Health care update from the NLBMDA

Here comes the American Health Care Act. And here’s what you need to know from Capitol Hill.

The National Lumber and Building Material Dealers Association today released the following update on the status of health care legislation:

[On March 8], two committees in the House of Representatives, Energy & Commerce and Ways & Means, will hold markups to consider legislation that would make substantial changes to the nation's health care system. The American Health Care Act, released two days ago by House Republican Leadership, would replace the Affordable Care Act (ACA) largely with a new system centered on tax credits to help people purchase health insurance.


"Initial reception to the House Republican health care proposal has been mixed.”

Congressional Republicans plan on using the budget reconciliation process to repeal and replace the ACA. This would allow the Senate to pass health care reform without giving Democrats an opportunity to filibuster. Under normal Senate procedure, 60 votes are needed to end debate, but under budget reconciliation only a simple majority is needed. However, for legislation to be considered as part of the budget reconciliation process, it cannot increase the deficit after its first 10 years in effect.

Initial reception to the House Republican health care proposal has been mixed. President Trump has given the American Health Care Act a strong vote of confidence, while members of the House Freedom Caucus, a group of conservative House Republicans, have expressed disappointment with the proposal. Senate Republicans are not making their opinions on the legislation well-known but are signaling that they might want to move more slowly on health care reform. House Republicans are moving forward with markup of the legislation despite the Congressional Budget Office's (CBO) announcement that it will not be releasing a cost estimate of the American Health Care Act until March 13.

NLBMDA has not taken a position on the legislation but does support provisions included in the American Health Care Act such as eliminating the cap on health flexible spending accounts (FSA) and permanent repeal of the health insurance tax on fully-insured health care plans.

Below is a summary of the changes proposed in the American Health Care Act. A section-by-section summary of the Ways & Means Committee section can be found here, and a section-by-section summary of the Energy & Commerce Committee section can be found here.

Repeals the Individual and Employer Mandates: Under current law, most individuals are required to purchase health insurance or pay a penalty. The American Health Care Act would replace this penalty with a "continuous care incentive" requiring anyone who goes without health coverage for 63 days or longer to pay a 30-percent late-enrollment surcharge on top of their premiums for the next year. In addition, current law 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. The American Health Care Act would eliminate this requirement.

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.  The American Health Care Act would eliminate this limit.

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 under the American Health Care 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: Under current law, 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.  The American Health Care Act would repeal the HIT.

Retains Popular ACA provisions: The American Health Care Act keeps parts of the Affordable Care Act that have proven popular, such as: 1) allowing children to stay on their parent's insurance policy until age 26; 2) requiring insurers to cover people with pre-existing conditions; and, 3) prohibiting insurers from setting annual or lifetime limits.

Makes Changes to Premium Subsidies: Under current law, middle-income Americans are eligible for tax credits on a sliding scale based on income to help offset the cost of premiums and deductibles. The American Health Care Act would change that by distributing tax credits by age rather than income. Tax credits will be available in full to individuals earning less than $75,000 and households earning less than $150,000, at which point they would begin to phase out.

Eliminates Unpopular ACA Taxes: The American Health Care Act would permanently repeal ACA taxes such as the "Cadillac Tax" of high-cost health plans, the medical device tax on the sale of certain medical devices, the over-the-counter medications, the surtax on Medicare Hospital Insurance, and the 3.8 percent tax on net investment income.

If you have questions regarding health care reform please contact Ben Gann, Vice President of Legislative and Political Affairs.

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