July 13th Amendment to the BCRA

I. Introduction
II. Individual Mandate
III. The Cruz Amendment’s Minimal Coverage Plans

A. Premium Subsidies (Tax Credits)
B. The State Stability and Innovation Program and Funding for Other Programs

IV. Medicaid Funding
V. Miscellaneous Taxes
VI. Abortions

I. Introduction

On June 13, 2017, Republican Senate leaders released an amendment (“July 13th Amendment”) to the Better Care Reconciliation Act (“BCRA”) intended to persuade holdout Republican Senators to vote for the bill.

The July 13th Amendment incorporates many suggestions made by Senator Ted Cruz, including what is referred to as “the Cruz Amendment.”  In the private market, the Cruz Amendment would allow insurers to offer minimal coverage plans that do not comply with Affordable Care Act (“ACA”) requirements so long as the insurer also made available at least one gold plan, one silver plan, and one bronze plan (which would have a lowered 58% actuarial value under the BCRA).  

The July 13th Amendment also makes some minor changes to Medicaid.  First, it would allow states to apply block grant fundings for the Medicaid expansion population.  Secondly, under the amendment, the bill would also allow states to exceed block grant caps in the case of a public health emergency.

This page offers a non-exhaustive summary of the July 13th Amendment.

The full text of the original language of the amendment can be found on the Senate’s website.

You can view the official section-by-section summaries from the Committee on the Budget here and here.

If you would like to read this summary within full context of the BCRA, or view a table comparing the BCRA to the American Health Care Act (“AHCA”) and the ACA, you may view it here.

II. Individual Mandate

The July 13th Amendment slightly changes the way the government would enforce the individual mandate.  Beginning in 2019, there would be a lookback period for individuals applying for insurance.  Those that apply during open enrollment periods could not have any gaps in coverage longer than 63 days over the previous year.  Individuals seeking coverage under special enrollment would need to either fulfill those same requirements or have at least one day of coverage during the 60-day period immediately preceding the submission of an application.

If an individual could not fulfill these requirements, he or she would be denied coverage for six months starting from the first day of the month that they applied for insurance.

Note that minimal coverage plans offered under the Cruz Amendment would not qualify as coverage for the purposes of the Individual Mandate.  However, the amendments state that any person that wishes to immediately move from a Cruz Amendment plan to an ACA-compliant plan during open or special enrollment periods may do so.

III. The Cruz Amendment’s Minimal Coverage Plans

The Cruz Amendment provides that states may allow insurers to offer minimal coverage plans that do not comply with many of the ACA’s requirements.  These requirements include essential health benefits, actuarial value (“AV”), out-of-pocket limits, guaranteed issue, preventive services coverage, and protections for those with pre-existing conditions.  However, if states permit insurers to offer these plans, they would need to also offer at least one gold plan, one silver plan, and one bronze plan (which would have a lowered 58% AV under the BCRA).

A. Premium Subsidies (Tax Credits)

Under the BCRA, the new benchmark level for determining premium tax subsidies would be set to the 58% AV.  This means that minimal coverage plans under the Cruz amendment would not qualify for tax credits, as they would be well below the 58% AV.  However, individuals may use health savings accounts to pay for these plans’ premiums.

The amendment also provides that if insurers do not offer a plan that meets the 58% AV level, the Secretary of the Treasury may structure premium tax credits based on plans with higher actuarial values.  However, as Timothy Jost writing for the Health Affairs Blog points out, insurers are required to offer 58% AV plans if they also offer minimum coverage plans under the Cruz Amendment.  As such, it is unclear how this would work.

The BCRA does not allow premium tax credits for consumers with any offer of employer coverage.  The July 13th Amendment goes further and prohibits tax credits for small business employees who get help from their employers to purchase coverage on the individual market.

Under the July 13th Amendment, all consumers could use tax credits to purchase catastrophic plans starting in 2019.  Under the ACA, individuals could only purchase these plans if they could not afford coverage or were under 30 years old.

B.The State Stability and Innovation Program and Funding for Other Programs

The July 13th Amendment provides a total of $182 billion (an additional $70 billion) over ten years for the State Stability and Innovation Program.  The Cruz Amendment provides that this  funding would be used to cover high-cost individuals, requiring HHS to pay these funds to insurers that offer ACA-compliant plans from 2020 to 2026.  Insurers would have to prioritize states that have both higher percentages of compliant plans and allow plans that waive ACA requirements under the Cruz Amendment.

The amendment also carves out a chunk of this money for Alaska, providing that 1% of the short-term stability funds that go to insurers and 1% of the long-term stability funds that go to the states are reserved for states where insurance premiums are at least 75% above the national average.

Additionally, the July 13th Amendment designates $45 billion from 2018 to 2026 for the opioid epidemic.

IV. Medicaid Funding

In an attempt to garner more moderate Republican votes, this amendment allows states to apply block grant funding for the Medicaid expansion population.  States can also exceed the block grant caps in the case of a public health emergency.  However, this exemption only lasts from 2020 to the end of 2024 and provides a maximum of $5 billion for all emergency exemptions covered by the bill, which is unlikely to address all needs.  For further discussion of the public health emergency exemption, you can read Sara Rosenbaum’s article on the subject at the Health Affairs Blog.

V. Miscellaneous Taxes

The July 13th Amendment reinstates some of the ACA taxes the original BCRA sought to repeal.  These include the $500,000 limit on business expense deductibility for compensation to insurance executives, the Medicare unearned income tax, and the Medicare tax on taxpayers earning more than $200,000 a year.  These taxes would maintain revenue to the federal government and largely affect wealthy individuals.  For an updated list of all taxes affected by the the BCRA, visit our executive summary of the BCRA.

VI. Abortions

The July 13th Amendment prohibits consumers from using their Health Savings Accounts to pay for plans that cover “elective” abortion.  “Elective” abortion is defined as any abortion other than those necessary to save the life of the mother or terminate a pregnancy that is the result of rape or incest.