Summary of the Graham-Cassidy-Heller-Johnson Amendment

Summary of Graham-Cassidy-Heller-Johnson Amendment

This summary describes key provisions of a proposal by Senators Graham, Cassidy, Heller, and Johnson.

drafted as an amendment in the nature of a substitute to HR 1628, the House-passed bill to repeal and replace

the Affordable Care Act (ACA).

Date plan

announced

September 13, 2017, as amended September 25, 2017

Overall

approach



, to fund state-designed

health care reform programs. Block grant funding would be instead of current federal

spending for marketplace premium and cost sharing subsidies and the Medicaid

expansion. Effectively, states must elect block grant funding or their residents will be

ineligible for any federal financial assistance for health care coverage after 2019.

Additional funding of $10 billion in 2019 and $15 billion in 2020 is available to states

to establish a reinsurance program.



 by increasing annual tax-free

contribution limit and through other changes.



Repeal

the enhanced FMAP for the Medicaid expansion effective January 1, 2020.

 and limit growth in

federal Medicaid spending beginning in 2020. State per-enrollee amounts for 4

groups would increase at a rate of medical CPI for children and adults and medical CPI

plus one percentage point for the elderly and disabled adults for 2020 – 2024 and

then by CPI-U for children and adults and medical CPI for elderly and disabled adults

for 2025 and beyond; provide state option to receive a block grant for nonelderly

non-disabled adults.

 for

nonelderly adults who are not disabled or pregnant.



 of $422 million for

FY 2017.



Individual

mandate

 Tax penalty for not having minimum essential coverage is eliminated effective January

1, 2016

Premium

subsidies to

individuals

 For 2018-2019, ACA premium tax credit formula and eligibility standards are

unchanged, except

- For end of year reconciliation of advance credits, the cap on repayment of

excess advance payments does not apply

Summary of the Graham-Cassidy-Heller-Johnson Amendment 2

- Tax credits cannot be used for plans that cover abortion, effective 2018.

 Starting in 2020, repeal ACA income-based premium tax credits

Cost sharing

subsidies to

individuals

 ACA cost sharing subsidies are repealed effective January 1, 2020.

Individual

health

insurance

market rules

 Some ACA market rules are retained, including prohibition on denying coverage

based on health status and prohibition on excluding pre-existing conditions.

 Starting in 2020 through 2026, states will establish other market rules for coverage

under the block grant related to

o Rating factors. States may not permit insurers to vary premium rates on the

basis of sex or genetic information. For all other factors – including health

status (including pregnancy), age, occupation, neighborhood, marital status,

duration of coverage, etc. – states have flexibility to permit insurers to vary

insurance premiums at issue and at renewal.

o Single risk pool. States may also permit insurers to establish any number of

separate risk pools for individuals enrolled in health coverage

 Conflicting language in the bill appears to limit state flexibility to

establish new rating rules only for age and geographic variation.

o Covered benefits. States have flexibility to determine covered benefits and the

level of covered benefits. Current law requirement to offer policies at certain

actuarial value levels would not apply. The current law requirement to limit

annual deductibles and other cost sharing expenses under a policy would not

apply.

 States must continue to ensure compliance with federal laws related to insurance

coverage for minimum maternity stay, mental health parity, coverage of

reconstruction following mastectomy, and prohibition of discrimination based on

genetic information.

 Provide $25 billion over 2 years ($10 billion in 2019 and $15 billion in 2020) to states

to establish reinsurance programs.

Benefit

design

 ACA requirement to cover 10 essential health benefit categories no longer applies to

coverage under the block grant. States shall establish rules for covered benefits

under the block grant program

 ACA requirement for maximum out-of-pocket limit on cost sharing no longer applies

to coverage under the block grant. States shall establish rules for allowable cost

sharing under the block grant program

 ACA requirement for plans to be offered at specified actuarial values/metal levels no

longer applies to coverage under the block grant. States shall establish rules for the

actuarial value of coverage under the block grant program.

 Prohibition on lifetime and annual dollar limits is not changed; however, the

prohibition on annual limits applies to limits on essential health benefits, which states

can redefine under the block grant program

 Requirement for individual market plans to cover preventive benefits with no cost

sharing no longer applies. States shall establish rules for covered benefits under the

block grant program

 Requirement for all plans to apply in-network level of cost sharing for out-of-network

emergency services is not changed; it is not clear whether states can set different

rules under the block grant program

 Redefine qualified health plans eligible for tax credits to exclude any plan that covers

abortion services beyond those for saving the life of the woman or in cases of rape or

incest (Hyde amendments), effective in 2018

Women’s

health

 ACA essential health benefit requirement, including requirement to cover maternity

care as an essential health benefit, for individual and small group health insurance

policies no longer applies to coverage under the block grant. States shall establish

rules for covered benefits under the block grant program

 Requirement for individual plans to cover preventive benefits, such as contraception

and cancer screenings, with no cost sharing no longer applies to coverage under the

block grant. States shall establish rules for covered benefits under the block grant

program

Summary of the Graham-Cassidy-Heller-Johnson Amendment 3

 Prohibition on gender rating is not changed

 Prohibition on pre-existing conditions exclusions, including for pregnancy, prior C-

section, and history of domestic violence, is not changed

 Prohibition on rating based on health status, including pregnancy, appears to be

changed for coverage under the block grant program. States can establish rating

rules and allow premiums to vary for individuals, except premiums cannot vary based

on sex or genetic information.

 Prohibit federal Medicaid funding for Planned Parenthood clinics for one year,

effective upon date of enactment. Specifies that federal funds to states including

those used by managed care organizations under state contract are prohibited from

going to such entity

 Redefine qualified health plans eligible for tax credits to exclude any plan that covers

abortion services, beyond those for saving the life of the woman or in cases of rape or

incest (Hyde amendment), effective in 2018

 Disqualify small employers from receiving tax credits if their plans include abortion

coverage beyond Hyde limitations, effective in 2018

 New block grant funds cannot be used to pay for abortion or for health insurance

coverage of abortion

 Prohibit HSA funds from being used to pay for either abortion services or premiums

for plans that include coverage for abortion beyond Hyde limitations Clarify that state

1332 waivers will not affect the authority of the Secretary of HHS to enforce the

requirement that premiums for plans covering abortion include a separate,

segregated payment for the abortion benefits

Health

Savings

Accounts

(HSAs)

 Modify certain rules for HSAs, changes take effect January 1, 2018 unless otherwise

noted:

- Increase annual tax free contribution limit to equal the limit on out-of-pocket

cost sharing under qualified high deductible health plans ($6,550 for self only

coverage, $13,100 for family coverage in 2017, indexed for inflation).

- Additional catch up contribution of up to $1,000 may be made by individuals

over age 55. Both spouses can make catch up contributions to the same HSA.

- Amounts withdrawn for qualified medical expenses are not subject to income

tax. Qualified medical expense definition expanded to include over-the-

counter medications and expenses incurred up to 60 days prior to date HSA

was established

- Tax penalty for HSA withdrawals used for non-qualified expenses is reduced

from 20% to 10%, effective January 1, 2017.

- Provide that qualified medical expenses include expenses for premiums for

qualified high deductible health plans; qualified premium expenses must be

net of any otherwise applicable ACA premium tax credit. In addition,

premium expenses claimed as deduction by self-employed individuals, or

premium contribution by employees excluded from gross income cannot be

paid with HSA funds

- Also, provide that qualified medical expenses include fees paid to private

concierge physician practices

- Expenses paid with HSA funds cannot be used to pay for either abortion

services or premiums for plans that include coverage for abortion beyond

Hyde limitations

High-risk

pools

 States may use block grant funds to establish mechanisms for high-risk individuals

to purchase non-group coverage, and for other purposes

Selling

insurance

across state

lines

 No provision

Exchanges/

Insurance

through

associations

 The bill does not change ACA provisions requiring establishment of State exchanges.

Other language eliminating marketplace subsidies and allowing states to set rules for

covered benefits, cost sharing, rating practices, and the number of allowable risk

pools within a market seems to mean that exchanges would not continue.

Summary of the Graham-Cassidy-Heller-Johnson Amendment 4

 Single risk pool rating requirement for plans no longer applies. States may set rules

for the number of allowable risk pools within a market as part of the block grant

program

Dependent

coverage to

age 26

 Requirement to provide dependent coverage for children up to age 26 for all

individual and group policies is not changed.

Other private

insurance

standards

 Minimum medical loss ratio standards for all health plans are not changed

 Requirement for all health plans to offer independent external review is not changed.

 Requirements for all plans to report transparency data, and to provide standard, easy-

to-read summary of benefits and coverage are not changed.

Employer

requirements

and

provisions

 Tax penalty for large employers that do not provide health benefits is reduced to

zero, retroactive to January 1, 2016

 Wellness incentives permitted under the ACA are not changed

 Repeal tax credits for low-wage small employers, effective January 1, 2020. Prohibit

small business tax credits from being used to purchase plans that cover abortions

beyond Hyde limitations, effective in 2018

Medicaid

Financing

 Repeal the enhanced match rate for the Medicaid expansion for expansion states as

of January 1, 2020.

- Eliminate coverage group for adults up to 138% FPL as of September 1, 2017

for non-expansion states and as of January 1, 2020 for expansion states.

- Eliminate option to extend coverage to adults above 133% FPL as of September

1, 2017 for non-expansion states and as of January 1, 2020 for expansion

states

- Creates new mandatory coverage group as of January 1, 2020 for members of

Indian tribes up to 138% FPL in states that had expanded coverage as of

December 31, 2019, who were enrolled in Medicaid as of December 31, 2019,

and do not have a break in eligibility of 6 months (or a longer period specified

by the state).

- Ends the “expansion state” enhanced match rate transition percentage as of

January 1, 2020.

 Convert federal Medicaid financing to a per capita cap beginning in FY 2020.

- Set total medical assistance expenditures for a state as the sum of the per-

enrollee amounts for 4 groups - elderly, blind and disabled adults, childrenand

other adults – multiplied by the number of enrollees in each group.

- The base year for per-enrollee amounts is determined using state-selected 8

consecutive quarters of expenditure data from FY 2014 through the third

quarter of FY 2017 for enrollees subject to the per capita caps. States that did

not provide Medicaid to individuals in the nonelderly non-disabled adult

category as of 7/1/15, but did provide coverage for that category

subsequently but not later than the 4

quarter of FY 2016, can use fewer than

8 but at least 4 consecutive quarters (as drafted does not appear to apply to

any state as all states cover some low-income parents and pregnant women).

Secretary has discretion to adjust data as deemed appropriate. Base year

amounts are inflated to 2019 by medical CPI. The target expenditures in 2020

are calculated based on the 2019 per-enrollee amounts for each enrollment

group adjusted to maintain the ratio of non-DSH supplemental payments to

total payments and multiplied by the number of enrollees in each group.

Expenditures exclude administrative costs, DSH, Medicare cost-sharing, and

safety net provider payment adjustments in non-expansion states. Certain

categories of individuals, including CHIP, those receiving services through

Indian Health Services, those eligible for Breast and Cervical Cancer services,

partial-benefit enrollees (including partial duals), and children who qualify on

the basis of being blind or disabled are excluded.

Summary of the Graham-Cassidy-Heller-Johnson Amendment 5

- Increase per-enrollee amounts by medical CPI for adults and children and

medical CPI plus one percentage point for the elderly and disabled for 2020

through 2024. For FY 2025 and beyond, increase per-enrollee amounts by

CPI-U for adults and children and medical CPI for elderly and disabled.

- Direct the Secretary to calculate and apply per capita cap payment provisions

for categories that were not satisfactorily submitted as if they were a single

1903A enrollee category and the growth factor otherwise applied shall be

decreased by one percentage point.

- Direct the Secretary to adjust target per-enrollee amounts by .5% to 2% for

states spending 25% or more above the mean per capita expenditures and by

.5% to 3% for states spending 25% or more below the mean per capita

expenditures, to be closer to the mean beginning in 2020. (Adjustments

applied in aggregate and not for each enrollee group in 2020 and 2021).

Adjustments are to be budget neutral to the federal government and excludes

adjustments to certain low-density states (Alaska, Montana, North Dakota,

South Dakota and Wyoming).

- States with medical assistance expenditures exceeding the target amount for a

fiscal year will have payments in the following fiscal year reduced by the

amount of the excess payments.

 Add state option to elect Medicaid block grant instead of per capita cap for nonelderly

non-disabled adults for a period of 5 fiscal years, beginning in FY 2020, through the

Medicaid Flexibility Program.

- States are required to provide for eligibility for mandatory adults (including

adults receiving cash assistance, pregnant women with incomes up to 133%

FPL and foster care children up to age 26).

- States must provide, as targeted health assistance, hospital care, lab and x-ray

services, nursing facility services, physician services, home health care, rural

health clinic and federally-qualified health center services, family planning

services, pregnancy-related services including nurse midwife and freestanding

birth center services. The targeted health assistance must have an actuarial

value of 95% of Medicaid benchmark coverage and must include mental health

and substance use disorder services on parity with physical health services.

States may impose cost sharing on enrollees up to 5% of family income

annually.

- States would not have to comply with other federal requirements including

comparability, statewideness, free of choice of provider, and other provisions

deemed appropriate by the Secretary.

- The block grant amount for the initial fiscal year a state elects the block grant

is based on the state’s target per capita medical assistance expenditures for

the fiscal year multiplied by the number adult enrollees (adults in the base

period increased by population growth plus three percentage points) and the

federal average medical assistance matching rate for the state for the fiscal

year. In subsequent fiscal years, the block grant amount is increased by

annual CPI-U.

- States have a maintenance of effort (MOE) requirement equal to the state share

of the CHIP enhanced FMAP without the 23 percentage point increase.

- States must submit an application that includes a description of the program,

including the conditions of eligibility for program enrollees, the amount,

duration and scope of services, and covered benefits; a certification that the

state will meet requirements related to data and program evaluations; and a

statement of program goals related to quality, access, growth rate targets,

consumer satisfaction, and outcomes. The application is subject to state and

federal notice and comment periods.

 Provide for a maximum of $5 billion for public health emergencies between 1/1/20

and 12/31/24 that is excluded from per capita cap and block grant amounts.

Summary of the Graham-Cassidy-Heller-Johnson Amendment 6

Amounts for a state would be equal to the amount spent on medical assistance for

enrollees in areas of state subject to emergency that exceeds amount spent in most

recent fiscal year for that population without the emergency. Secretary must declare

public health emergency and determine that exclusion is appropriate.

 Provide 100% FMAP for designing, developing, installing, and operating information

processing and retrieval systems for FY 2018 and 2019 for states that select the most

recent 8 consecutive quarters for which data are available as their per capita cap base

period.

 Reduce FY 2021-2025 DSH cuts for certain states (amount of reduction is the

difference between the state’s CY 2020 Market-based Health Care Grant Program

(described below) allotment increased by medical-CPI and the state’s allotment for the

last CY). Provides 1-time DSH increase for FY 2026 for these states (increase is the

difference between state’s total DSH cuts for FY 2021-2025 and the total DSH cut

reduction received by the state for FY 2021-2025).

 Phase down the safe harbor threshold for provider taxes from 6.0% to 5.6% in FY

2021; 5.2% in 2022; 4.8% in 2023; 4.4% in 2024; and 4% in 2025 and beyond.

 Provide $8 billion for FY 2023-2026 for quality performance bonus payments to states

that have lower than expected medical assistance expenditures and meet quality

performance or improvement for certain measures defined by the Secretary with state

consultation. Payments provided to states as an increase in FMAP.

 Create a Home and Community Based Services (HCBS) demonstration of $8 billion

from January 2020 through December 2023 for 100% FMAP for HCBS provided under

Section 1915 (c), (d), or (i) to per capita cap enrollees who are seniors or adults with

disabilities. The Secretary shall select states with priority given to 15 with lowest

population density.

 Increase federal match to 100% for medical assistance provided by non-Indian Health

Service providers for tribal enrollees.

 Increase FMAP for states that have separate poverty guidelines in 2017 that are higher

than the poverty guidelines for most states (Alaska and Hawaii), effective as of the 2

quarter of FY 2018 and for each FY thereafter, as follows: Alaska’s FMAP shall be

increased by 25% of the weighted average of the FMAPs for states that did not have a

separate poverty guideline, and Hawaii’s FMAP shall be increased by 15% of the

weighted average of the FMAPs for states that did not have a separate poverty

guideline, not to exceed 100%.

Other Changes

 Create state option to conduct eligibility redeterminations every 6 months (or more

frequently) for expansion enrollees beginning October 1, 2017; increase the state

administrative match rate by 5 percentage points from October 1, 2017 through

December 31, 2019 for administering more frequent redeterminations.

 Change 3-month retroactive coverage requirement to 2 months beginning October 1,

2017 except for those 65+ or individuals eligible based on a disability

 Eliminates enrollment simplification and Marketplace coordination requirements as of

January 1, 2020.

 Create state option to require work as a condition of eligibility for nondisabled,

nonelderly Medicaid enrollees as of October 1, 2017, by participating in work

activities as defined in the TANF program

for a period of time as determined by the

state and as directed and administered by the state.

- Exempts pregnant women through 60-days post-partum, children under 19,

individuals who are the only parent/caretaker relative in family of child under

age 6 or child with disability, individuals under age 20 who are married or

head of household and maintain satisfactory attendance at secondary school

or equivalent or participate in education directly related to employment,

regular participants in inpatient or intensive outpatient substance use disorder

Summary of the Graham-Cassidy-Heller-Johnson Amendment 7

treatment and rehabilitation programs that satisfy state criteria, and full-time

students at institutions of higher education.

- Provides 5 percentage point increase in the federal administration matching

rate to implement the work requirement.

 Provide state option to cover qualified psychiatric hospital (IMD) services for adults

ages 21-65 beginning in FY 2019. Services for individuals limited to up to 30

consecutive days and up to 90 days in a calendar year. States must maintain the

number of licensed IMD beds and the state funding for IMD services and psychiatric

outpatient care as of enactment of provision or, if higher, as of date of application to

provide coverage. Federal matching funds are 50% or the state’s regular FMAP as of

September 30, 2018.

 Repeal the essential health benefits requirement for those receiving alternative

benefit packages, including the expansion group, as of December 31, 2019.

 Eliminate hospital presumptive eligibility provisions for all groups and provision

allowing other providers to determine presumptive eligibility for expansion adults and

low-income parents, effective January 1, 2020

 Repeal enhanced FMAP for the Community First Choice Option to provide attendant

care services effective January 1, 2020

 Prohibit federal Medicaid funding for Planned Parenthood for one year, effective upon

date of enactment

 Require states to report on (1) spending and enrollment for the groups that will be

subject to the per capita cap and those to be excluded from the per capita cap

beginning 10/1/18, (2) IMD spending beginning 60 days after enactment, and (3)

data on children with complex medical conditions beginning 1/1/20.

Medicare

Revenues

 Reinstate the tax deduction for employers who receive Part D retiree drug subsidy

(RDS) payments to provide creditable prescription drug coverage to Medicare

beneficiaries, beginning after December 31, 2016

 The HI payroll tax on high earners is not changed

Coverage enhancements

 ACA benefit enhancements (no-cost preventive benefits; phased-in coverage in the

Part D coverage gap) are not changed

Reductions to provider and plan payments

 ACA reductions to Medicare provider payments and Medicare Advantage payments

are not changed

Other ACA provisions related to Medicare are not changed, including:

 Increase Medicare premiums (Parts B and D) for higher income beneficiaries (those

with incomes above $85,000/individual and $170,000/couple).

 Authorize an Independent Payment Advisory Board to recommend ways to reduce

Medicare spending if the rate of growth in Medicare spending exceeds a target

growth rate.

 Establish various quality, payment and delivery system changes, including a new

Center for Medicare and Medicaid Innovation to test, evaluate, and expand methods

to control costs and promote quality of care; Medicare Shared Savings Accountable

Care Organizations; and penalty programs for hospital readmissions and hospital-

acquired conditions.

State role

 Establish new short-term block grant program for states called the Market-based

Health Care Grant Program.

- Appropriate funding of $1.176 trillion over 7 years ($146 billion for calendar

year 2020, $146 billion for 2021, $157 billion for 2022, $168 billion for 2023,

Summary of the Graham-Cassidy-Heller-Johnson Amendment 8

$179 billion for 2024, $190 billion for 2025, and $190 billion for 2026).

Block grant funds would be available instead of ACA spending for private

marketplace subsidies and the Medicaid expansion. No block grant program

funding is authorized or appropriated after 2026.

- Program funds can be used for any of 7 purposes:

 a program or mechanism to help high-risk individuals purchase health

coverage

 a reinsurance program to stabilize premiums in the private individual

market

 direct payments to health care providers

 assistance to reduce deductibles, other cost sharing and out-of-pocket

costs for individuals enrolled in the individual market

 a program or mechanism to help individuals buy non-group coverage

 to provide private insurance coverage to individuals who are eligible

for Medicaid, limited to no more than 15% of a state’s allotment,

except that states may use 20% of their allotment for this purpose if

states submit a waiver application and the Secretary determines that

funds are used to supplement and not supplant state Medicaid

spending and provided that states certify that block grant funds will

not be used to finance the non-Federal share of Medicaid or other

spending

 to provide private managed care coverage to individuals who are not

eligible for Medicaid or CHIP

- Block grant funds cannot be used for health insurance coverage of abortion or

to pay for abortion; block grant funds cannot be used for required state

contributions; Medicaid/CHIP rules for citizenship and documentation apply to

state uses of block grant funds

- States providing coverage through this program will set rules relating to

insurer rating practices and covered benefits. No standard is established

under the bill for state rules except that states may not allow premiums to be

based on sex or genetic information. States can allow rating based on health

status and any other factor. States can set standards (if any) for covered

benefits and allowable cost sharing under insurance policies.

- States must use at least 50% of block grant funds to provide assistance to

individuals with incomes 50%-300% of the poverty level.

- Allocation of block grant amounts in 2020 is based on State spending in the

premium assistance base period inflated to November 2019. The premium

assistance base period amount is determined using state-selected 4

consecutive quarters from FY 2014 through the first quarter of FY 2018 for

federal payments to states for Medicaid expansion enrollees and Basic Health

Program (BHP) enrollees, and advance payment of premium tax credits (APTCs)

and cost sharing subsidies provided to marketplace enrollees. Base period

amounts for Medicaid expansion payments are inflated to November 2019 by

the projected increase in Medicaid expenditures as determined by the

Medicaid and CHIP Payment and Access Commission. Base period amounts for

BHP payments, APTCs, and cost sharing subsidies are inflated to November

2019 by medical CPI.

- The base period amount for low density states with per capita health care

spending that is 20% greater than the average per capita spending across all

states will be increased by the percentage by which the state’s per capita

spending exceeds the average spending.

- In 2026, the allocation of block grant funding is equal to 4/10 of the base

period amount and 6/10 based on the ratio of the number of low-income

residents with incomes 50%-138% of the poverty level to the total number of

Summary of the Graham-Cassidy-Heller-Johnson Amendment 9

low-income residents (50%-138% FPL) across all states. Allocations for 2021-

2025 would phase-in the transition from the allocation based on the state’s

base period funding to the allocation in 2026 based on the state’s share of the

low-income population.

- Beginning in 2022, adjustments to state allocations will also be made based

on population risk factors using clinical risk categories and may be adjusted

based on population factors that impact health expenditures, including

demographic characteristics, wage rates, cost of care, and income. If the total

state allocation amounts using the specified formula and including any

adjustments exceed the appropriated block grant amount for any year, the

amount for each state would be reduced proportionally. If the allocations are

less than the appropriated block grant amount, additional funds will be

distributed based on the state’s share of low-income residents with incomes

50%-138% of the poverty level.

- An additional $6 billion in 2020 and $5 billion in 2021 will be available to

increase the block grant amounts for states—25% of the total will go to low-

density states; 50% will go to non-expansion states; and 25% will go to

expansion states.

- An additional $750 million is appropriated to increase the allotments for

2023-2026 for states that implemented the Medicaid expansion after

December 31, 2015. This provision appears to benefit Louisiana and Montana.

 The bill does not amend ACA state waiver authority under Section 1332. However, it

requires that pass-through funding continue to be available to states with approved

1332 waivers from 2020 through 2023 and appropriates $500 million for these

payments.

 State consumer assistance/ombudsman program is not changed, and is not funded.

 State option to establish a Basic Health Program (BHP) is not changed, though federal

funding to support BHP would end in 2020.

 States continue to administer the Medicaid program with Federal matching funds

available up to the federal per capita cap with the option of a block grant for certain

populations.

Financing

 Certain ACA taxes repealed, effective January 1, 2017, except where otherwise noted:

- Tax penalties associated with individual and large employer mandate, reduced

to zero effective on January 1, 2016

- Excise tax on medical devices repealed, effective January 1, 2018

- Provision excluding costs for over-the-counter drugs from being reimbursed

through a tax preferred health savings account (HSA)

- Other expansions of HSA tax preferences, effective January 1, 2018

- Provision increasing the tax (from 10% to 20%) on HSA distributions that are

not used for qualified medical expenses

 Cap federal Medicaid funding, effective FY 2020; enhanced match for Medicaid

expansion population repealed beginning January 1, 2020

 Appropriate $2 billion for federal administration of the premium tax credit changes,

State block grant program, Medicaid changes, and other implementation

responsibilities.

Endnotes

Section 204 of the proposal contains two provisions that appear in conflict. Basically,

the section says that certain ACA rules no longer apply to coverage funded by the block

grant. These include a portion of ACA rating rules (relating to geography and age rating),

rules requiring coverage of essential benefits, preventive benefits, rules capping

deductibles and other cost sharing in a year, the requirement to offer child only plans,

and the single-risk-pool rating requirement. By specifying a list of provisions that no

longer apply, this language retains other current law provisions that would continue to

apply.

However, the section goes on to say states can establish rules for rating practices,

covered benefits, and the number of risk pools insurers can establish in a market for

health insurance established under a coverage program funded by the block grant, and if

Summary of the Graham-Cassidy-Heller-Johnson Amendment 10

those rules conflict with any of several specified provisions in the law, the state’s rule are

considered to be in compliance with the specified provisions (even if they are not).

With respect to rating rules, the section could be read to allow States to only further vary

rating rules with respect to rating based on age and geographic location. States also can

allow insurers to have more than one risk pool.

However, because Section 204 goes on to explicitly say that states in their application

must identify the criteria by which a health insurer could vary premiums for coverage

(except that in no case could an insurer vary premiums based on sex or genetic

information) the bill could also be read to allow States to allow rating variation based on

any factor, other than sex or genetic information. Inclusion of this language would make

no sense if the intent was to limit state flexibility to only change existing rating

provisions with respect to geography and age.

Work activities under the TANF program include unsubsidized employment, subsidized

private sector employment, subsidized public sector employment, work experience

(including refurbishing publicly assisted housing) if sufficient private sector employment

is not available, on-the-job training, job search and job readiness assistance, community

service programs, vocational educational training (not to exceed 12 months for any

individual), job skills training directly related to employment, education directly related to

employment for those who have not received a high school diploma or certificate of high

school equivalency, satisfactory attendance at secondary school or in a general

equivalency certificate course for those who have not already completed, and provision of

child care services to an individual participating in a community service program.

Sources of

information

https://www.cassidy.senate.gov/imo/media/doc/LYN17752.pdf