Republican members of the U.S. House of Representatives yesterday released their long-awaited alternative to the Affordable Care Act (ACA). The proposed law retains some of the more popular features of the ACA while modifying or outright repealing others.
What would the proposal mean for employers in Massachusetts? Here is a quick, initial review of key provisions:
Employer-Provided Health Insurance:
- Eliminates the employer mandate retroactive to December 31, 2015.
- Eliminates taxes on prescription drugs, over-the-counter medications, health-insurance premiums, and medical devices.
Employer-Provided Health Insurance and the Individual Health Insurance Market
- Retains ACA provision allowing parents to retain dependents on their plan until they are 26.
- Health Savings Accounts - Allows individuals to contribute at the current family amount and allows families to contribute at twice the current family amount
Individual insurance market
- Eliminates the individual mandate retroactive to December 31, 2015.
- Retains ACA prohibitions on pre-existing conditions, but effective in 2019 imposes a 12- month surcharge equal to 30 percent of the premium for enrollees in individual market who had a 63-day or more lapse of coverage in prior 12 months.
- Effective January 1, 2020, repeals cost-sharing subsidies, currently available to individuals with incomes from 100 percent to 250 percent of the federal poverty level (FPL) to assist with out-of-pocket expenses
- Effective January 1, 2020, eliminates the Premium Tax Credit for individuals purchasing health insurance in state exchanges, replacing that credit with tax credits for qualified plans on individual market.
- Repeal of plan tiers based on actuarial value.
- Increase age ratio for plan costing from 3:1 to 5:1, allowing aged-based cost variations to differ by as much as five times based on enrollee’s age.
Tax credits for Qualified Plans on the Individual Market
- Annual credits begin at $2,000 for 20 year olds, and increase by $500 per decade, capping at $4,000 for people in their 60s; reduced by 10 percent of modified adjusted gross income (MAGI) over $75,000 ($150,000 for joint filers); reduced by amount received under a small-employer health reimbursement plan; penalties on erroneous filers.
- Effective January 1, 2020 payments may be made in advance and on behalf of eligible individuals directly to health plan provider.
- Applies to plans on individual health insurance market and COBRA.
- Qualified plans do not include those that cover abortion, except in case of rape, incest or when mother’s life is threatened.
The bill also establishes a Patient and State Stability Fund, which provides states with $100 billion over nine years to design programs promote participation and stabilize risks in the individual health insurance market.
That provision has a down side for Massachusetts -15 percent of the funds are available only to states that either experienced an increase in the uninsured population from 2013-2015 among people below the poverty level; or to states that have fewer than three health insurance plans available on their state exchange in 2017. Massachusetts would forfeit 15 percent of the available funds for not meeting either of these requirements.
There are also provisions that would roll back the expansion of Medicaid, the federal health insurance program for low-income people, and change the manner in which Medicaid funds are allocated to states:
- Effective January 1, 2020, repeals Medicaid eligibility expansion from individuals with incomes at or below 138 percent of federal poverty level; and to children, pregnant women, and breast cancer and cervical cancer patients with incomes at or below poverty level.
- Effective January 1, 2020, changes state funding from claims-based allocations to “per capita” allocations, potentially reducing funding to eligible recipients in Massachusetts.
- Eliminates ACA requirement that Medicaid provide “essential health benefits.”
- Requires state to verify Medicaid eligibility every six months.
Expect animated discussion and debate on both the federal and state level as advocates and opponents dig into the details over the coming weeks.