On Tuesday, February 28, President Trump addressed a Joint Session of Congress and outlined his Affordable Care Act (ACA) replacement legislation principles.  The President endorsed a tax credit and expanded Health Savings Accounts to help people purchase health care insurance.  He reiterated that individuals should be able to purchase health insurance across state lines.  The President reaffirmed that those with pre-existing conditions should have access to coverage but did not specify how that would be accomplished.  Finally, President Trump said that governors should be given resources and flexibility on Medicaid and ensure that “no one is left out.”

On Thursday, March 2, House Speaker Paul Ryan (R-Wis.) met with Republican members in a closed-door Capitol meeting and discussed in general terms the current Republican proposal to replace the ACA.  Speaker Ryan distributed and later collected one part of the legislation within the jurisdiction of the House Energy and Commerce Committee.  During the meeting Speaker Ryan purportedly set out a three-week timeline for passage by the full House of the replacement legislation.  This week the House Energy and Commerce Committee and Ways and Means Committee will hold markup hearings on separate parts of the Republican proposal, with the Energy and Commerce Committee considering the Medicaid provisions and the Ways and Means Committee marking up the tax provisions.  Next week the House Budget Committee will combine the two components into a reconciliation package for a possible vote by the full House by the end of March.  The Senate would then take up the legislation.

Republican leadership has not released any legislative text and the Congressional Budget Office has not completed an estimate of the cost of the replacement bill or its effect on coverage.  Leaked reports indicate that the Republican replacement legislation dated February 24 includes a few changes to the version dated February 10, which we reported on last week.  The February 24 bill reportedly includes a new refundable tax credit ranging from $2,000 to $4,000 based on age and not income as included in the ACA; wealthier persons would not qualify.  Conservative Republicans generally disfavor refundable tax credits because individuals with lower incomes, who pay less in taxes, receive the full credit even if it exceeds their tax liability.  Nonrefundable tax credits can be used only to offset actual tax liability but would also result in less money available for those who need assistance in paying for health insurance.  A verification process for employed individuals would be established to demonstrate they do not have access to coverage through their employers and therefore qualify for the tax credits.

The 31 states and the District of Columbia that expanded their Medicaid programs under the ACA could maintain those programs until 2020 when federal funding would decrease.  Starting in 2020, the federal government would begin to reimburse these states at a lower rate under a transition to a system in which states would receive a fixed amount based on the number of Medicaid enrollees.  The states would have significant flexibility in how to spend the Medicaid funds.  The amount of Medicaid funds would increase each year at a rate tied to the chained consumer price index, plus one percentage point.  In addition, extra premium assistance would be provided to individuals making up to one-third above the poverty level.  It is expected that states that did not expand their Medicaid programs under the ACA would receive increased disproportionate share payments.  Republicans are also considering extra funding to physicians in states that did not expand their Medicaid programs.

The Republican proposal would eliminate the insurance mandate and allow insurers to charge higher premiums to individuals whose insurance coverage lapsed.  The bill would also eliminate taxes that helped offset the cost of the ACA’s coverage expansion, including taxes on medical device manufacturers and insurance companies and households making more than $250,000 a year.  The bill includes the tax exemption for employer-sponsored plans would be capped at the 90th percentile of current premiums; benefits above that level would be taxed.  The legislation also creates a default reinsurance fund for states that do not take advantage of the state innovation grants intended to assist states stabilize the health insurance market.  Under the proposal, insurers would be reimbursed for insureds who have medical expenses that exceed $50,000, with a $350,000 limit.

The Director of the Office of Management and Budget, Mick Mulvaney, reportedly is the current point person for the Trump Administration working with Republican House members on the ACA replacement legislation.

Senator Rand Paul (R.-Ky) has announced that he will oppose the current Republican replacement legislation.  He insists on a complete repeal of the ACA, to be followed by consideration and vote on a replacement bill.  Senator Paul could be joined in his opposition to the Republican proposal by Senators Ted Cruz (R.-Tx) and Mike Lee (R.-Utah).

Also on Thursday, the Senate Finance Committee on a 13-12 party-line vote recommended the confirmation of Seema Verma as the Administrator of the Centers for Medicare & Medicaid Services.  The full Senate will next vote on Ms. Verma’s confirmation.

The Trump Administration announced that Brian Neale will be the new director for the Center for Medicaid and CHIP Services.  Mr. Neale previously worked with Vice President Mike Pence and Ms. Verma in developing Indiana’s expanded Medicaid program, known as the Healthy Indiana Plan.