The American Health Care Act: What it is and how to fight back

by Eleanor Wertman, MPH

What is the American Health Care Act, and why did it pass this time around?

On Thursday May 4th, House Republicans narrowly passed the American Health Care Act (AHCA), their purported replacement for the Affordable Care Act (ACA, also known as Obamacare). The version of the AHCA that they passed contained most of the same provisions as the original bill draft, which was so unpopular that it was never brought to a vote. Among these provisions were a rollback of Medicaid expansion; changes to the tax credit structure for plans sold on the individual market (i.e. the exchanges); abolition of the individual insurance mandate; a provision to increase insurance rates by 30% for a year for beneficiaries who let coverage lapse; and a repeal of funding for the Prevention and Public Health Fund, which currently constitutes about 12% of the Centers for Disease Control and Prevention budget. The nonpartisan Congressional Budget Office, which analyzes the cost impact of legislation, estimated the AHCA would leave 24 million people uninsured by 2026 and increase premiums for older adults and middle class families, among other negative outcomes.

House Republicans struggled to revise the AHCA to come up with a version that would appease both party moderates and right-wing Freedom Caucus Republicans. They finally found a solution in the form of the MacArthur Amendment, a series of provisions allowing states to apply for waivers starting in 2020 to eliminate certain ACA insurance regulations. This amendment appealed to enough House Republicans on both sides of the aisle that they were finally able to ram the AHCA through.

What does the MacArthur amendment change about the AHCA?

The ACA’s “community rating” policy prohibits insurers from charging beneficiaries higher premiums based on their health history and gender. However, the MacArthur amendment creates an AHCA waiver allowing states to let insurance companies consider people’s health status for one year when pricing policies. This waiver would affect people with a preexisting condition (a broad term that historically included everything from a past cancer diagnosis to asthma) who have a lapse in health coverage for 63 days or more. States that use the waiver would be required to participate in some kind of risk mitigation arrangement, in which insurance companies would bill states for costs incurred by people with preexisting conditions and coverage gaps. The AHCA establishes the Patient and State Stability fund to allow states to finance such risk reduction arrangements, including high-risk pools. High-risk pools concentrate disproportionately sick beneficiaries into one insurance plan, which conservatives argue will insulate healthier people from higher premiums. However, high-risk pools have historically been tremendously expensive both for the states implementing them and the consumers placed in them. AHCA critics argue the money set aside to fund risk mitigation for sicker people is woefully insufficient to meet the healthcare costs of people with preexisting conditions; one estimate predicted the Patient and State Stability Fund would cover the costs of only 5% of people with preexisting conditions.

Under the ACA, insurance companies are required to cover 10 categories of services known as essential health benefits (EHBs), including doctors’ services, hospital care, prescription drug coverage, mental health services and substance use treatment, maternity care, and more. The MacArthur Amendment to the AHCA also lets states apply to waive the requirement that insurance plans cover these benefits. While this waiver would be applied on a state-by-state basis, critics argue it could affect insurance across state lines as well because of its potential impact on employer-sponsored insurance plans. The ACA currently prohibits private insurance plans from setting lifetime or annual spending caps on EHB services. However, large employer insurance plans, which make up 86% of the plans on the private market, can use any state’s definition of EHBs when establishing their policies. Thus, if one state decided to drop maternity coverage, mental health coverage, and prescription drugs from its EHB list, an employer plan could use that state’s restricted definition of benefits. Under this employer plan, lifetime and annual spending caps would no longer exist for those services no longer defined as EHBs.

I’m confused. Does this bill eliminate insurance or automatically increase costs for people with preexisting conditions?

Critics of the AHCA have argued that the bill completely eliminates protections for people with preexisting conditions, which is not strictly true. People with preexisting conditions who maintain their healthcare coverage will not immediately be denied insurance or charged more. However, many people are unable to maintain consistent insurance coverage and will be subject to price discrimination if their state applies for a waiver of the ACA’s community rating policy. The Commonwealth Fund estimates that about 30 million working adults experienced a coverage gap of at least 63 days in 2016. The various AHCA policies that increase premium costs for exchange plans could further increase the number of adults who let their insurance coverage lapse. Additionally, an estimated 27% of all Americans (52 million people) have a preexisting condition that would allow insurance companies to charge them more money if they experienced a coverage gap. The AHCA was passed rapidly without the customary Congressional Budget Office review (and without leaving time for many House Republicans to even read the bill in its entirety). It’s therefore difficult to estimate how many people with preexisting conditions could lose affordable coverage under the AHCA. However, the AARP has estimated that people with preexisting conditions could see annual costs of $25,700 annually.

What happens to the Affordable Care Act now?

The AHCA is far from law, and the ACA remains the law of the land. The bill heads next to the Senate, which will likely significantly alter the AHCA or start over from scratch. As Sen. Lamar Alexander (R-TN) commented, “We’re writing a Senate bill and not passing the House bill.”  Republican Senators will try to pass their version of the bill using a congressional process called reconciliation, a process which lets the Senate pass bills that have a budgetary impact with just a simple majority instead of the two-thirds majority normally needed (Senate Democrats used budget reconciliation to pass the ACA back in 2010). Once the bill passes in the Senate, it must then be passed by the House.

Unlike House Republicans, the Senate GOP appears to be taking a more gradual approach to drafting their ACA replacement. Republican Senators have refused to commit to a timeline for a vote. Sen. John Cornyn (R-TX) would only state, “When we get 51 senators, we’ll vote.”

What can I do to fight against the ACA’s repeal?

Start reaching out to your Senators and urging them to draft a bill that repairs the ACA’s problems instead of creating a whole new host of barriers to affordable healthcare. Meet with their healthcare staffers and tell them your personal stories about how the ACA has helped you (or, if it hasn’t helped you, how the ACA needs to be improved). Learn more about how the AHCA would affect you personally and use that personal story to call and/or write your Senators. Consider using tools like 5 Calls, ResistBot, and Fax Zero to reach out to your representatives.

Don’t forget to advocate with local politicians, too. North Carolina still has the opportunity to expand Medicaid under the ACA, and House Republicans have even proposed a bill to do so (albeit with a work requirement and other restrictions). Call your state representatives and urge them to push for Medicaid expansion while they still can. Twenty Senators come from Medicaid expansion states, and securing Medicaid expansion in as many states as possible before any ACA repeal plan is in place will make it even harder for Congress to undo Medicaid expansion.

House Republicans passed the AHCA narrowly, without a Congressional Budget Office review and without support from the Senate for their plan. We still have the chance to protect and improve the ACA and ensure the AHCA never becomes law.