Better Care Reconciliation Act: What we know and what's next

After many weeks of secrecy that drew contempt from Democrats and Republicans alike, Senate Republicans have finally revealed their draft of a health care reform bill. Called the Better Care Reconciliation Act of 2017, the bill retains much of the original American Health Care Act (AHCA), but shifts some provisions toward the moderate end of the spectrum. 

 Below are the highlights of the Better Care Reconciliation Act, and a recap of some of the most significant changes, including Medicaid, state waivers, and tax credits.

Fewer eligible for tax credits/subsidies

Similar to the Affordable Care Act (ACA), the Senate bill proposes using income level-based tax credits to lower an individual’s monthly insurance payment instead of the age-based tax credits proposed in the AHCA. However, the Better Care Reconciliation Act would limit eligibility for these credits to individuals with household incomes up to 350 percent of the federal poverty level (FPL) (The ACA threshold is 400 percent of FPL.) This means that fewer individuals and families would receive tax credits to assist in the payment of their healthcare coverage premiums. These credits would also be capped at a lower percentage of overall medical costs than those under the ACA.

Individual and employer mandates eliminated

Consistent with the AHCA, the Senate’s Better Care Reconciliation Act would eliminate both the individual mandate and the employee mandates. The language in this bill would retroactively repeal both mandates to Jan. 1, 2016.

Employer reporting untouched

Provisions related to employer reporting remain untouched in the proposed Senate bill since it’s considered outside the scope of budget reconciliation. Employer reporting is also widely viewed as a necessary requirement for the IRS or any governmental agency to reconcile and properly administer tax credits.

Medicaid phase-out

The Better Care Reconciliation Act’s phase-out of the ACA’s Medicaid Expansion retains the same basic principles of the AHCA but would be done over a longer period of time. Over the course of four years, Medicaid Expansion would be rolled back from covering individuals with household incomes that are 138 percent of the FPL to 100 percent of the FPL.

In 2020, 90 percent of the current federal funding would be provided. This funding would decrease by 5 percent each year until 2023, after which federal funding for Medicaid Expansion would be eliminated. However, after 2025, growth in spending would shift from the consumer price index (CPI) for medical care to the CPI for all goods, which is at a lower level of growth.

Despite these changes, the Senate’s bill retains the House's per capita cap for federal Medicaid spending. 

State waivers remain, community rating repeal removed

The AHCA’s state waivers remain in the Senate’s bill and would allow states to request a waiver to opt out of the ACA’s essential health benefits, which mandate that all plans must cover 10 basic categories of care. The inclusion of this provision is significant as many believe it’s what got the bill over the hump in the House, so it makes sense for the Senate to leave it in. One key difference in the Better Care Reconciliation Act is that states would not be allowed to repeal community rating, the provision mandating that all people of the same age in the same area be charged the same amount—something the AHCA allowed.

What’s next?

There are several significant milestones left for the Better Care Reconciliation Act to go through before any real movement can happen. These include:

  • Congressional Budget Office (CBO) scoring—The CBO will score the Senate’s version of the bill and project the same critical information they have done for past versions of the AHCA. This includes the overall impact on the federal deficit, on health care premiums, and on the number of insured Americans. It’s likely that score will be more publicly favorable than it was for the AHCA due to the more moderate provisions.
  • Senate amendment and open debate process — Republican Senate Leader Mitch McConnell announced shortly after the public unveiling of the bill that the Senate would undergo its normal amendment process, which means that members of the Senate who didn’t participated in the drafting of this bill will have the opportunity to offer amendments and openly debate the bill’s merits. This means changes may be made before the Senate brings the bill to a vote.
  • Senate vote — The final step in this phase of the legislative process will be a Senate vote on the Better Care Reconciliation Act. It’s still very unclear whether or not the Senate can garner the required votes to pass this bill, even though a 60 vote super majority is not needed in the reconciliation process. The CBO score and the Senate amendment and debate process will help predict the likelihood of passing the bill. 

For now, we’ll continue to parse out the detailed nuances of the Senate’s Better Care Reconciliation Act and allow the rest of Congress and the American people to do the same. This is a constantly evolving situation, and we will continue to provide updates as changes occur.