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April 26, 2017

Conservative Freedom Caucus changes course, endorses GOP health plan with new changes

Daily Briefing

    The House Freedom Caucus on Wednesday officially endorsed a new draft amendment that GOP leaders hope could revive the American Health Care Act (AHCA). 

    The deal—orchestrated by Rep. Tom MacArthur (R-N.J.), co-chair of the moderate Tuesday Group; Rep. Mark Meadows (R-N.C.), chair of the conservative House Freedom Caucus; and Vice President Pence—offers some changes sought by conservative Republicans. The draft amendment would allow states to apply for waivers that would let insurers charge older adults more for coverage, charge more to some beneficiaries with pre-existing conditions, and alter the ACA's Essential Health Benefits requirements. 

    New draft amendment details

    Age-band ratio waiver

    While the draft amendment would allow states to apply for waivers to increase the age-band ratio that allows insurers to charge older adults more for coverage, Tim Jost, a professor at Washington and Lee University School of Law, in a Health Affairs Blog wrote that is unclear whether such waivers would allow insurers to set an age ratio "higher" than the AHCA's 5-to-1 ratio or the ACA's 3-to-1 ratio. A summary of the draft amendment released earlier this week suggested the ratio would not be able to exceed 5-to-1. States would be able to apply for the age-band ratio waiver for plan years beginning on or after Jan. 1, 2018.

    Essential health benefits waiver

    The draft amendment also would allow states, after Jan. 1, 2020, to apply for waivers to set their own essential health benefits for plans in the individual and small group markets—rather than the national set of benefits provided for by the ACA, which include hospitalization and rehabilitation. According to Jost, this means states could define the types of drugs covered, as well as out-of-pocket spending limits and lifetime or annual spending caps.

    Health status underwriting waiver

    Further, under the draft amendment, states could apply for waivers to opt out of the AHCA's provision that would impose a 30 percent premium penalty on individuals who do not maintain continuous coverage, and instead allow insurers to impose health status underwriting on individuals who allow their coverage to lapse for at least 63 days. However, insurers would not be able to charge more for coverage based on gender, according to Jost.

    The amendment also includes language prohibiting insurers from limiting access to coverage for individuals with pre-existing conditions, but Jost notes that health status underwriting "could effectively make coverage completely unaffordable to people with preexisting conditions."

    States that opt to waive the ACA's community rating requirements would be required to participate in the AHCA's Patient and State Stability Fund, which provides states with grants to pursue cost-controlling measures, such as creating high-risk pools or establishing state-based cost-sharing reductions.

    Waiver eligibility  

    To qualify for a waiver, states would need to demonstrate that their proposal would do at least one of the following:

    • Increase enrollment in coverage;
    • Increase health plan competition;
    • Reduce average premiums;
    • Stabilize the insurance market; or
    • Stabilize premiums for individuals with pre-existing coverage.

    According to Vox, if the federal government takes no action on submitted waivers they would be automatically approved after 60 days.

    Other details

    Further, Vox reports, the draft amendment would exempt members of Congress and their staff from the "amendment's terms." However, Rep. Dave Brat (R-Va.) Wednesday morning told reporters the congressional exemption provision is being "fixed" to ensure lawmakers are not exempt from the waivers, Axios reports.

     The Congressional Budget Office (CBO) has yet to release new budget projections for the amendment, but according to a former CBO analyst, the changes would likely increase the number of uninsured U.S. residents over the next decade from the initial projection of 24 million people.  

    GOP lawmakers meet today to discuss changes  

    The conservative Freedom Caucus after a meeting Wednesday to discuss the amendment released a statement endorsing the changes. The release said, "While the revised version still does not fully repeal Obamacare, we are prepared to support it to keep our promise to the American people to lower health care costs."

    The moderate Tuesday Group also is expected to meet Wednesday. Some moderate lawmakers, however, have been critical of the deal because MacArthur has not coordinated with other Tuesday Group members on his discussions. It remains unclear whether enough moderate Republicans would support the draft amendment to secure 216 votes the GOP needs to pass the bill in the House.

    Next steps

    According to "PowerPost," an aide to House Speaker Paul Ryan (R-Wis.) said Ryan "hasn't ruled out" a vote on a health reform bill this week, but that passing a spending measure to keep the government funded beyond Friday is the top priority. Ryan spokesperson AshLee Strong said if there is a strong consensus on health reform that the House could move quickly (Bade et al., Politico, 4/25; Kliff [1], Vox, 4/25; Kliff [2], Vox, 4/25; Diamond, Politico Pro, 4/26 [subscription required]; Jost, Health Affairs Blog, 4/26; Costa/ Winfield Cunningham, "PowerPost," Washington Post, 4/25; Freedom Caucusrelease, 5/26; Owens, Axios, 4/26).

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