American Health Care Act Pulled: Details and What to Expect Next

Contributed by: James Smiertka James Smiertka

Last week, the American Health Care Act (AHCA) was pulled from the House floor when it was clear that there would not be enough votes to pass it. President Trump conceded that they were about 10 to 15 votes short with no support from Democrats and even some moderate Republicans. The opposition came amid worries that the bill would take away medical insurance from millions of Americans. Some of the House’s most conservative members (members of the Freedom Caucus) were instrumental to the bill’s failure as they viewed parts as too similar to Obamacare, among other concerns.

Main Takeaways

  • The AHCA would have rescinded a range of taxes created by Obamacare, ended the penalty on people who refuse to obtain health insurance, and ended Obamacare’s income-based subsidies while creating less-generous age-based tax credits.
  • The AHCA would have ended Obamacare’s expansion of Medicaid, cut future Medicaid funding, and let states impose work requirements on some Medicaid recipients.

    • States would have been allowed to deny Medicaid coverage for able-bodied adults without children who did not work, study, train or seek work.

  • The nonpartisan Congressional Budget Office (CBO) estimated the AHCA would:

    • Lower premiums by 10%.
    • Reduced the federal deficit by $337 billion.
    • Capped Medicaid spending for the first time (saving taxpayers $880 billion).
    • Increased choices for consumers.
    • Lowered taxes by $883 million (targeted toward middle-income Americans and small business owners).
  • The CBO also estimated that the AHCA would have immediately stripped health insurance from millions of Americans.

    • The CBO stated that 14 million people would be uninsured by next year, rising to 21 million in 2020 and 24 million in 2026.

  • The conservative House Freedom Caucus wanted to more aggressively lower insurance costs and to dismantle federal regulation of insurance products along with eliminating federal standards for minimum benefits that must be provided by health insurance products.
  • The American Psychological Association (APA) voiced major concern that the AHCA would have reduced mental health and substance use coverage for millions of Medicaid enrollees and contributed to the loss of coverage for millions more.

What’s Next?

Based on Representative Paul Ryan’s comments immediately after the AHCA bill was pulled, there was no indication that another attempt at healthcare reform was imminent. Within a few days, there was news that House Republican leaders and the White House had restarted negotiations for healthcare legislation, but no timeline has been given. It seems likely that the Trump administration will look to focus on other priorities in the near future as well. Healthcare reform is still a top priority for the Trump administration, but it’s worth noting that a total repeal of the Affordable Care Act (ACA) may be difficult to pass through the Senate, so the failure of this bill also has the potential to be a catalyst for Congress to combine efforts to make changes to the existing ACA. The current administration believes that this will be a tough year for the ACA, and some Democrats are open to change so it’s likely not a question of if it will be revisited, but a question of when and how. If you have any questions about how changes created by the new administration may affect your financial situation and plan, reach out to us!

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®

This information does not purport to be a complete description of the developments referred to in this material; it has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.