July 13, 2017

The new Senate bill is out. Here's what you need to know.

Daily Briefing

This developing story was updated at 6:12 p.m. ET

Senate GOP leaders on Thursday released a revised version of their health care bill.

We'll have a full analysis in Friday's Daily Briefing of the revised bill's implications for providers. In the meantime, here are the key details of the revised bill:

The revised Better Care Reconciliation Act (BCRA) is similar in many respects to the original version, including in its significant spending reductions and reforms to Medicaid—although it includes several key changes, such as a provision that would allow insurers to sell exchange plans that don't comply with the Affordable Care Act's (ACA) requirements.

A Congressional Budget Office (CBO) score of the revised bill is expected early next week, but it is not clear whether the score will include the newly added provision allowing the sale of ACA-noncompliant plans. That provision could be changed or removed from the bill, GOP sources told Politico.

Revised bill would still shift Medicaid to a per capita model

The revised bill has largely similar Medicaid provisions to the prior version—which CBO estimated would, relative to current law, reduce federal funding for Medicaid by $772 billion over 10 years and reduce Medicaid enrollment by 14 million by 2026.

Like the original BCRA, the revised bill would fundamentally change Medicaid financing by ending the current arrangement in which the federal government pays states for a set share of all costs incurred by Medicare beneficiaries. Instead, the federal government would set a cap on per-beneficiary payments to states, and that cap would grow more slowly over time than the average state's currently projected Medicaid cost increases.

As in the original bill, from 2020 to 2024, the cap's growth rate for adult and child beneficiaries would still be tied to the Consumer Price Index for Medical Care (CPI-M), which is projected to grow by about 3.9 percent annually. The growth rate for adults with disabilities and the elderly would be tied to CPI-M plus 1 percentage point. From 2025 on, the cap's growth rate would be tied to CPI-U, a broader measure of inflation across the economy which is projected to grow more slowly than medical inflation, at around 2.5 percent annually.

The bill also would still phase out enhanced federal funding for the ACA's Medicaid expansion beginning in 2021.

The bill includes new Medicaid changes—including to DSH payments

Unlike the original BCRA, the new bill would:

  • Create a new four-year, $8 billion competitive demonstration project allowing states to continue and/or improve community-based and home care services for the elderly and individuals with disabilities;
  • From 2020 – 2024, in the event a public health emergency is declared in a given area, not count state medical assistance spending in that area toward per capita caps or block grant allotments during that time period (up to $5 billion, total);
  • Let states that expanded Medicaid opt to cover the expansion population under block grants (in addition to the non-elderly, non-disabled adults who could be covered under block grants in the original BCRA).

For non-expansion states, the revised bill also would link the Medicaid Disproportionate Share Hospital (DSH) bonus in 2020 (added in the original bill) to a state's number of uninsured individuals (rather than the number of Medicaid enrollees, as in the original bill).

How the bill would change the individual and employer markets

The revised bill leaves many aspects of the original BCRA's individual and employer market provisions unchanged. For instance, it would still:

  • Repeal the ACA's individual mandate and replace it with a lock-out policy, which would prohibit individuals who do not maintain continuous coverage from purchasing individual market coverage for at least six months;
  • Repeal the ACA's employer mandate;
  • Repeal the ACA's subsidies starting in 2020, replacing them with tax credits available to those with incomes of up to 350 percent of the federal poverty level; and
  • Make it far easier for states to gain approval for waivers that allow states to waive several ACA requirements, including essential health benefits, and remove the requirement that waivers not adversely affect health insurance coverage and affordability.

Unlike the original bill, the revised BCRA includes a draft provision—which has not yet been officially attached to the bill—that would allow insurers that sell at least three ACA-compliant exchange plans in a rating area to also sell off-exchange coverage that would not have to follow certain ACA requirements. For instance, the noncompliant plans would not have to include the ACA's essential health benefits and could charge people with pre-existing conditions more for coverage, potentially making such coverage unaffordable. However, premium tax credits could not be used for these off-exchange plans.

Specifically, in order to sell noncompliant off-exchange plans in a given coverage area, insurers would have to sell at least one gold-level plan, one silver-level plan, and one benchmark-level plan that are compliant with ACA regulatory requirements.

The revised bill would also:

  • Provide an additional $70 billion in long-term market stabilization funding (for a total of $182 billion) over eight years (however, under the draft provision described above, this funding would be diverted to a new federal fund to help pay for the cost of disproportionately expensive, high-risk exchange patients);
  • Allow individuals under age 30 to purchase catastrophic plans (which cover three primary care visits and have high deductibles), and allow eligible individuals to receive tax credits for these catastrophic plans; and
  • Allow individuals to use Health Savings Accounts to pay their premiums.

Other changes from the original bill

Unlike the original BCRA, the revision version would:

  • Provide $45 billion to help fight the opioid crisis (the original BCRA provided $2 billion for this purpose); and
  • Not repeal taxes on Medicare Health Insurance, net investment income, or executive compensation for particular health insurance executives.

Next steps

Chad Pergram reports for Fox News that Senate GOP leaders are expecting to receive a CBO score on Monday. On Tuesday, they plan to receive formal rulings from the Senate parliamentarian on whether any provisions need to be stricken from the bill for it to adhere to the chamber's budget reconciliation rules, after which they would proceed to vote on the motion to proceed to debate, Pergram says.

Republican leaders hope the new version of the BCRA can help secure the 50 votes they need to proceed to debate and consider amendments on the measure. If the procedural vote succeeds, the bill would likely change further and would "be a work-in-progress until the final vote," Politico reports.

According to the Associated Press' Erica Werner, Sens. Susan Collins (R-Maine) and Rand Paul (R-Ky.) have decided to vote against the motion to proceed, meaning one more "no" vote would lead to its failure.

(Pear/Kaplan, New York Times, 7/13; Everett et al., Politico, 7/13; Sullivan et al., "PowerPost," Washington Post, 7/13; Litvan/Dennis, Bloomberg, 7/13; Axios, 7/13; Scott, Vox, 7/13; Better Care Reconciliation Act discussion draft, 7/13; Sanger-Katz, Tweet, 7/13; Lee, Modern Healthcare, 7/13; Fram AP/ABC News, 7/13; Leonard, Washington Examiner, 7/13;  Werner tweet [1], 7/13; Werner tweet [2], 7/13; Pergram tweet, 7/13)

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