Senate Republicans have released a draft of the Better Care Reconciliation Act (BCRA) that aims to repeal and replace a number of provisions in the Affordable Care Act (ACA). The Senate bill mirrors many of the terms in the American Health Care Act (AHCA) passed by the House of Representatives in April. For example, both bills repeal many of the taxes under the ACA, delay the so-called "Cadillac tax," eliminate the penalties under the individual and employer mandates, and loosen restrictions on health savings accounts and health flexible spending arrangements. However, the BCRA differs from the AHCA in a number of respects, including:

  • The AHCA would replace the ACA's income-based subsidies for Marketplace coverage with subsidies based, to a significant degree, on age. On an aggregate basis, these age-based subsidies are expected to be less than the ACA subsidies. The BCRA would retain the ACA framework of income-based subsidies, although at reduced levels and with a narrower range of eligibility (the BCRA cuts off eligibility at 350 percent of the poverty line, where the ACA set the cutoff at 400 percent).

  • The BCRA's modifications to Medicaid funding differ in certain respects from the AHCA's. Both would result in significant reductions in Medicaid spending. The BCRA's reductions would occur more gradually, with the funding for states that expanded Medicaid under the ACA phasing out between 2021 and 2024. However, it is expected that the indexing rules under the BCRA would lead to deeper reductions in Medicaid spending over time.

  • Both the BCRA and the AHCA would expand states' ability to waive out of certain ACA requirements (including the requirement for individual insurance to provide a prescribed set of "essential health benefits"). The BCRA approach gives states greater latitude generally, but does not include the AHCA provision that would allow states to permit insurers to charge individuals with preexisting conditions a higher premium for up to one year.

  • The AHCA would allow insurers to impose a one-year, 30 percent increase in premiums on those who seek to reenter the individual insurance market after a substantial lapse in coverage. The BCRA includes no similar provision.

  • The BCRA includes provisions specifically supporting creation of fully insured health plans by certain business associations, where the associations have been established for reasons beyond the provision of health coverage to members.

Senate Majority Leader Mitch McConnell has stated his intent to bring the bill to a vote next week before the Senate recesses for the Fourth of July holiday, but the bill is likely to face a number of challenges, which include:

  • Scoring from the Congressional Budget Office. This scoring is expected to be issued early next week and to project the effect the bill would have on the federal budget, on individual health insurance premiums, and on the number of individuals who will gain or lose health insurance coverage if the BCRA is enacted.

  • Parliamentary considerations to determine whether the BCRA provisions qualify for the Senate process known as Budget Reconciliation. This process enables the bill to avoid a filibuster by Senate Democrats, but imposes limits on what may be included in the bill.

  • Objections and concerns raised by both the most conservative and most moderate Republican Senators.

  • Efforts by Senate Democrats who are united in opposition to the BCRA.

Although all of these considerations entered into the House Republicans' negotiation and drafting of the AHCA, they may have a greater impact on deliberations in the Senate, where Republicans' 52-seat majority means the issue could turn on the loss of just three GOP votes.

Whether or not the bill passes, changes are expected for the ACA and a range of other laws and regulations affecting health care and health benefits. Ballard Spahr attorneys established the Health Care Reform Initiative to monitor and analyze legislative and regulatory developments. We will continue to follow developments in this area as they emerge. Changes may come to the Health Care Reform Dashboard, but it will continue to serve as an online resource center for news and analysis on developments regarding the ACA and health care reforms that follow.

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