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Alerts and Updates

Senate Releases Discussion Draft of Health Care Reform Legislation

June 23, 2017

Senate Releases Discussion Draft of Health Care Reform Legislation

June 23, 2017

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It must be emphasized that the current provisions of the Better Care Act remain subject to change based on the need to secure sufficient votes to ensure its passage through the Senate.

On June 22, 2017, the Senate released a discussion draft of the Better Care Reconciliation Act of 2017 (the “Better Care Act”), the next step to formally repealing and replacing the Patient Protection and Affordable Care Act (the “ACA”). As outlined in our prior Alert, the House of Representatives had previously passed the American Health Care Act of 2017 (the “AHCA”) on May 4, 2017. The current provisions of the Better Care Act, as discussed in this Alert, remain in discussion form only and are subject to change based on continued negotiations.

The Better Care Act was unveiled after weeks of closed-doors negotiations among Senate Republications and, as with the AHCA, takes major steps to roll back the ACA. A vote may occur as early as next week, with continued negotiations expected due to the fact that Senate Republicans can lose only two votes in their party to secure passage of the Better Care Act. If the Better Care Act passes the Senate, it would need to be reconciled with the AHCA before going to President Trump’s desk for signing.

As with the AHCA, the Better Care Act would repeal a number of the ACA’s key features – such as the employer mandate and the ACA’s numerous taxes – and would restructure the Medicaid program.

Significant changes between the AHCA and the Better Care Act include:

Provision

ACA

AHCA

Better Care Act Proposal

Individual Mandate

Individuals required to purchase health insurance or pay penalty.

Penalty reduced to zero – effectively repealing individual mandate; however, if an individual had a lapse in coverage for greater than 63 days, issuers will assess a flat 30% late-enrollment surcharge on top of their base premium.

The individual mandate would be eliminated and the government would no longer penalize individuals for failing to have health insurance (including through premium surcharges upon a lapse in coverage).

Pre-Existing Conditions

Insurance companies are not allowed to increase an individual’s premiums or deny coverage based on pre-existing conditions.

States could allow insurers to increase someone’s premiums based on their pre-existing conditions if they had a break in coverage.

Identical to ACA – insurance companies are not allowed to increase an individual’s premiums or deny coverage based on pre-existing conditions.

It must be emphasized that the current provisions of the Better Care Act remain subject to change based on the need to secure sufficient votes to ensure its passage through the Senate. As Senate Majority Leader Mitch McConnell’s goal is to place the Better Care Act for vote next week, such changes could occur very quickly up to the time of a vote. Attorneys in the Employee Benefits and Executive Compensation Practice Group at Duane Morris are monitoring these developments and will provide an update on any material changes. In addition, we will provide an update if the vote takes place prior to the Fourth of July holiday recess.

If the Senate does pass the Better Care Act – in either its current or a revised form – it is important to note that this will not be the end of the road to repeal and replace the ACA. To enact law, both the House and the Senate must vote on identical legislation, which means the two chambers of Congress would need to reach an agreement on how to reconcile the differences between the AHCA and the Better Care Act. Two key provisions are outlined in the chart above; however, there are also significant differences between the AHCA and the Better Care Act with respect to Medicaid and premium tax credits. The final reconciled bill would then need to pass another round of voting in both the House and the Senate.

For Further Information

If you have any questions about this Alert, please contact any of the attorneys in our Employee Benefits and Executive Compensation Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.