In June, the Senate rolled out its take on repealing and replacing the Affordable Care Act (ACA) called the Better Care Reconciliation Act (BCRA). Many Senate Republicans immediately took issue with the bill for a variety of reasons, forcing Majority Leader Mitch McConnell to work with them over the July 4th holiday to address those issues. On July 13, the second version of the bill was released, and a vote was tentatively set for next week.

You can read my take on the first version here. This new version is largely the same with some notable tweaks. Senator Ted Cruz got his amendment added to the BCRA, which would allow insurance carriers to sell non-compliant plans on the Exchanges (which presumably would be less expensive) as long as they also sold plans compliant with the ACA’s current requirements. While on paper this would appear to work as a way to give people a choice to purchase lower cost plans, what remains to be seen is whether insurance carriers would be willing to even entertain such an option (there’s a whole science behind how health insurance works, and in reality, this amendment sort of just ignores that science; underwriters tend to be leery of regulations that do that).

While the BCRA originally repealed virtually all of the ACA’s tax increases, this new version pulls a couple of those back in. The tax on net investment income and health insurance Medicare tax were pulled back in likely for political reasons. One immediate conclusion made about the original BCRA bill was that it really cut back taxes for high-income individuals without doing the same for lower-income people. Keeping these taxes in the bill both solves that political problem and provides additional funding to help pay for the Cruz Amendment, as well as free up additional money to adjust other portions of the bill.

A last significant change reflects the continued enhancement of Health Savings Accounts (HSA). HSAs would now be able to be used to pay for health insurance premiums on a tax-free basis, as well as on healthcare expenses (i.e. bills that result from actual doctor visits, etc.) While employees typically already pay for their premium contributions tax-free via Cafeteria Plans, the same option didn’t exist for individuals covered by their own plans and not through an employer. This move would eliminate that disparity.

Even now, the BCRA is not final. Next week, we’ll likely see amendments proposed and possibly added before a vote takes place. The bill has also been sent back to the Congressional Budget Office for a new score, and it’ll be interesting to see how those results are spun once it comes back. What’s clear right now is that the Senate leadership still has to win over a number of Republicans for this bill to pass, and even if it does, that’s not the end of the story. A pass would then require both the House and Senate to go into conference to come up with a blend of the BCRA and American Health Care Act, and that blended bill would then have to go back for votes in both chambers.

Stay tuned over the next few weeks for more updates on the ACA “repeal and replace” efforts. For any questions in the meantime, please contact us

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