Note: A meeting between House Republicans and President Trump concluded this morning with no agreement that the entirety of Title I of the ACA would be repealed. At this writing, it looks like the president has agreed to repeal of the Esential Health Benefits in the non-group market but not mandatory coverage to 26 and pre-existing exclusion. The vote appears to be moving to tomorrow. Neither of these two events means the vote fails, however. Trump is very popular in districts represented by Freedom Caucus members. We have seen this many times before. It isn't over until it's over.
In December, Heritage Action - the political arm of the conservative think tank Heritage Foundation - and Brian Blase at the Mercatus Center and Paul Winfree at the Heritage Foundation argued that Republicans should "rip the band-aid off" by either repealing all of the ACA or repealing the ACA provisions contained in the December 2015 bill plus Title I. (Both articles are worth the read, if you have time.) Title I of the ACA contains the insurance market reforms like requirements for Essential Health Benefits, community rating and an age ratio of 3:1 - the things that have driven up premiums on the individual market especially in states that pre-ACA had little regulation. It is the absence of these provisions that have so inflamed the Freedom Caucus and other conservative factions in the House.
Worth noting is staff and other affiliated people at the Heritage Foundation advised Trump during the campaign and have served on the transition team at HHS.
One point of the Heritage/Mercatus articles was to refute the conventional wisdom that repealing Title I through reconciliation would not survive the "Byrd Bath" - when the Senate rules determine what can be included in the bill. They make a compelling argument and one that is clearly driving the Freedom Caucus' negotiations with leadership and the White House.
Recall that reconciliation is limited by the Byrd rule which stipulates that:
“[Any provision of a reconciliation bill] that contains material extraneous to the instructions to said Committee [of jurisdiction]…shall be deemed stricken from the bill and may not be offered as an amendment from the floor.”
A provision shall be considered “extraneous” if:
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If it does not produce a change in outlays or revenues. However, a provision in which outlay decreases or revenue increases exactly offset outlay increases or revenue decreases shall not be considered extraneous.
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If the net effect does not achieve the reconciliation instructions contained in the budget instructions.
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If it is offered by a committee that does not have jurisdiction
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If it produces changes in outlays or revenues which are merely incidental to the non-budgetary components of the provision
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If it increases net outlays or decreases revenues during a fiscal year after the fiscal years covered by reconciliation and those increases or decreases are greater than outlay reductions or revenue increases resulting from other provisions.
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If it reduces Social Security payments.
For good reason, the American Health Care Act avoids repeal of any provision not safely in the non-extraneous category. We would even argue that the ACA repeal looks more like a vehicle for reforming Medicaid - a goal of Paul Ryan's since he was "drinking out of a keg." For a complete breakdown on what is in the bill before and after the most recent published amendments go here and here.
For context, a complete list of the December 2015 repeal provisions can be found here.
The absence of repeal of Title I provisions from the December 2015 bill and the American Health Care Act has given rise to the widely held belief that it would not pass muster with the Senate Parliamentarian, although the question of their inclusion was never adjudicated.
That conventional wisdom could be wrong.
The Heritage Foundation et al argument in favor of adding the ACA's Title I provisions to an ACA repeal bill comes from the Supreme Court itself which found in King v. Burwell that the three legs of the ACA stool – insurance market regulations, a coverage mandate and tax credits are inextricably linked. In their order on King v Burwell the Supremes wrote:
“Congress made the guaranteed issue and community rating requirements applicable in every State in the Nation, but those requirements only work when combined with the coverage requirement and tax credits.”
Only the Senate Parlementarian knows how she will rule if asked but it is worth at least considering the Heritage Foundation's view.
Call with questions. We are always here it seems.
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
