U.S. Senate Republican leadership yesterday released its draft health care reform legislation entitled the “Better Care Reconciliation Act of 2017.”

The Senate legislation would retain two key provisions of the Affordable Care Act (ACA):  (i) insurers are prohibited from denying coverage or increasing an individual’s premiums based on a preexisting medical condition; and (ii) young adults may be covered under their parents’ health plan until they reach the age of 26.

The Senate bill would make significant changes to the ACA.  For example, the individual mandate and the employer mandate would be eliminated.  Under the ACA, insurers must cover certain categories of essential health benefits; under the Senate legislation, states could seek waivers that would enable them to change what qualifies as an essential health benefit.  ACA tax credits that are available to individuals between the federal poverty level and four times that threshold would continue for two years; eligibility would be reduced to 350 percent of the federal poverty level and extended to more low-income individuals who do not qualify for Medicaid.  Tax credits would be tied to income, age and geography and not primarily based on age as included in the House bill.  ACA cost-sharing subsidies to insurance companies would continue for two years.  The Senate legislation would repeal ACA taxes over a number of years.  Insurers could charge the elderly five times more than younger individuals for the same health plan; under the ACA the ratio is three-to-one.  Individuals could contribute more to their Health Savings Accounts than under the ACA.  The Medicaid program would no longer be an open-ended entitlement program, but rather beginning in 2021, states could receive either a block grant or a per capita payment amount.  Beginning in 2025, these Medicaid payments would be tied to the consumer price index for all urban customers rather than the medical care component of the consumer price index, which almost certainly would result in a substantial reduction in Medicaid payments.  For states that expanded Medicaid under the ACA, beginning in 2021 the federal government would pay a smaller portion of the cost.  States could impose work requirements on able-bodied adults as a condition of receiving Medicaid benefits.  Enhanced Medicaid payments to states that expanded their programs would continue for three years; beginning in 2021, over three years the enhanced Medicaid payments would be reduced to regular Medicaid payment rates.  Medicaid funding for Planned Parenthood would be eliminated for one year (there is some uncertainty whether Senate reconciliation rules will permit inclusion of this provision in the Senate legislation).

Senate Majority Leader Mitch McConnell reportedly intends for the full Senate to debate and vote on the Better Care Reconciliation Act of 2017 next week before the July 3rd Congressional recess.