5 Big Changes Republicans Made to Their Healthcare Bill This Week

By Sean Williams Markets Fool.com

Thursday, March 23, 2017, was supposed to be a big day for the Republican Party, with the House set to vote on whether to pass the American Health Care Act (AHCA), which is also now being referred to as "Trumpcare." It's no coincidence that President Trump had been pushing hard for a vote on March 23rd. After all, it was the seventh anniversary from the date that now-former President Barack Obama signed the Affordable Care Act (ACA), best known as Obamacare, into law.

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However, that vote didn't come to pass. It became increasingly clear as the day approached that Republicans wouldn't have enough "yes" votes to pass the AHCA in the House. Thus, the vote was cancelled until a later time.

Image source: U.S. Department of Homeland Security, Flickr.

But just because the vote was cancelled doesn't mean that President Trump and other Republican lawmakers haven't been busy making modifications to the bill to garner more votes. After all, democracy is supposed to involve compromise. If you haven't been following the developments with Trumpcare on Capitol Hill over the past week, then you've missed four pretty big changes that were made to the AHCA.

Trumpcare, as it was first presented

Before we dive into what's different, it'd probably be a good idea to revisit the basic tenets of the law as it was originally presented in the first week of March. Here are some of the most important provisions of the AHCA in its first version (though you can read a more comprehensive version here):

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  • It completely repealed the individual and employer mandates and the penalties associated with not purchasing health insurance.
  • Income-based subsidies were to be replaced with age-based tax credits. Older adults in their 60s were to receive twice as much ($4,000) annually as young adults ($2,000) in their 20s.
  • Medicaid expansion was to cease by the beginning of 2020, with Medicaid being doled out to the states on a per-capita basis.
  • Older adults could be charged up to 67% more for their monthly premiums compared to younger adults than what they could under Obamacare.
  • The annual contribution limit for health savings accounts was to be nearly doubled.
  • A $100 billion risk pool was to be created to help cover the costs of high-risk, sicker patients.
  • Insurers would be allowed to tack on a 30% surcharge to consumers who didn't have continuous coverage in the previous year.
  • Three Obamacare provisions would remain: Children under the age of 26 could stay on their parents' health plan, insurers couldn't deny coverage to consumers with pre-existing conditions, and insurers would still need to abide by 10 minimum essential benefits with their health plans.

Perhaps the big post-reveal surprise wasn't that Democrats almost uniformly opposed it, but that certain members within the Republican Party were opposed to it. Some lawmakers voiced their concerns about the Congressional Budget Office's prediction that 24 million people would lose coverage -- many of them current Medicaid members -- by 2026. Others simply referred to this new bill as a second coming of Obamacare, and didn't believe the bill went far enough to remove the restrictions on the health insurance industry.

Image source: Getty Images.

Five amendments made to the AHCA this week

With this in mind, and with Republicans looking to garner more votes, five amendments (known officially as manager's amendments) were made to the AHCA this week.

1. Allow states to receive Medicaid funding as a block grant

The bulk of the amendments came on the Medicaid side of the equation. One of the biggest involves ditching the per-capita Medicaid funding in favor of allowing states to accept block-granting of Medicaid funds instead.

Under per-capita funding, Medicaid dollars are doled out on a per-enrollee basis as opposed to how things are done now where states are given what they need to cover their Medicaid expenditures. With block grants, a fixed amount, which is updated annually with inflation, would be given to the states to do as they see fit for their Medicaid program. It reduces the role of the federal government in overseeing state programs, and is therefore expected to be more efficient, allowing those federal dollars to stretch farther. Either way, we're probably looking at a decline in federal money making its way to states, but block granting likely offers states far more flexibility in deciding what services to cover.

2. Require abled-bodied Medicaid recipients to work or participate in job-training programs

One of the more controversial changes, and one that more right-leaning conservatives in Congress have been pushing for, is the amendment that'll require nondisabled, nonelderly, and non-pregnant adults to work, or be involved in a work-training program, as a condition of their Medicaid coverage. States would have the right to expand these definitions a bit to include activities such as job search, community service, educational programs, or providing child care. There were some exclusions, as well, including single parents.

Image source: Getty Images.

3. Prevents Medicaid expansion by the end of this year

Another manager's amendment made this week involved pushing forward the date by which states could no longer expand their Medicaid programs. Medicaid expansion, which involved taking federal money to expand Medicaid to those earning up to 138% of the federal poverty level, was set to end by Jan. 1, 2020. Under this new provision, it would end this year.

As noted by HealthAffairs: "States could cover the ACA expansion population, however, as an optional category with their normal Medicaid match after that date [2017]. Medicaid expansion enrollees enrolled prior to the end of 2019 would retain the enhanced match after 2019 (90 percent in 2020), but only so long as they remained continuously enrolled and only in states that had expanded Medicaid by March 1, 2017."

4. Reduces the income threshold for the deductibility of medical expenses

It was widely expected that any amendments to the AHCA would do something for elderly Americans, because many of them are expected to be paying considerably more for their health insurance under Trumpcare. Though initial rumors during the week had suggested that Republicans were going to set aside $75 billion or so to help cover the costs to treat elderly Americans, this legislation wasn't found within the manager's amendments.

Instead, the manager's amendment reduced the income threshold for the deductibility of medical expenses from 10% to 5.8%. This reduction is expected to provide a net of $75 billion in tax relief to people, many of whom will be elderly Americans. Unfortunately, it doesn't help lower-income elderly Americans between ages 50 and 64 because they'll have little to no net income tax liabilities to begin with.

Image source: Getty Images.

5. States have the ability to adjust minimum essential health benefits

The final change alters the 10 minimum essential health benefits clause which had been kept in place from Obamacare. These 10 benefits, which include emergency services, hospitalization, preventative and wellness services, and maternity and newborn care, are what keep insurance providers from placing a current lifetime spending cap on these services. According to insurance companies, the wide scope of these benefits is another reason why health insurance premiums have pushed so high.

Just hours ago, Republican lawmakers agreed to allow states the right to determine what a minimum essential benefit should be.

The upside to eliminating the essential benefit clause is it would almost assuredly lower premiums, perhaps enticing younger, healthier adults to enroll (which has been one of the biggest challenges for Obamacare). On the flip side, removing essential health benefits would allow insurers to once again set caps on maximum lifetime coverages, pushing the onus of cost, should medical care be needed, back onto the patient.

Long story short, we may still have weeks of debates and changes to come before a workable healthcare bill makes its way to President Trump's desk.

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