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8 Highlights of the Senate Healthcare Bill

The Senate has released its version of the healthcare reform bill, the Better Care Reconciliation Act (BCRA), and it's in the process of negotiations to get it passed. Once healthcare reform makes it through the Senate, the BCRA must be reconciled with the House version in order to come up with a version that can become law. But given the significant differences between the two bills, Congress has quite a task ahead of it.

Medicaid

The BCRA allows Obamacare's Medicaid expansion to continue until 2021, then begins rolling it back so that the program will return to its original levels by 2024. By contrast, the American Health Care Act (the House healthcare reform bill) cuts off Medicaid expansion in 2020. Both healthcare reform bills eventually switch Medicaid from a needs-based program to one in which states receive a fixed amount of Medicaid funding.

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Repeal of Obamacare taxes

Obamacare was partly funded through new taxes, including the net investment income tax (NIIT) and a small extra Medicare tax on wages. Both the AHCA and the BCRA repeal these taxes; however, as the Senate struggles to pass the BCRA, some senators have proposed keeping the NIIT to help fund the bill. Should this happen, the NIIT would bring in $172 billion over 10 years that could be funneled into other areas of healthcare reform.

Essential health benefits

Obamacare established 10 "essential health benefits" that all health insurance plans are required to cover. These essential health benefits include things like maternity and neonatal care and prescription drug coverage. Both the AHCA and the BCRA would allow states to apply for waivers permitting insurers not to cover the benefits currently deemed essential.

Pre-existing condition coverage

Obamacare does not allow health insurance plans to discriminate based on pre-existing conditions; they can neither deny coverage to consumers based on pre-existing conditions nor charge those consumers higher premiums. The BCRA upholds this requirement, whereas the AHCA would give states the opportunity to opt out of it.

Mandatory health insurance coverage

The "individual insurance mandate," which requires every American to get health insurance coverage or pay a penalty tax, is one of the most hotly debated aspects of Obamacare. The BCRA completely repeals the individual insurance mandate. The AHCA removes the mandate but tried to motivate individuals to obtain health insurance by allowing insurers to increase premiums by up to 30% for anyone who experiences a gap in coverage.

Health savings accounts (HSAs)

Health savings accounts are already a powerful tool, both for funding medical expenses and cutting the account holder's tax bill. The BCRA further enhances these benefits by raising annual contribution limits by $3,250 for individuals and by $6,550 for families. It also allows HSA owners to use the accounts to pay for over-the-counter drugs, not just prescription ones. The AHCA also boosts HSA benefits, but it sets slightly less generous contribution limit increases than the Senate bill does.

Employer-sponsored healthcare plans

Obamacare requires employers over a certain size to offer affordable health insurance plans to their employees. The BCRA and the AHCA both remove this requirement in its entirety.

Premium tax credit

Taxpayers can get part or all of their health insurance premiums reimbursed through this federal tax credit under Obamacare. The credit they're eligible to receive depends chiefly on their household income. Both of the GOP healthcare reform bills propose a premium tax credit, but they change the amounts and the requirements. The BCRA version of this tax credit is similar to the Obamacare version, basing the credit on household income and location (the credit takes into account the cost-of-living variation in different regions). The AHCA proposes much more radical changes, basing the credit amount almost entirely on age, with a much higher household income limit than the current tax credit.

Will the BCRA pass?

The BCRA met with mixed reviews when it debuted on the Senate floor. Unsurprisingly, Democrats were united against the bill. However, both moderate and conservative Republicans had issues with different provisions of the BCRA, leaving the bill without enough support to risk putting it to the vote. The Senate is currently in heated negotiations to try to reach a compromise version that will be able to pass, which means that whatever form the final bill takes, it will probably be significantly different from the current version.

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