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Is the American Health Care Act rising from the dead?

May 03, 2017

On April 26, 2017, the Freedom Caucus, a group of conservative House Republicans, announced its tentative agreement on the terms of a compromise amendment crafted by Tom MacArthur (R-N.J.) to the American Health Care Act. The MacArthur Amendment[1]  has the potential to unite House Republicans and move the American Health Care Act (AHCA) through the House. 

On March 26, 2017, House Speaker Paul Ryan pulled the American Health Care Act in the face of opposition from the Freedom Caucus.  One of the primary objections of the Freedom Caucus was the AHCA requirement that insurance continue to cover essential health benefits, which included behavioral health coverage. For treatment centers, the inclusion of behavioral health coverage (including treatment for substance use disorders) within the definition of essential health benefits was, and is, paramount to maintain coverage for these services. Just before the AHCA was pulled, a managers’ amendment was proposed in an attempt to obtain Freedom Caucus support which would have allowed states to alter the definition of essential health benefits. In the end, the AHCA was a “bridge too far,” and Speaker Ryan withdrew the legislation.

Critical pieces of the MacArthur amendment for alcohol and drug treatment industry

The MacArthur Amendment ostensibly maintains the requirement that insurance include essential health benefits.[2]  However, the MacArthur Amendment allows “limited waivers” to states in several different areas, two of which are important to the alcohol and drug treatment industry. 

First, the MacArthur Amendment will permit states to apply for a limited waiver to re-define essential health benefits beginning in 2020.  It is expected that coverage for behavioral health services will be pared down by states exercising this type of waiver. Second, the amendment also permits states to obtain waivers which would allow insurers to conduct health status underwriting as a penalty for those in the individual market who allow their insurance to lapse. In other words, if a consumer allows their coverage to lapse, states which receive this type of waiver could permit insurers to conduct health status underwriting which would permit the insurer to review and price policies based on pre-existing conditions. Such a waiver could result in substantially increased premiums for those trying to re-enter the insurance market with pre-existing conditions, including substance abuse disorders.

Under the MacArthur Amendment, the Department of Health and Human Services (HHS) must approve a requested waiver on any requested ground as long as the state attests that the waiver will reduce premiums, increase the numbers of those covered, or provide some other benefit to the state. Some have argued that every expected waiver will meet one or more of these criteria, and thus HHS will ultimately approve every requested waiver.  The MacArthur Amendment has multiple components (including risk pools), which are designed to keep people enrolled in the insurance market.  However, the MacArthur Amendment has not yet undergone Congressional Budget Office (CBO) scoring, so the actual impact on those proposed changes on the numbers of insured are uncertain.

What does it all mean for the alcohol and drug treatment industry?  Service providers in the mental and behavioral health space, including alcohol and drug treatment centers, stand to lose ground if the American Health Care Act with the MacArthur Amendment is passed.

  • Essential Health Benefits May Be Reduced.  The MacArthur Amendment will permit states to obtain a waiver to change the definition of essential health benefits, and limit coverage for behavioral health.  Even the proponents recognize that allowing states to exercise this discretion will probably result in the reduction of coverage for mental health and substance use disorders.
  • Pre-Existing Conditions Could Be Brought Back.  The MacArthur Amendment will permit states to apply for waivers which might allow insurers to undertake health status underwriting for, among other things, pre-existing conditions, at least for those individuals who allowed their coverage to lapse.  Many expect that allowing insurers to underwrite and price for pre-existing conditions like mental health issues and substance use disorders will prevent individuals from re-entering the individual insurance market after allowing coverage to lapse.  
  • Millions Will Still Likely Lose Insurance.  While there are some measures which are aimed to keep people insured under the MacArthur Amendment, it is unclear whether those efforts will reduce the number of people who are expected to become uninsured.  The CBO previously estimated that the AHCA, before the MacArthur Amendment, would result in 24 million losing coverage in the decade following passage.[3]  It is unclear whether the McArthur Amendment’s limited provisions aimed at solving that problem will have any impact on the numbers of uninsured.

Obstacles ahead

Although the Freedom Caucus’ expression of support for the MacArthur Amendment is a breakthrough, there are significant obstacles ahead which might prevent ultimate passage.  The first such obstacle is from moderate Republicans, including those within the Tuesday Group, who sought to preserve essential health benefits as set forth in the Affordable Care Act and preserved in the original AHCA.  Even if the moderate Republicans go along with the MacArthur Amendment and the bill passes by the House, the hurdles on the Senate side are even steeper.  It is unclear whether the AHCA with the MacArthur Amendment could be passed under Senate rules with a simple majority, or whether a filibuster-proof 60 votes is necessary.  Passage with even a simple majority could be more difficult in the more moderate Senate. 

All in all, the MacArthur Amendment is not good news for service providers in the mental and behavioral health space, but the obstacles to ultimate passage are significant.  

Walter H. Boone is a partner with Balch & Bingham, LLP, a full service corporate law firm supporting the behavioral health industry with offices across the Southeastern United States. Balch & Bingham, LLP is an Advisor to the American Addiction Treatment Association (AATA), a national trade association that provides online resources and training events, for licensing and certification, operations, reimbursement, clinical standards, patient privacy, quality assurance, and risk management.

[1] The actual  language of the MacArthur Amendment can be found here

[2] For a more detailed analysis of the MacArthur Amendment, see here.

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