House Ways & Means Committee Issues Report on Increasing Access to Lower Premium Plans Act

WASHINGTON, July 27 -- The House Ways and Means Committee issued a report (H.Rpt. 115-849) on legislation (H.R. 6311) to amend the Internal Revenue Code of 1986 and the Patient Protection and Affordable Care Act to modify the definition of qualified health plan for purposes of the health insurance premium tax credit and to allow individuals purchasing health insurance in the individual market to purchase a lower premium copper plan. The report was advanced by Rep. Kevin Brady, R-Texas, on July 19.

Excerpts of the report follow:

I. SUMMARY AND BACKGROUND

A. Purpose and Summary

The bill H.R. 6311, as reported by the Committee on Ways and Means, provides an off-ramp from Obamacare's rising premiums and limited choices by allowing the premium tax credit to be used for qualified plans offered outside of the law's exchanges and Healthcare.gov. In addition, it expands access to the lowest-premium plans available ("catastrophic" plans) for all individuals purchasing coverage in the individual market and allows the premium tax credit to be used to offset the cost of such plans.

B. Background and Need for Legislation

Obamacare's flawed policies have increased the cost of coverage in the individual market by 105 percent over 2013-2017 on average. As Republicans continue their efforts to reverse Obamacare's damage, policies such as those included in this bill will help to lower premiums and increase choices for Americans.

Obamacare's tax credits are only available to offset the cost of bronze, silver, gold, and platinum health care plans that are sold on the law's government-run health insurance exchanges. Catastrophic plans are not eligible for the premium tax credit. In addition, catastrophic plans are only available to those under age 30 or those over age 30 that qualify for a hardship exemption.

C. Legislative History

Background

H.R. 6311 was introduced on July 6, 2018 and was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Committee action

The Committee on Ways and Means marked up H.R. 6311, the "Increasing Access to Lower Premium Plans Act of 2018," on July 12, 2018, and ordered the bill, as amended, favorably reported (with a quorum being present).

Committee hearings

The policy issues associated with tax pertaining to health care and the ACA were discussed at the following Ways and Means hearings during the 114th and 115th Congresses:

Full Committee Hearing on the Tax Treatment of Health Care (April 14, 2016)

Subcommittee on Health Member Day Hearing on Tax-Related Proposals to Improve Health Care (May 17, 2016)

Subcommittee on Health Hearing on Rising Health Insurance Premiums Under the Affordable Care Act (July 12, 2016)

Subcommittee on Health Hearing on Lowering Costs and Expanding Access to Health Care through Consumer-Directed Health Plans (June 6, 2018)

II. EXPLANATION OF THE BILL

A. Modification of Definition of Qualified Health Plan

PRESENT LAW

In general

A refundable tax credit (the "premium assistance credit") is provided for eligible individuals and families to subsidize the purchase of health insurance plans through an American Health Benefit Exchange ("Exchange"), referred to as "qualified health plans."1 The premium assistance credit is generally payable in advance directly to the insurer, as discussed below. However, eligible individuals may choose to pay their total health insurance premiums out-of-pocket and claim the credit at the end of the taxable year.

1Sec. 36B. Section 36B was enacted as part of the Patient Protection and Affordable Care Act ("PPACA"), Pub. L. No. 111-148, and modified by the Healthcare and Education Reconciliation Act of 2010 ("HCERA"), Pub. L. No. 111-152. PPACA and HCERA are referred to collectively as the Affordable Care Act ("ACA").

Qualified health plans generally must meet certain requirements.2 Special rules apply to certain qualified health plans, referred to as "catastrophic-only" qualified health plans, which are available only to individuals who are under age 30 or meet other specified requirements.3 The premium assistance credit is not available with respect to catastrophic-only qualified health plans.4 In addition, in the case of a qualified health plan that provides coverage for abortions for which Federal funds may not be used, no part of the premium assistance credit may be used for the portion of premiums attributable to that coverage.5

2Secs. 1301 and 1302 of PPACA.

3Sec. 1302(e) of PPACA.

4Under the Public Health Service Act ("PHSA") as amended by the ACA, health insurance must meet certain requirements. Section 1251 of PPACA excepts certain health plans sold at the time of enactment of PPACA from some of the PHSA requirements ("grandfathered" plans). The premium assistance credit is not available with respect to a grandfathered plan or plans that receive similar treatment under administrative guidance.

5Sec. 1303(b)(2) of PPACA.

The premium assistance credit is generally available for individuals (single or joint filers) with household incomes between 100 and 400 percent of the Federal poverty level ("FPL") for the family size involved. Household income is defined as the sum of: (1) the individual's modified adjusted gross income, plus (2) the aggregate modified adjusted gross incomes of all other individuals taken into account in determining the individual's family size (but only if the other individuals are required to file a tax return for the taxable year). Modified adjusted gross income is defined as adjusted gross income increased by: (1) any amount excluded from gross income for citizens or residents living abroad),6 (2) any tax-exempt interest received or accrued during the tax year, and (3) the portion of the individual's social security benefits not included in gross income.7 To be eligible for the premium assistance credit, individuals who are married must file a joint return. Individuals who are listed as dependents on a return are not eligible for the premium assistance credit.

6Sec. 911.

7Under section 86, only a portion of an individual's social security benefits are included in gross income.

An individual who is eligible for minimum essential coverage from a source other than the individual insurance market generally is not eligible for the premium assistance credit.8 However, an individual who is offered minimum essential coverage under an employer-sponsored health plan may be eligible for the premium assistance credit if an employee's share of the premium for self-only coverage exceeds 9.56 percent (for 2018) of the employee's household income, or the plan's share of total allowed costs of benefits provided under the plan is less than 60 percent of such costs (called "minimum value"), and the individual declines the employer- offered coverage. An individual who enrolls in an employer- sponsored health plan generally is ineligible for the premium assistance credit, even if the coverage is considered unaffordable or does not provide minimum value.

8Minimum essential coverage is defined in section 5000A(f).

As part of the process of enrollment in a qualified health plan through an Exchange, an individual may apply and be approved in advance for a premium assistance credit.9 The individual must provide information on income, family size, changes in marital or family status or income, and citizenship or lawful presence status.10 Initial eligibility for the premium assistance credit is generally based on the individual's income for the tax year ending two years prior to the enrollment period. The Exchange process includes a system through which information provided by the individual is verified with the Internal Revenue Service ("IRS"), the Social Security Administration ("SSA") and the Department of Homeland Security ("DHS").11 If an individual is approved for advance premium assistance payments, the Treasury pays the advance amount directly to the issuer of the health plan in which the individual is enrolled. The individual then pays to the issuer of the plan the difference between the advance payment amount and the total premium charged for the plan.

9Secs. 1411-1412 of PPACA. Under section 1402 of PPACA, certain individuals eligible for advance premium assistance payments are eligible also for a reduction in their share of medical costs, such as deductibles and copays, under the plan, referred to as reduced cost- sharing. Eligibility for reduced cost-sharing is also determined as part of the Exchange enrollment process. The Department of Health and Human Services ("HHS") is responsible for rules relating to Exchanges and the eligibility determination process.

10Under section 1312(f)(3) of PPACA, an individual may not enroll in a qualified health plan through an Exchange if the individual is not a citizen or national of United States or an alien lawfully present in the United States. Thus, such an individual is not eligible for the premium assistance credit.

11Under section 6103, except as provided in the Code, returns and return information are confidential and may not be disclosed by the IRS, other Federal employees, State employees, and certain others having access to such information. Under section 6103(l)(21), upon written request of the Secretary of HHS, the IRS is permitted to disclose certain return information in connection with a determination through the Exchange process of an individual's eligibility for advance premium assistance payments, reduced cost-sharing, or certain other government-sponsored health programs.

REASONS FOR CHANGE

The Committee believes that tax credits provided to offset the cost of health plans provided on government exchanges should also be available to offset the cost of similar health plans offered outside the government exchanges. This would expand the choices available to individuals and families and empower them to make decisions based on their specific needs and budgets.

Furthermore, the Committee believes that Federal assistance in the form of premium tax credits should not be available for health plans that cover elective abortion. This would allow individuals to avoid directly, unwittingly, and unwillingly subsidizing abortion.

EXPLANATION OF PROVISION

Application of credit to additional coverage

Qualified health plans generally must meet certain requirements.12 Under the proposal, the premium assistance credit is available with respect to catastrophic plans13 that meet the requirements relating to qualified health plans. Under the proposal, the premium assistance credit is also available with respect to health plans that meet the requirements relating to qualified health plans except that they are not offered through an Exchange. Thus, an individual who purchases a qualified health plan in the individual market, but not through an Exchange, may be eligible for the premium assistance credit if the requirements for eligibility are otherwise met. However, advance premium assistance payments are not available with respect to a qualified health plan that is not purchased through an Exchange. An individual who purchases such a plan must claim the premium assistance credit on his or her income tax return.

12Section 2 of the proposal amends section 1302(e) of PPACA to allow all individuals purchasing health insurance in the individual market the option to purchase a lower premium plan that does not offer a bronze, silver, gold, or platinum level of coverage.

13As described in sec. 1302(e) of PPACA.

Under present law, any person that provides minimum essential coverage to an individual during a calendar year must report certain information to the IRS.14 The proposal requires additional information reporting for minimum essential coverage provided to an individual that is not enrolled through an Exchange.

14Sec. 6055(b).

As under present law, the credit is not available with respect to grandfathered plans or plans that receive similar treatment under administrative guidance. In addition, the proposal specifies that the credit is not available with respect to grandmothered plans. Under the proposal, a grandmothered health plan is defined to be health insurance coverage which is offered in the individual health insurance market as of October 1, 2013, and is permitted to be offered in such market after January 1, 2014, as a result of CCIIO guidance.15

15CCIIO guidance refers to the letters issued by the Centers for Medicare and Medicaid Services on November 14, 2013, to the State Insurance Commissioners outlining a transitional policy for non- grandfathered coverage in the individual health insurance market, as subsequently extended and modified. Subsequent modifications include a communication entitled, "Insurance Standards Bulletin Series-- INFORMATION--Extension of Transitional Policy through Calendar Year 2017," issued on February 29, 2016 by the Director of the Center for Consumer Information and Insurance Oversight of such Centers.

Ineligibility of qualified health plans covering abortion

Under the proposal, the premium assistance credit is not available with respect to a qualified health plan that provides coverage for abortions for which Federal funds may not be used.16 However, nothing in the proposal prohibits an individual from purchasing, or a health insurance issuer from offering separate coverage for abortions, or a health plan that includes abortions, as long as no premium assistance credit is allowed with respect to the premiums for such coverage and premiums are not paid for with any amount attributable to the premium assistance credit (or the amount of any advance payment of the credit).

16This includes coverage for abortions other than any abortion necessary to save the life of the mother or any abortion with respect to a pregnancy that is the result of an act of rape or incest. The treatment of any infection, injury, disease, or disorder that has been caused by or exacerbated by the performance of an abortion shall not be treated as an abortion for purposes of determining eligibility for the premium assistance credit.

EFFECTIVE DATE

The modifications to the premium assistance credit are generally effective for taxable years beginning after December 31, 2018. The proposal specifying that advance premium assistance payments are not available with respect to a qualified health plan that is not purchased through an Exchange is effective on January 1, 2019. The proposal amending the present-law reporting requirements under section 6055 is effective for coverage provided for months beginning after December 31, 2018.

III. VOTES OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means during the markup consideration of H.R. 6311, the "Increasing Access to Lower Premium Plans Act of 2018," on July 12, 2018.

The vote on Mr. Reichert's motion to table Mr. Neal's appeal of the ruling of the Chair that Mr. Thompson's amendment was non-germane, was agreed to by a roll call vote of 21 yeas to 15 nays. The vote was as follows:

(TABLE OMITTED)

In compliance with the Rules of the House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means during the markup consideration of H.R. 6311, the "Increasing Access to Lower Premium Plans Act of 2018," on July 12, 2018.

The vote on the amendment offered by Ms. DelBene to the amendment in the nature of a substitute offered by Chairman Brady to H.R. 6311, which would strike sec 2(a)(2) and subsection (c) of section 2", was not agreed to by a rollcall vote of 15 yeas to 22 nays. The vote was as follows:

(TABLE OMITTED)

In compliance with the Rules of the House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means during the markup consideration of H.R. 6311, the "Increasing Access to Lower Premium Plans Act of 2018," on July 12, 2018.

The vote on the amendment offered by Ms. Sanchez to the amendment in the nature of a substitute offered by Chairman Brady to H.R. 6311, which would make plans that are otherwise eligible for section 2 in the underlying bill contingent on if that plan issuer does not discriminate or raise premiums on the basis of gender for any plan, was not agreed to by a rollcall vote of 16 yeas to 23 nays. The vote was as follows:

(TABLE OMITTED)

In compliance with the Rules of the House of Representatives, the following statement is made concerning the vote of the Committee on Ways and Means during the markup consideration of H.R. 6311, the "Increasing Access to Lower Premium Plans Act of 2018," on July 12, 2018.

H.R. 6311 was ordered favorably reported to the House of Representatives as amended by an amendment in the nature of a substitute offered by Chairman Brady by a rollcall vote of 23 yeas to 16 nays. The vote was as follows:

(TABLE OMITTED)

IV. BUDGET EFFECTS OF THE BILL

A. Committee Estimate of Budgetary Effects

In compliance with clause 3(d) of rule XIII of the Rules of the House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 6311, as reported.

The bill, as reported, is estimated to have the following effect on Federal fiscal year budget receipts for the period 2019-2028:

(TABLE OMITTED)

Pursuant to clause 8 of rule XIII of the Rules of the House of Representatives, the following statement is made by the Joint Committee on Taxation with respect to the provisions of the bill amending the Internal Revenue Code of 1986: The gross budgetary effect (before incorporating macroeconomic effects) in any fiscal year is less than 0.25 percent of the current projected gross domestic product of the United States for that fiscal year; therefore, the bill is not "major legislation" for purposes of requiring that the estimate include the budgetary effects of changes in economic output, employment, capital stock and other macroeconomic variables.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget Authority

In compliance with clause 3(c)(2) of rule XIII of the Rules of the House of Representatives, the Committee states that the bill involves no new or increased budget authority. The Committee further states that the revenue-reducing tax provision involves a new tax expenditure. See Part IV.A., above.

C. Cost Estimate Prepared by the Congressional Budget Office

In compliance with clause 3(d) of rule XIII of the Rules of the House of Representatives, the following statement is made concerning the effects on the budget of the bill, H.R. 6138, as reported. As of the filing of this report, the Committee had not received an estimate prepared by the Congressional Budget Office (CBO).

V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

A. Committee Oversight Findings and Recommendations

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House of Representatives, the Committee advises that the findings and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated into the description portions of this report.

B. Statement of General Performance Goals and Objectives

With respect to clause 3(c)(4) of rule XIII of the Rules of the House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required.

C. Information Relating to Unfunded Mandates

This information is provided in accordance with section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104- 4).

The Committee has determined that the bill does not contain Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental mandate on State, local, or tribal governments.

D. Applicability of House Rule XXI 5(b)

Rule XXI 5(b) of the Rules of the House of Representatives provides, in part, that "A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not be considered as passed or agreed to unless so determined by a vote of not less than three-fifths of the Members voting, a quorum being present." The Committee has carefully reviewed the bill and states that the bill does not involve any Federal income tax rate increases within the meaning of the rule.

E. Tax Complexity Analysis

Section 4022(b) of the Internal Revenue Service Restructuring and Reform Act of 1998 ("IRS Reform Act") requires the staff of the Joint Committee on Taxation (in consultation with the Internal Revenue Service and the Treasury Department) to provide a tax complexity analysis. The complexity analysis is required for all legislation reported by the Senate Committee on Finance, the House Committee on Ways and Means, or any committee of conference if the legislation includes a provision that directly or indirectly amends the Internal Revenue Code of 1986 and has widespread applicability to individuals or small businesses.

Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House of Representatives, the staff of the Joint Committee on Taxation has determined that a complexity analysis is not required under section 4022(b) of the IRS Reform Act because the bill contains no provisions that amend the Internal Revenue Code of 1986 and that have "widespread applicability" to individuals or small businesses, within the meaning of the rule.

F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff Benefits

With respect to clause 9 of rule XXI of the Rules of the House of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not contain any congressional earmarks, limited tax benefits, or limited tariff benefits within the meaning of the rule.

G. Duplication of Federal Programs

In compliance with Sec. 3(c)(5) of rule XIII of the Rules of the House of Representatives, the Committee states that no provision of the bill establishes or reauthorizes: (1) a program of the Federal Government known to be duplicative of another Federal program, (2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public Law 111139, or (3) a program related to a program identified in the most recent Catalog of Federal Domestic Assistance, published pursuant to section 6104 of title 31, United States Code.

H. Disclosure of Directed Rule Makings

In compliance with Sec. 3(i) of H. Res. 5 (115th Congress), the following statement is made concerning directed rule makings: The Committee advises that the bill requires no directed rule makings within the meaning of such section.

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

B. Changes in Existing Law Proposed by the Bill, as Reported

In compliance with clause 3(e)(1)(B) of rule XIII of the Rules of the House of Representatives, changes in existing law proposed by the bill, as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, existing law in which no change is proposed is shown in roman):

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of the House of Representatives, changes in existing law made by the bill, as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, and existing law in which no change is proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

DISSENTING VIEWS

H.R. 6311 Increasing Access To Lower Premium Plans Act of 2018

H.R. 6311 (Roskam, R-IL) allows anyone to purchase catastrophic coverage (currently catastrophic plans can only be purchased by those under 30 and people with hardship exemptions), puts all catastrophic plans into the overall risk pool, allows use of Advance Premium Tax Credits (APTCs) to be used for catastrophic plans in the exchange, and allows premium tax credits (but not APTCs) to be used to purchase plans off exchange. The bill explicitly prohibits tax credits for plans that offer comprehensive women's health care.

H.R. 6311 continues Republican efforts to undermine and destabilize the health insurance market increases costs for consumers, and undermines women's health care, while at the same time growing our deficit.

H.R. 6311 would likely reduce choice and competition in the Affordable Care Act (ACA) marketplaces. While the bill would allow people buying individual-market plans outside the ACA marketplaces to receive ACA tax credits, the credits are only be available when individuals file their tax returns the following year (not upfront to help them pay premiums); this disadvantages more moderate-income families that do not have extra disposable income to pay premium costs up front. It also would eliminate the requirement that insurers selling plans eligible for the ACA tax credit must offer at least one "silver" and one "gold" plan through the marketplace-- reducing plan choice for patients. If this bill were enacted, an insurer could offer coverage only outside the marketplace (destabilizing the marketplace and undermining marketplace choice) while still giving consumers access to premium tax credits.

H.R. 6311 would likely lead to increased premiums for individuals with preexisting conditions. Reducing the incentives for insurers to offer marketplace coverage could make it easier for insurers to engage in strategies to attract only healthier enrollees, such as offering only bronze or catastrophic plans, which have higher deductibles and other cost-sharing expenses for consumers than silver and gold plans. It also could reduce plan choices for consumers within the marketplaces if insurers shift to off-marketplace business. And it could prompt fewer consumers to comparison shop in the marketplaces--where they can compare premiums and benefits for multiple insurers--thus reducing competitive pressure on insurers to hold down premiums.

Legislation busts the deficit to benefit the wealthy, again. The Joint Committee on Taxation (JCT) estimates the cost of this bill to be $10.9 billion over 10 years. Altogether the 11 bills this Committee marked up would add another $92 billion in unoffset tax cuts to the deficit. With this bill, Republicans are adding more tax cuts and increasing the deficit. Republicans are using the deficit, which they keep making larger with cuts for the wealthy, to justify the deep cuts they plan to make to Medicare and Medicaid. Republicans already are proposing to cut Medicare and Medicaid by nearly a trillion dollars to try to pay for the tax cuts they've already enacted. This bill will only increase Republicans' calls for further cuts to these critical programs.

Democrats offered three amendments to this bill in an attempt to better protect consumers. Representative Thompson (D-CA) offered an amendment to require that plans covered under the underlying bill be offered by an issuer that does not raise premiums in connection with a failure to make risk adjustment payments. This effort to ensure consumers' premiums are not increased due to Republican sabotage of health care was ruled non-germane. The appeal of the ruling of the chair was defeated 21-15.

Representative DelBene (D-WA) offered an amendment to strike language that prohibits premium tax credits from going toward any health plan that includes coverage for abortion services. Washington, Oregon, California, and New York all require health plans to include abortion services in every health plan, and H.R. 6311 would thereby takeaway premium tax credits for everyone in those four states.

Coalition members of All* Above All, which includes the American Civil Liberties Union and the National Partnership for Women and Families, wrote in opposition to the bill noting, "We oppose HR 6311 which could drastically impact the quality and affordability of insurance coverage available to women. . . . HR 6311 is drafted to achieve anti-abortion politicians' goal of eliminating abortion coverage in the individual insurance marketplace. HR 6311 would deny women the tax credits that make plans affordable merely for choosing comprehensive insurance that includes abortion coverage. These provisions penalize individuals who seek plans that cover abortion and companies that want to provide comprehensive plans to their employees, and disincentivizes plans from covering abortion. Women should not be penalized for seeking comprehensive health coverage that meets their needs." The amendment was defeated on party lines 15-22.

Representative Sanchez (D-CA) offered an amendment to require that plans covered under the underlying bill be offered by an issuer that does not discriminate or raise premiums on the basis of gender. This commonsense amendment was also defeated on party lines, 16-23.

Richard E. Neal,

Ranking Member

The full text of the report is found at: https://www.congress.gov/congressional-report/115th-congress/house-report/849/1?r=5

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