Senate Republican leadership unveiled a discussion draft bill on Thursday to replace many aspects of the Affordable Care Act (ACA). The long-awaited bill is called the Better Care Reconciliation Act of 2017.

The Senate will hold a vote after the Congressional Budget Office releases its report on the bill, which could take place as early as next week. If the draft bill passes, it also will need to be reconciled with the existing House-approved American Health Care Act (AHCA). Although the two bills are similar, there are several key differences.

Medicaid Expansion

Under the ACA, the enhanced federal match for Medicaid expansion is 95% this year, 94% next year, 93% in 2019 and 90% in 2020 and beyond. The Senate bill intends to repeal Medicaid expansion under the ACA more slowly than the AHCA. Under the AHCA, individuals covered through the expansion would lose their coverage after January 1, 2020. On the other hand, the Senate bill proposes a four-year, phase-out period with federal matches at 90% in 2020, 85% in 2021, 80% in 2022, and 75% in 2023. Federal funding would then switch to a general state match percentage after 2023.

Medicaid Spending Growth

The two bills outline different funding structures for Medicaid. Currently, states design Medicaid reimbursement levels that are within federal parameters, and the federal government matches programs at a rate that is somewhere between 50% and 73%. The AHCA caps spending according to the CPI-M, a medical standard of inflation. In contrast, the Senate bill proposes using the CPI-M until 2025, at which point spending is capped at the much lower standard inflation rate.

Individual Mandate

Under the ACA, individuals must purchase insurance or face a tax penalty. Companies with at least 50 employees are also required to offer insurance. The AHCA penalizes uninsured individuals by allowing insurance companies to charge individuals up to 30% more for coming back in. The Senate bill does not include an individual mandate.

Tax Credits

Currently, individuals with incomes of up to 400% of the federal poverty level are eligible for tax credits to help pay for insurance. Under the Senate bill, this requirement would change to include Americans earning up to 350% of the poverty level. This proposal differs from the AHCA, which ties tax credit eligibility to age and is available to anyone without access to affordable insurance. The Senate bill would also continue the ACA initiative of providing cost-sharing subsidies to insurers for another two years, while the AHCA would eliminate the subsidies.

State Waivers

The ACA requires plans to cover the 10 essential health benefits (EHBs), including pregnancy, mental health and substance use disorder services, and prescription drugs. As with the AHCA, the Senate bill stipulates that states are no longer required to cover EHBs. However, states must still comply with the ACA’s community ratings requirement, a rate restriction that prevents insurers from adjusting premiums based on factors such as health status, gender, and medical claims.

ACA Taxes

The ACA directed taxes at groups including insurers, medical-device manufacturers, and hospitals to cover the cost of programming, not all of which have been implemented due to their low popularity. Both the AHCA and the Senate bill call for the repeal of several ACA taxes, including the 3.8 percent investment income tax on individuals with incomes over $200,000.

Reactions

In a statement opposing the bill, U.S. Senate Minority Leader Chuck Schumer said, “Simply put: this bill will result in higher costs, less care, and millions of Americans will lose their health insurance.”

In contrast, Health and Human Services Secretary Tom Price, MD, issued a statement of support that said, “The Senate’s proposal is built on patient-centered reforms that put the American people in charge of their health care decisions, not government, protecting patients, bringing down the cost of coverage, and expanding choices.”

You also can watch two policy experts share their reactions to the Senate Republicans’ health care bill on the MedPage Today website.