NLBMDA takes a look at health care proposal
The National Lumber and Building Material Dealers Association released the following analysis of the Republican health care reform proposal. It carries the byline of Ben Gann, the NLBMDA VP of legislative and political affairs:
Yesterday, Senate Republican Leadership released its own health care reform proposal, the Better Care Reconciliation Act, after weeks of closed-door negotiations. The announcement comes as Senate Majority Leader Mitch McConnell (R-KY) wants the Senate to vote on health care reform legislation by the end of next week. The Senate bill is similar to the American Health Care Act (H.R. 1628), which passed in May in the House of Representatives and would make major changes to the nation's health care system. President Donald Trump has said the final Senate bill will be "very good."
A significant difference between the House and Senate versions concerns the use of tax credits to help individuals and families pay for health insurance. The Senate version adjusts the tax credit amount based on income and geography much like it is currently under the Affordable Care Act (ACA). In contrast, tax credits in the House version are less generous and based strictly on age.
Other provisions in the Senate proposal to address the individual insurance market include an 8-year, $62 billion long-term innovation fund for states to help people purchase insurance, and $50 billion over 4 years to stabilize the individual insurance market.
Passage of health care reform in the Senate remains challenging given the narrow Republican advantage. Democrats are unanimous in their opposition to the proposal, which means Leader McConnell can only lose two Republicans and still pass the legislation using Vice President Mike Pence as the tie-breaking vote. Four Republican senators, Ted Cruz (TX), Ron Johnson (WI), Mike Lee (UT), and Rand Paul (KY) have all said that they oppose the initial Senate proposal.
The Congressional Budget Office (CBO) will release a report early next week on the Senate proposal. In it, CBO will detail the number of individuals who would lose insurance based on the Senate proposal and its impact on the federal budget. CBO estimates that the House-passed reform bill would result in 23 million fewer Americans being insured but save the federal government $119 billion over the first 10 years.
Complicating matters further is the legislative procedure called budget reconciliation being used to pass health care reform. Under normal Senate procedure 60 votes are needed to end debate, but under "budget reconciliation" only a simple majority is needed. However, for any legislative provision to be considered under budget reconciliation it must impact the federal budget and not increase the deficit after its first 10 years. For example, there are questions as to whether the Better Care Reconciliation Act can change current law by allowing states to opt-out of the essential health benefits requirement since the focus of provision is not budgetary.
NLBMDA has not taken a position on the legislation but does support provisions included in the Better Care Reconciliation Act such as eliminating the cap on flexible spending accounts (FSA) and permanent repeal of the health insurance tax on fully-insured health care plans.
Below is a summary of changes proposed in the Better Care Reconciliation Act. If you have questions regarding health care reform, please contact me at [email protected].
Repeals the Individual and Employer Mandates: Under current law, most individuals are required to purchase health insurance or pay a penalty. In addition, the ACA requires businesses with 50 or more full-time equivalent employees to provide health insurance to at least 95 percent of their full-time employees and dependents up to age 26, or pay a fee.
Repeals FSA Contribution Limits: Under current law, a maximum of $2,600 can be contributed annually to a flexible spending account for qualified medical expenses. That amount is indexed annually for inflation.
Increases Limits for Health Savings Accounts (HSA): Under current law, an individual can put $3,400 and a family $6,750 into a tax-free HSA. The limits increase substantially in the Better Care Reconciliation Act with a limit of $6,550 for individuals and $13,100 for families beginning in 2018.
Repeals the Health Insurance Tax (HIT) on Fully-Insured Health Care Plans: The HIT is levied on all insurance companies that offer fully-insured plans, the tax is passed down in the form of higher premiums to small and medium-sized business that offer fully-insured plans, which unlike large companies do not typically self-insure a health care plan. The tax is suspended for 2017 but is $14.3 billion in 2018.
A Popular ACA Provision Remains: The Better Care Reconciliation Act continues to allow children to stay on their parent's insurance policy until age 26.
But Changes to Other Popular ACA Provisions: Under the Senate proposal insurers must still cover individuals with preexisting conditions and not raise their premiums, but states may allow insurers to not cover costs associated with some conditions. In addition, the ban on limiting annual and lifetime costs remains in effect but states could opt-out of the requirement.
State Waiver for Essential Health Benefits: As part of the ACA, health insurance plans must cover 10 essential health benefits that include outpatient care, emergency room visits, hospitalization, maternity and neonatal care, prescription drugs, rehabilitative and habilitative services, lab work, preventative and wellness care and services, pediatrics, and mental health. Under the Better Care Reconciliation Act, states could apply for a waiver to opt-out of the essential health benefit requirement allowing for plans with lower premiums but higher out-of-pocket costs.
Changes to Premium Subsidies: Under current law, middle-income Americans are eligible for tax credits on a sliding scale according to income, age and geography to help offset the cost of premiums and deductibles. The Better Care Reconciliation Act keeps the same basic tax credit structure, but makes it moderately less generous and apply to plans with less overall benefits. The tax credits would be based on the cost of a low-level bronze plan rather than a silver plan. Silver plans have an average deductible of about $3,500, while an average bronze plan is about $6,000. Tax credits would be available to individuals earning less than $41,580 and households earning less than $85,050.
Eliminates Unpopular ACA Taxes: Permanently repeals ACA taxes such as the "Cadillac Tax" of high-cost health plans, medical device tax on the sale of certain medical devices, over-the-counter medications, surtax on Medicare Hospital Insurance, and 3.8 percent tax on net investment income.