Introduction Key highlights

Introduction

On January 4 2017 the Republican Study Committee (RSC)(1) released the American Healthcare Reform Act of 2017, which would repeal and replace the Affordable Care Act of 2010.(2) Drafted by US Representative Phil Roe, a physician and RSC member, this legislation is similar to Affordable Care Act repeal and replace proposals that were introduced by the RSC in 2013 and 2015.

RSC Chairman Mark Walker has noted that the bill would not implement a "simultaneous" repeal and replacement of the Affordable Care Act; instead, it includes provisions addressing both repeal and replacement, but does not provide a timeline for the replacement.

Although the American Healthcare Reform Act has not (to date) been formally introduced, it is expected to garner support from conservative members of the House of Representatives and serve as a basis for negotiation with other key lawmakers, including (among others) the sponsors of three additional significant Republican replacement proposals:

Walker has reportedly stated that the American Healthcare Reform Act is not in competition with other proposals and is intended to be a collaborative approach.

Key highlights

Fully repeals the Affordable Care Act The RSC's proposal would repeal the Affordable Care Act in its entirety, including:

  • all insurance reforms, including underwriting restrictions, consumer protections and affordability rules;
  • the Medicaid expansion;
  • Medicare reforms, including filling the Part D doughnut hole;
  • changes to drug reimbursement and approval, including amendments to the 340B programme; and
  • the new approval pathway for biosimilar biologic products.

The repeal would be effective January 1 2018.

Replaces the Affordable Care Act's tax credits with standard deduction The American Healthcare Reform Act would establish an above-the-line standard deduction for qualified health insurance plans in the amount of $7,500 for an individual or $20,500 for families. Unlike the Affordable Care Act's tax credits, which are provided on a sliding scale for individuals and families with income at 400% of the federal poverty level or below who purchase 'qualified health plans' (as defined under the Affordable Care Act), the proposed standard deduction would not be means tested and would be adjusted based only on annual inflation. The American Healthcare Reform Act provides that the term 'qualified health plan' would be addressed by subsequent regulation and must have "coverage for inpatient and outpatient care, emergency benefits, and physician care", as well as "coverage which meaningfully limits individual economic exposure to extraordinary medical expenses". This proposal is similar to President Donald Trump's proposal to allow individuals to deduct the cost of health insurance premium payments from their tax returns. In contrast, the three major congressional Republican replacement proposals rely on age-adjusted tax credits.

Reforms health savings account (HSA) rules The American Healthcare Reform Act makes a number of changes to existing HSA rules in order to expand the availability of these accounts. For example, the American Healthcare Reform Act would expand HSA eligibility for individuals who are currently unqualified to maintain an HSA, including certain Tricare participants, veterans, individuals who obtain services through the Indian Health Service and Medicare beneficiaries. In addition, the legislation would ease certain HSA restrictions related to catch-up payments, qualified medical services and maximum contributions.

Increasing the use of HSAs is one of the centrepieces of Trump's healthcare reform plan and is also prominently featured in the three other congressional Republican replacement proposals noted above.

Provides funding for state high-risk pools The American Healthcare Reform Act provides $25 billion in federal funding over 10 years to assist states in establishing high-risk pools. High-risk pools are featured in Trump's healthcare reform plan and in the three other congressional Republican replacement proposals noted above.

Provides for portability of health insurance policies across state lines The American Healthcare Reform Act allows individuals to purchase health insurance policies across state lines. The RSC's draft text proposes that, when an insurance plan offered in one (primary) state is sold in a secondary state, the health insurer would still be subject to the consumer protection and fraud laws of the secondary state.

Addresses federal antitrust laws The American Healthcare Reform Act makes certain changes to the McCarran Ferguson Act to clarify that federal antitrust laws apply to the business of health insurance.

Makes Medicare claims data publicly available The American Healthcare Reform Act requires the Department of Health and Human Services to make Medicare claims data publicly available through a no-cost database.

Establishes state transparency portals The American Healthcare Reform Act provides $50 million in federal funding to states to establish optional transparency portals. These portals would serve as a resource for standard information on certain health plans, but would be prohibited from directly enrolling consumers in coverage.

Addresses doctor-patient relationship The American Healthcare Reform Act repeals the Federal Coordinating Council on Comparative Effectiveness Research and prevents provisions of the bill from being interpreted as interfering with the doctor-patient relationship. This provision appears to be designed to replace the provision of the Affordable Care Act that terminated the Federal Coordinating Council for Comparative Effectiveness Research (which was enacted under Section 804 of the American Recovery and Reinvestment Act of 2009). The Affordable Care Act replaced the Federal Coordinating Council on Comparative Effectiveness Research with the Patient-Centred Outcomes Research Institute (PCORI). The American Healthcare Reform Act does not include a replacement for PCORI; it states only that "[e]ffective on the date of the enactment of this Act, section 804 of the American Recovery and Reinvestment Act of 2009... is repealed".

Permits establishment of association health plans The American Healthcare Reform Act allows small businesses to join together to establish association health plans.

Institutes medical liability reform The American Healthcare Reform Act makes several changes to medical liability reform, including establishing a voluntary right of removal to federal court for cases involving a federal payer or federal statute. The American Healthcare Reform Act would also establish a mandatory, prediscovery independent medical review panel.(4)

For further information on this topic please contact Stephanie P Hales, Patricia DeLoatche, Dora Hughes or Laura R Cohen at Sidley Austin LLP by telephone (+1 202 736 8000) or email (shales@sidley.com, pdeloatche@sidley.com, dhughes@sidley.com or laura.cohen@sidley.com). The Sidley Austin website can be accessed at www.sidley.com.

Endnotes

(1) The RSC is Congress's largest conservative caucus, with more than 170 members.

(2) The draft legislative text and other materials released by the RSC specify that the American Healthcare Reform Act would "repeal the Patient Protection and Affordable Care Act and related reconciliation provisions" enacted through the Healthcare and Education Reconciliation Act of 2010.

(3) A number of other members of Congress have introduced legislation relating to Affordable Care Act repeal and replacement. The examples noted here are not exhaustive; there have been other proposals introduced to date, including proposals from Republican members of Congress who may be particularly influential in health reform discussions and negotiations in the 115th Congress.

(4) For additional information on this legislation, please see the Final Bill, Section-by-Section Summary, Bill Summary and Further Explanation – Standard Deduction for Health Insurance.

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