We previously posted an article entitled The American Health Care Act On The Move regarding the Republican attempt to overhaul the Affordable Care Act (ACA). The initial legislation was never voted on by the House of Representatives. However, on May 4, a second attempt was successful in passing a modified version of the American Health Care Act (AHCA) in the House.

The AHCA remained largely intact from its original version (addressed in our aforementioned article), with the exception of two substantial amendments. The amendments are known as the “MacArthur Amendment” and the “Upton Amendment”.

MacArthur Amendment-State Waivers

The goal of the MacArthur Amendment is to help states reduce premium costs by permitting the waiver of certain ACA requirements. The MacArthur Amendment allows three types of state waivers:               

1. Age Rating – The ACA only permits a 3-to-1 age band ratio in premiums between the young (18) and the old (65). The AHCA modifies this to 5-to-1 and further permits states to seek even greater ratios. For instance, prior to the ACA, Louisiana allowed an 11-to-1 ratio in premiums.
2. Essential Health Benefits – The ACA requires that individual policies and small group employer plans provide coverage for a package of 10 “Essential Health Benefits”. Under this waiver, States would be permitted to define their own Essential Health Benefits. While the impact to lifetime and annual dollar limits is not clear, it would certainly impact the transparency in selling policies across state lines.
3. Health Status Underwriting – Health Status would be permitted as a factor in underwriting individual policies in situations where the individual did not maintain continuous coverage.

Any state waiver requests would be granted by default, unless the Secretary of Health and Human Services notifies the State within 60 days after the date of the request that the application failed to meet any applicable requirements.

Upton Amendment

The Upton Amendment seeks to counteract the MacArthur Amendment impact of using health status as a factor in underwriting individual policies where the individual did not maintain continuous coverage. In permitting health status to be a factor in underwriting for these individuals, it amounts to a return to the Preexisting Condition Exclusion (PCE) prohibited by the ACA. However, including a health status factor in underwriting the premium of someone with a preexisting condition could cause the premium to exceed any standard of affordability, essentially creating a PCE through disparate impact. The Upton Amendment provides an additional $8 billion in high-risk pool funding over the five year period from 2018 through 2023 for waiver states for individuals with PCEs.

On to the Senate

The Senate has vowed to draft its own legislation on this matter. This means that it could prove a near impossibility to acquire the sufficient majority in the House a second time to approve any Senate changes, in light of the extreme difficulty in negotiating these amendments through the House.