Quick Take: The Major Changes in the Senate's AHCA

Senate Republicans released their draft version of the Better Care Reconciliation Act of 2017 this morning. This is the Senate version of the American Health Care Act (AHCA), aimed at repealing and replacing the Affordable Care Act (ACA or "Obamacare"). Below is quick summary of what major changes the Senate would make to the House-passed bill; a more comprehensive analysis will be available, including the fiscal effects, when the Congressional Budget Office (CBO) scores the bill next week.

Policy Area House   Senate
Individual and Employer Mandate Penalties Eliminates employer mandate penalty; replaces individual mandate penalty with a 30 percent surcharge for not having continuous coverage   Both penalties eliminated
Medicaid Expansion Prohibits any additional states from expanding and freezes expansion enrollment; expansion funding ends in 2020   Begins to phase out expansion funding over 3 years starting in 2021, keeping enhanced match for those already on the program
Future Medicaid Funding Enacts a per-capita cap by eligibility group starting in 2020, growing with medical inflation; states could also choose a block grant instead   Enacts a per-capita cap by eligibility group starting in 2020, growing with medical inflation until 2025 and growing with economy-wide inflation thereafter; states could also choose a block grant instead
Other Medicaid Changes Optional work requirements; increased redeterminations; prohibits lottery winners from using Medicaid   Optional work requirements and increased redeterminations; reduces provider tax threshold from 6 to 5 percent
Premium Subsidies Phases out ACA premium subsidies between 2018 and 2020; enacts a new flat subsidy based on age ranging between $2,000 and $4,000 that phases out starting at $75,000 of income for individuals / $150,000 of income for families   Transitions ACA premium subsidies in 2020 to a modified system with a subsidy pegged to the median plan with an actuarial value of 58 percent based on percentages of income varied by age and income (up to 350 percent of the poverty line)
Cost Sharing Reductions Eliminated   Funded for 2018 and 2019 and repealed thereafter
Market Stability Funds Establishes a $130 billion Patient and State Stability Fund for states to stabilize insurance markets, including $15 billion earmarked for "Federal Invisible Risk Sharing" and $15 billion earmarked for maternity and newborn care   Establishes two funds totaling $112 billion -- a short-term stability fund and a long-term stability fund -- with the former frontloaded to provide reinsurance and the latter with more flexibility in states using it at their discretion
Medicare Hospital Insurance Surtax Repealed in 2023   Repealed in 2023
Cadillac Tax on High-Cost Health Insurance Plans Delayed until 2026   Delayed until 2026
Medical Expense Deduction Reduces percent of income floor from 10% to 5.8%   Reduces percent of income floor from 10% to 7.5% (reversing ACA increase)
Other ACA Taxes Eliminated retroactively to 2017   Eliminated retroactively to 2017, with the exception of the tax on branded prescription drugs (eliminated in 2018)
Disproportionate Share Hospital Payment Cuts Restored for non-expansion states   Restored for non-expansion states
Insurance Regulations Allows states to apply for new waivers to eliminate Essential Health Benefits requirements and health status underwriting; expands age rating from 3:1 to 5:1   Allows states to apply for existing 1332 waivers under the ACA with new flexibility allowing them to change insurance regulations as long as change would not add to the deficit; expands age rating from 3:1 to 5:1

 

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