changes depending on age.Tax credits have long been a staple of conservative healthcare reform proposals, not only to purchase insurance, but also as a mechanism to equalize the tax treatment of individual and employer-based insurance.  The amounts are:
    • For those under 30, $2,000;
    • Between 30 and 39, $2,500;
    • Between 40 and 49, $3,000;
    • Between 50 and 59, $3,500; and;
    • Over 60 years, $4,000

In the Senate, Majority Leader Mitch McConnell (R-Ky.) has put together a group to begin crafting a healthcare bill.  According to a May 5, 2017 Inside Health Policy article, this group is composed of Leader McConnell, Majority Whip John Cornyn (R-Texas), Republican Conference Chairman John Barrasso (R-Wyo.), GOP Policy Chairman John Thune (R-S.D.), Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-Tenn.), Budget Committee Chairman Mike Enzi (R-Wyo.), and Finance Committee Chairman Orrin Hatch (R-Utah).  The other six members represent the broad, philosophical spectrum of the Republican conference:  Tom Cotton (R-Ark.), Ted Cruz (R-Texas), Cory Gardner (R-Colo.), Mike Lee (R-Utah), Rob Portman (R-Ohio), and Pat Toomey (R-Pa.)

Conservatives are asking for the Senate to do even more in its bill to drive insurance back to the states and put more free-market proposals in place.  Where this ends up remains to be seen as the legislative “sausage-making” proceeds.

There is no doubt Obamacare is in a death spiral and millions of Americans are facing uncertainty about their healthcare choices.  The policies found in AHCA, and the initiatives being undertaken by HHS Secretary Tom Price, are designed to reverse Obamacare’s overreach, return power over health insurance back to the states, and create patient-centered healthcare that will revive the direct relationship between doctors and patients.  There is a long way to go before the bill ends up on President Trump’s desk for his signature.  But the beginning of the end of the “Not-so-Affordable Care Act” is finally underway.


Sign Up for Email Updates!Click Here!

View Archives

Posts by Author

Posts by Tag

Big Government (152) Obamacare (76) Waste (74) Congress (72) Healthcare (70) Budget (69) Uncategorized (56) Telecommunications (50) Internet (48) Technology (46) Debt (43) Deficit (43)