Yesterday, the U.S. House passed the American Health Care Act (AHCA) with a 217 to 213 vote. (here) No Democrat voted for the bill and a number of Republicans, mostly moderates, voted against it. The bill represents the first phase of a three part strategy to overturn the Affordable Care Act (ACA), also known as Obamacare. Because Republicans only have a simple majority in the U.S. Senate, the phase one bill is a reconciliation bill, dealing only with the financial and budget aspects of the ACA.

Phase two allows Health and Human Services Secretary Tom Price to overrule the 1,440 discreet regulatory measures in the ACA. Phase three requires bi-partisan votes to overturn the remaining features of the ACA.

The ACA has been a failure at reaching its goals. Obamacare has not come close to providing universal health insurance, it has not held health care costs down, and it has forced millions of people out of their existing insurance into government-controlled plans.

The original AHCA bill was not acceptable to some moderates and some conservatives in the House. Consequently, it underwent changes over the past six weeks. The original bill retains some features of the ACA, but more importantly repeals many of the fundamental parts of Obamacare. Here are the basics of the bill:

• Repeals the individual and employer mandate.
• Eliminates virtually all of the ACA taxes and defers the “Cadillac Tax” on high-cost health insurance plans until 2025.
• Provides a refundable tax credit based on age, not income. The credit starts at $2,000 per person for 18 year olds and gradually increases to $4,000 as people age. The maximum for a family is $14,000.
• People purchasing catastrophic health insurance plans, without the ACA benefit mandates, can receive the tax credits.
• Expands health savings account (HSA) contributions to $6,550 per year for individuals and $13,000 per year for families.
• Reforms Medicaid. States would receive per capita federal grants. States that did not expand Medicaid under the ACA would receive more federal money for disproportionate share hospitals (those hospitals that have a higher share of low-income patients) and possibly more funds because of changes in the federal match.
• States would receive federal money through a $100 billion grant over the next decade which apparently could be used for such things as high risk pools to cover people with pre-existing conditions.
• Retains several ACA provisions. Children can stay on their parents’ health insurance plans until age 26. The bill addresses the pre-existing condition mandate.

Added to the above measures was the MacArthur Amendment which includes (here):

• States could receive waivers to change community rating from 1:3 to 1:5 in 2020, opt out of the ACA’s essential health benefit mandates in 2018, and replace the original bill’s penalty for not maintaining continuous health insurance coverage provided that the state participate in a high-risk pool.
• For a state to receive a waiver, it must show that doing so would decrease insurance premiums, would increase the number of insured, would stabilized the insurance market, would stabilize premiums for people with pre-existing conditions, and would increase the number of plan choices in the state.

The state grant money was also increased to $138 billion for high-risk pools and insurance market stabilization.

The Congressional Budget Office (CBO) did not score the bill as passed. The CBO did score the original bill:

• Cut $337 billion off the federal deficit over ten years.
• Lower taxes by $883 billion for everyone who uses health care. Eliminates the ACA taxes on drug companies, medical device manufacturers, insurance companies and insurance plans.
• Lower insurance premiums ultimately by 10 percent.
• Place a limit on Medicaid spending for the first time in the history of the entitlement, saving $880 billion over ten years.
• Decrease overall federal spending by $1.2 trillion over ten years.

The bill now moves to the U.S. Senate. Early indications are that the Senate will craft its own bill and will do so over a much longer time period. Undoubtedly, most if not all Democrats in the Senate will oppose the new bill, and moderate and conservative Republicans will find themselves at odds as in the House. (here)

For now the ACA remains the law of the land. However, passage of the AHCA is a good start at meaningful health care reform.