Healthcare News & Insights

Senate introduces latest ACA repeal bill: What it means for hospitals

After weeks of secrecy, the Senate’s finally released its version of the Affordable Care Act’s (ACA) replacement bill. While it’s similar to the House’s original proposal, there are a few key changes in the legislation. Here’s what’s most important for hospitals going forward. 

The new bill, the “Better Care Reconciliation Act of 2017,” is the latest attempt to repeal the ACA. And just like its predecessor, the American Health Care Act, it’s still facing an uphill battle.

Changes & concessions

A significant point of contention is the new bill’s treatment of Medicaid. The Better Care Reconciliation Act would limit Medicaid spending even more than the House’s bill, according to an article in Modern Healthcare.

The House’s bill would’ve eliminated the funding for the ACA’s Medicaid expansion by 2020. Although the new Senate proposal extends the expansion until 2021, it also changes the formula by which Medicaid will be funded in subsequent years.

Per an article in CNN, instead of tying federal funding for existing Medicaid patients to the medical inflation rate, it’ll be impacted by the standard inflation rate, starting in 2025. This rate is lower than the medical inflation rate, so states will have less money to work with. As a result, they’d likely start cutting back on payments to providers, along with scaling back enrollment and benefits.

Not only would this affect millions of people with Medicaid, it’ll also have a big impact on hospitals’ bottom line. The Medicaid expansion has been a boon for many facilities, since it’s lowered uncompensated care costs. However, those numbers could spike again if the Medicaid expansion’s discontinued and funding is limited.

Even more patients may lose insurance coverage if some of the proposed changes to premium subsidies are approved. Unlike the American Health Care Act, which wanted to replace the ACA’s subsidies based on income with a system based on age, the new bill takes a different approach that’s like the ACA’s, but with stricter criteria for eligibility. According to an article in the New York Times, the threshold for subsidies would be offered to those at incomes up to 350% of the poverty level, instead of 400%.

The new bill does allow for people below the poverty level to receive premium subsidies, which could be beneficial in states that didn’t approve the Medicaid expansion. But experts say this won’t balance out the projected funding cuts to the Medicaid program over time.

Republicans did decide to keep another critical type of subsidies intact as part of the Better Care Reconciliation Act: cost-sharing subsidies for payors, which were designed to compensate carriers for covering low-income people.

After his election, Donald Trump said he would no longer pay subsidies to insurance companies in the ACA’s healthcare exchanges. Payors were upset by this, however, and many began leaving the exchanges as a result. To stabilize the healthcare marketplace and premium costs, the new bill promises payors these funds through 2019. This may help keep carriers committed to offering exchange plans, preventing some patients from becoming uninsured.

Several other features of the bill could have a significant impact on facilities.

Example: While the bill requires payors to cover pre-existing conditions without charging people extra based on their medical history, states would have the option to waive various coverage requirements (or “essential health benefits”) that are currently part of the ACA, including emergency services and maternity care. So patients could face significant out-of-pocket costs for these services – which may increase bad debt at hospitals.

Will it pass?

The future of the Better Care Reconciliation Act remains uncertain.

Much of the legislation was crafted in secret by a handful of senators, including Senate Majority Leader Mitch McConnell. The Congressional Budget Office must still release its analysis of how this bill will impact Americans and the federal budget, and this report will determine how much support it ultimately gets from Republicans who are currently on the fence. Democrats have already pledged to fight the bill tooth and nail.

To more forward, the new bill needs almost unanimous support from Republicans, as if more than two party members vote against it, it won’t receive the majority necessary to pass. A decision on the bill’s future is expected sometime in July. We’ll keep you posted.

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