On February 16, 2017, House Republicans released a policy brief on how to repeal and replace the Affordable Care Act (ACA).  The brief builds upon the ideas outlined in the 2016 “A Better Way” proposal and promises action on repeal and replace when the House returns from its Presidents’ Day recess, with House committees expected to mark up the bill quickly.    

House Republicans plan to pursue healthcare reform through three tracks:  legislation to repeal and replace the ACA through the budget reconciliation process; regulatory relief; and reform legislation through regular procedural order.  While the policy brief does not outline how the plan would be paid for, it outlines some of the components of their ACA repeal and replace approach:

Reform Medicaid:  The proposal would repeal the ACA Medicaid expansion.  To provide a transition period, States that expanded their Medicaid programs would be eligible to receive the enhanced Federal payments for “a limited period of time,” after which the Federal match would return to the traditional rate.  States that did not expand their Medicaid programs under the ACA would be eligible to receive “temporary resources for safety net providers” during this same “limited period of time.” 

At a future date, States would be allowed to draw from a total Federal Medicaid allotment based upon its Federal medical assistance percentage (FMAP).  This total Federal allotment would be calculated by multiplying the State’s per capita allotment for key beneficiary categories of aged, blind and disabled, children, and adults by the number of enrollees in each category.  Calculation of these numbers is particularly controversial among Republican-led States that expanded Medicaid and could see a significant reduction in the Medicaid allotments as a result of the decision to repeal ACA Medicaid expansion altogether.  Per capita allotments would be calculated from Medicaid spending on that particular category in a base year, indexed to inflation.   States could choose whether to receive federal funding as a block grant or a global waiver. 

Disproportionate Share Hospital (DSH) cuts enacted under the ACA would be repealed. 

Encourage State Innovation Grants:  States would be encouraged to utilize these grants to help lower health care costs including premiums and deductibles for “some of their most vulnerable patients.”   States would have the flexibility to use these funds for some of the high risk pools functioning prior to enactment of the ACA. 

Expand and Enhance Health Savings Accounts (HSAs):  The House Republican proposal would increase the maximum HSA contribution limit, allow spouses to make additional contributions, allow an individual to establish and use an HSA within 60 days of being covered by a high-deductible health plan, and allow HSA funds to be used for over-the-counter health products.  

Replace ACA Subsidies with Portable, Refundable Monthly Tax Credits:  For individuals not covered by employer or government provided insurance, House Republicans propose to provide individuals with advanceable, refundable monthly tax credits, indexed to age and adjusted by family size, to help purchase insurance. The “advanceability” will ensure that Americans who need assistance paying monthly premiums will have access to this credit when they need help and will not have to wait to receive this credit until filing their taxes the following year.  The credit would be available for dependent children up to age 26.  Individuals could use these credits to purchase any State-approved eligible health care plan, including catastrophic coverage.  The credit could not be used for plans that  provide abortion coverage.

ACA subsidies would be provided to individuals during the transition to tax credits.  The House Republican proposal would eliminate immediately the penalty taxes for the individual mandate and the employer mandate and would provide relief from ACA taxes, including those collected from medical device manufacturers, brand-name prescription drugs, and health insurers.

Also on February 16, 2017, the Senate Finance Committee held a hearing on the nomination of Seema Verma to be Administrator of CMS.  Ms. Verma is a healthcare consultant who has worked on Medicaid programs, including the Healthy Indiana 2.0 waiver granted under then-Governor Mike Pence.  During the hearing, Senators asked about Medicaid expansion and the potential for block grants.  Ms. Verma responded that anything that might improve health outcomes should be on the table and emphasized the need for innovation in health care delivery.