Key Takeaways:
- House Republicans are set to vote on their version of a health care bill, which does not address the expiration of enhanced Affordable Care Act subsidies.
- The bill contains measures such as allowing small businesses to band together to buy coverage through association health plans and providing federal funding for cost-sharing subsidies.
- The enhanced subsidies are likely to lapse at the end of the year, resulting in a 114% increase in annual premium payments for enrollees.
- The bill also includes provisions to bring transparency to pharmacy benefit managers and codify a regulation allowing employers to provide tax-free funds to buy coverage on the Obamacare exchange.
Introduction to the Health Care Bill
The House of Representatives is set to vote on a health care bill proposed by Republicans, which does not address the looming expiration of enhanced Affordable Care Act subsidies. The subsidies, which were enacted in 2021 as part of a Covid-19 relief package, are set to lapse at the end of the year, resulting in a significant increase in premium payments for enrollees. The Senate is not expected to vote on any health care proposals this week, and a Democratic effort to extend the subsidies was recently voted down.
Details of the House Bill
The House bill contains several measures that have long been popular with Republicans. According to Larry Levitt, executive vice president for health policy at KFF, a nonpartisan research group, "This is kind of a greatest hits of Republican health care ideas of the last decade." The bill would allow small businesses and self-employed individuals to band together across industries to buy coverage through association health plans, which could potentially lower premiums. However, these plans have features that favor healthier consumers, such as not requiring the same robust coverage as Obamacare plans and not having limits on how much more they can charge older enrollees.
Impact of the Bill on Enrollees
If the enhanced subsidies lapse, enrollees will see their annual premium payments increase by 114% – or about $1,000 – on average in 2026, according to KFF. Roughly 2 million more people are also expected to be uninsured next year if the subsidies end, according to the Congressional Budget Office. The bill would also provide federal funding for the cost-sharing subsidies that lower-income Obamacare enrollees receive to reduce their deductibles and out-of-pocket costs for care. However, this funding would reduce silver plan premiums, but it would also slash the aid enrollees receive to pay for coverage, in effect raising their monthly payments while lowering the federal government’s obligation.
Pharmacy Benefit Managers and Transparency
The House bill would require pharmacy benefit managers to provide employers with data on the price of drugs, the rebates they receive from manufacturers, and other operations. This is an effort to bring more transparency into an opaque part of the prescription drug supply chain that has been blamed for the high cost of medications. However, experts say that this measure is unlikely to have much of an impact on the industry. PBM reform has had bipartisan support in Congress, and a more comprehensive bipartisan overhaul measure looked close to passage last December, but was ultimately torpedoed.
Employer-Sponsored Coverage and Tax-Free Funds
The House bill would codify a regulation from the first Trump administration that allows employers to provide their workers with tax-free funds to buy coverage on the Obamacare exchange. Critics are concerned that this measure could result in more sicker employees in Obamacare policies, which would raise premiums. Additionally, it could place more of the risk of rising rates on workers if their employers’ contributions don’t keep pace. Overall, the bill contains several measures that could have significant implications for the health care system and enrollees, and its passage is likely to be closely watched in the coming weeks.
