Senate Begins Work on ACA Repeal

May 17, 2017

The Senate has begun work on legislation to repeal and replace the Patient Protection and Affordable Care Act (ACA), and while many questions around substance and process remain unanswered, indications are that Republican leaders are intent on developing their own proposal rather than simply modifying the repeal-and-replacement bill recently approved in the House.

The American Health Care Act of 2017 (AHCA, H.R. 1628), which cleared the House on May 4, would repeal major pieces of the ACA – including most of its tax provisions – and replace it with a system aimed at facilitating the purchase of health insurance on the individual market through refundable tax credits and liberalized rules for tax-favored health savings accounts.

Among the bill’s more contentious provisions is one that would allow states to let insurers return to their old practice of charging more to customers with preexisting medical problems — a practice that the current law prohibits. Specifically, it would allow states to relax some key ACA protections of those with preexisting conditions, by allowing states to apply for waivers to allow insurers to offer sparser policies that don’t cover the 10 essential health benefits mandated by the ACA. Also, insurers would be able to charge higher premiums to those with medical issues if they let their coverage lapse. States requesting waivers would have to set up programs — such as high-risk pools — to protect insurers from high-cost patients.

The measure was approved by a close vote of 217 to 213 after House Republican leaders worked over the course of several weeks to accommodate a slew of objections from conservative Republicans – namely members of the Freedom Caucus – who contended that the AHCA left in place too many elements of the law they wanted to dismantle, and moderates, who were concerned about the impact of the new bill on older and less affluent individuals. Even with some adjustments, the AHCA was opposed by twenty Republicans and all House Democrats.

As the AHCA worked its way through the House, it began to attract a number of Republican critics in the Senate, where a similar conservative-versus-moderate dynamic is playing out and therefore, the dissatisfaction with the House-passed bill has prompted Senate Republican leaders to indicate they will scrap that measure and draft an entirely new one in its place.

In the Senate a work group of 14 Republicans has been assembled to draft the Senate legislation. The group consists of Senate Finance Committee Chairman Orrin Hatch (Utah), Senate Budget Committee Chairman Mike Enzi (Wyo.), Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (Tenn.), Majority Leader Mitch McConnell (Ky.) and Sens. John Cornyn (Texas), John Thune (S.D.), Rob Portman (Ohio), Pat Toomey (Pa.), Cory Gardner (Colo.), John Barrasso (Wyo.), Mike Lee (Utah), Ted Cruz (Texas), Tom Cotton (Ark.) and Shelley Moore Capito (W.Va.).

While the timeframe for drafting legislation remains uncertain, the Senate Finance Committee has asked for feedback on the ACA repeal process by May 23. Chairman Hatch is seeking feedback on areas under committee jurisdiction, including “taxes and the expansion of consumer-driven health savings accounts, Medicaid, tax credits to purchase health care coverage and funding to stabilize states’ individual markets.”