Legislative text was released on June 22nd for the Senate version of the 2017 healthcare reconciliation instruction. The text is in the form of an amendment in the nature of a substitute to the House-passed bill (H.R. 1628).We expect the Congressional Budget Office (CBO) to release a score of this legislative text next week. We also hear this legislative text is subject to change before the Senate begins consideration of the measure, which will likely occur at the end of next week. Senator McConnell has threatened to keep the Senate in session over the weekend to complete consideration of the bill as there is limited (20 hours) debate time.A few interesting observations about the bill:

• It leaves in place but makes some changes to the subsidy delivery system from the Affordable Care Act (ACA) rather than repeal it and stand up a new tax subsidy for insurance – just as the House bill did.
• It contains a slower phase out of the Medicaid expansion. However, it also uses a slower growing inflation formula that could lead to larger Medicaid reductions in the future.
• It does not include a requirement for maintaining continuous insurance coverage.
• Its tax repeal provisions are nearly identical to the House bill.

Below is a full summary of the bill:Short Summary – The bill’s name has been changed from the American Health Care Act (AHCA) to the Better Care Reconciliation Act of 2017 (BCRA).Section 101 – Reduces to $0 the definition of excess advance payments of premium tax credits.Section 102 – Lowers the threshold for the refundable tax credit for purchase of a qualified health plan to 350 percent of the poverty line. The ACA had established the threshold at 400 percent of the poverty line.Changes the criteria of aliens qualified for the tax credit and reduced cost-sharing from aliens “lawfully present” to the definition of a “qualified alien” from the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (welfare reform).Changes the methodology for calculating the premium assistance amount from the second lowest cost silver plan to the applicable median cost benchmark plan as defined by a plan that are actuarially equivalent to 58 percent of a full qualified health plan under the ACA and makes modifications for subsidies based upon age.Section 103 – Repeals the small business tax credit beginning in calendar year (CY) 2020.Section 104 – Repeals the individual mandate starting in CY 2016.Section 105 – Repeals the employer mandate starting in CY 2016.Section 106 – Creates a state stability and innovation program to fund arrangements with health insurers to address coverage and access disruption. The program is funded with $15 billion in CY 2018 and 2019 and $10 billion in CY 2020 and 2021 and is administered by the Administrator of the Centers for Medicare and Medicaid Services (CMS). An additional $62 billion is provided for long-term state stability and innovation programs starting in CY 2019 and through CY 2026. The funds are allowed to be carried over from year-to-year. States are required to match these funds starting in CY 2022. The match starts at 7 percent and grows to 35 percent.Section 107 – The Department of Health and Human Services (HHS) is provided $500 million for an implementation fund for the law.Section 108 – Repeals the so-called “Cadillac Tax” starting in CY 2020 but reinstated in CY 2026.Section 109 – Repeals the prohibition from using a Health Savings Account (HSA) for over-the-counter medications starting in CY 2017.Section 110 – Lowers the tax on distributions from HSAs for non-medical use from 20 to 10 percent and from 20 to 15 percent for Archer HSAs starting in CY 2017.Section 111 – Removes the limitation on contributions to flexible spending accounts starting in CY 2018.Section 112 – Repeals the tax on branded medications starting in CY 2017.Section 113 – Repeals the medical device tax starting in CY 2018.Section 114 – Repeals the tax on health insurance providers starting in CY 2018.Section 115 – Repeals the elimination of the deduction for expenses allocable to Medicare Part D starting in CY 2017.Section 116 – Reduces the threshold for deducting chronic care from 10 to 7.5 percent starting in CY 2017.Section 117 – Repeals the extension of the Medicare payroll taxes starting in CY 2017.Section 118 – Repeals the tax on indoor tanning services starting in fiscal year (FY) 2018.Section 119 – Repeals the Medicare tax imposed on unearned income starting in CY 2017.Section 120 – Repeals the limitation on the deductibility of health insurer executive pay starting in CY 2017.Section 121 – Maximum contributions to HSAs are increased from $2250 to $4500 for individuals.Section 122 – Allows both spouses to make catch-up contributions to the same HSAs.Section 123 – Allows medical expenses to be covered by an HSA if the account is opened within 60 days.Section 124 – Institutes a one-year ban on federal payments to Planned Parenthood and other abortion providers who provide abortions with exceptions for rape, incest, and the life of the mother.Section 125 – Takes away States’ ability which was expanded by the Affordable Care Act to make presumptive determinations of eligibility for adults. States will retain this authority for children, pregnant women, and breast and cervical cancer patients.Section 126 – Phases out States’ ability to extend coverage to adults above 133% of the federal poverty level starting in CY 2020 through CY 2023. Sunsets the essential health benefits starting in CY 2020.Section 127 – Repeals the Medicaid Disproportionate Share (DSH) Hospital payment reductions starting in fiscal year (FY) 2018 for non-expansion states.Section 128 – Shortens the duration for which newly enrolled beneficiaries can be covered from three months before becoming eligible to one month.Section 129 – Provides $10 billion in safety net funding for non-expansion states for CY 2018-2022.Section 130 – Requires states with Medicaid expansion to re-determine expansion enrollees eligibility every six months.Section 131 – Allows states to condition medical assistance to a nondisabled, nonelderly, non-pregnant person on satisfying a work requirement.Section 132 – Gradually lowers the Medicaid provider tax threshold.Section 133 – Institutes a per capita cap on the Medicaid program starting in FY 2020 where states funding is reduced by the amount the state exceeds its target. The expenditure target is calculated by using a period of 8 consecutive fiscal quarters starting no earlier than FY 2014 and inflating those numbers using the consumer price index for all urban consumers from September of the previous fiscal year to the year in question. A cap is established for each of the enrollee categories of elderly, blind and disabled, children, non-expansion adults, and expansion adults.Section 134 – Allows states to opt for a Medicaid block grant for a period of no less than ten years.Section 135 – Allows for states to receive Medicaid and Children’s Health Insurance Program (CHIP) bonus payments for quality performance in health care and long-term care output measures.Section 136 – Allows states to grandfather managed care and home and community-based services waiver programs.Section 137 – Requires HHS to solicit advice from states and their State Medicaid Director before implementing any regulations from the Medicaid provisions.Section 138 – Allows states to opt-into a program for considering inpatient psychiatric services as medical assistance.Section 139 – Allows for small business health plans to be sold across state lines through associations and franchisors.Section 201 – Eliminates funding for the Prevention and Public Health Fund.Section 202 – Provides $2 billion in FY 2018 for states to respond to the opioid crisis.Section 203 – Provides $422 million for Community Health Centers.Section 204 – Changes the ability of insurance companies in the individual and small group market to vary their rates based upon age from the current limit of 3 to 1 for adults to 5 to 1.Section 205 – Allows states to set the medical loss ratio for plans in their state starting in CY 2019.Section 206 – Provides $2 billion for FY 2017, 2018, and 2019 for the state waiver program for innovation under the ACA.Section 207 – Authorizes funding for the cost-sharing program of the ACA for CY 2018 and 2019.Section 208 – Terminates the cost-sharing program starting in CY 2020.