The U.S. House of Representatives narrowly passed the American Health Care Act (AHCA) today by a vote of 217 to 213. Every House Democrat and 20 House Republicans opposed the measure.

The AHCA was given new life after language intended to bolster high-risk pools to cover preexisting conditions was negotiated by Congressmen Fred Upton (R-MI) and Billy Long (R-MO) yesterday.

The bill eliminates the employer and employee mandates; replaces the ACA’s income-based subsidies with tiered tax credits, gradually increasing for older Americans; allows states to apply for waivers to define their own essential health benefit requirements; expands the limits for Health Savings Accounts; discontinues Medicaid expansion in 2020; and repeals most of the ACA’s taxes. The legislation would delay implementation of the Cadillac Tax by five years, from 2020 to 2025, and it importantly preserves the tax exclusion for employer sponsored insurance.

Since the bill was last considered on the House floor in March—without culminating in a vote—two significant changes have been made. Click here for a memo detailing those changes, as composed by our legal team at Steptoe & Johnson.

And click here for Steptoe’s side by side comparison of the ACHA and the ACA.

Today’s vote was a major victory for the Trump Administration and Speaker Ryan. The AHCA will now be considered by the U.S. Senate where its fate is far from clear.

There are several changes likely to be made to the package in the Senate, but the chamber’s ability to amend the legislation will be hampered by its own reconciliation rules, which will limit the bill to provisions that have a fiscal impact. These limitations allow the Senate to bypass its normal 60-vote threshold and pass the measure by a simple majority vote.

Republicans have a 52-seat majority and will only be able to lose two votes from their caucus. Democrats are expected to unite against the measure. Rumored changes to the package in the Senate could include increased subsidies, more money for high risk pools, and changes to Medicaid expansion provisions. More details on possible Senate moves can be found here.

The Council is working to build support in the Senate for an amendment to be offered by Senators Dean Heller (R-NV) and Martin Heinrich (D-NM) to fully repeal the Cadillac Tax. The last Congress saw 90 percent of the U.S. Senate support a complete repeal of the tax, and we’re working to replicate that support as the Senate considers the AHCA.

The threat to replace the Cadillac Tax with a cap on the tax exclusion for employee premiums remains high, and we’re working hard to build opposition to any tax levies that would undermine employer sponsored insurance.

As always, please contact Joel Wood at joel.wood@ciab.com or Joel Kopperud at joel.kopperud@ciab.com with any questions.