Patient Financial Services



PFS May

The third time was the charm for the American Health Care Act (AHCA)—at least as it went before the House of Representatives. On May 4, an amended version of the AHCA passed the House by a narrow margin of 217 to 213 and is now on its way to the Senate. Over the last few months, the bill has significantly evolved to garner the support needed to
move forward.


There are several amendments in latest version of the bill. One amendment created an invisible risk-sharing program to reduce marketplace premiums through a federal risk pool for members with high-cost medical conditions. Another allowed states to apply for waivers to drive "fair health insurance premiums," which includes allowing states to relax the minimum requirements for essential health benefits. And a third created a fund to assist individuals who have had gaps in coverage due to health status in states where insurers are permitted to charge higher premiums to those who have experienced coverage gaps.

A fourth group of amendments—the Manager's Amendment—outlined a number of provisions to Medicaid, cost-sharing subsidies and healthcare-related taxes.

  • Medicaid Expansion. With the Manager's Amendment, the AHCA ends mandatory expansion for adults up to 133% of the federal poverty level (FPL) who are childless, nondisabled and not pregnant. While states may choose to continue expansion for adults above 133% of the FPL, the higher Medicaid matching rate currently in place for the expansion population will discontinue in 2018. States that choose to cover this group would receive normal Medicaid matching rates.
  • Medicaid Funding. States now have the option of choosing block grants, instead of a per-capita cap model, to fund Medicaid programs for individuals in the traditional adult and children eligibility categories. For participating in block grants, states will be given more flexibility to choose who is eligible for Medicaid, although they will still be required to cover certain low-income women and children. Block grants are not a funding option to support programs for the elderly or disabled.
  • Medicaid Work Requirement. Under the Manager's Amendment, states have the option to establish work requirements—similar to those for Temporary Assistance for Needy Families—as a condition of Medicaid coverage. This applies to certain populations, including nondisabled, nonelderly and non-pregnant adults. States that choose to institute work requirements will be receive a 5% cost increase to support administration of these programs. This program is similar to the work requirement program that is part of the Temporary Assistance for Needy Families (TANF) work program.
  • New Premium Tax Credits. These amendments do not change tax credits amounts, but they do reduce the medical expense deduction from 7.5% to 5.8%—a move projected to be worth $85 billion. In addition, the amendments restricted premium tax credits from being used to pay for unsubsidized COBRA coverage and eliminated the option for individuals to place into an HSA tax credits that exceed the cost of their premiums.

The next stop for the AHCA is the Senate—another tough crowd for the bill. Many speculate the group will end up changing the structure of the premium tax credits, among other aspects of the bill. One thing is certain: additional changes to the AHCA are likely on the horizon as the Senate examines the proposed law.