Employee Benefits Compliance

What’s Happening with “ObamaCare to TrumpCare”?

aca repeal

This is the 4th article in the series ObamaCare to TrumpCare.  View the 3rd article here

You’ve probably seen postings on social media saying that the Republicans voted to eliminate the prohibition on preexisting conditions limits and to no longer require coverage of dependents to age 26.  This is not quite the case.  Here is a quick summary of what’s happening with the Affordable Care Act (ACA), in reverse chronological order.  One significant change is that there is growing momentum (among some Republicans) for Repeal-without-Replace, rather than Repeal-Delay-Replace or simultaneous Repeal-and-Replace.

  • Repeal without replace. Feb. 13-17. Until now, most Republicans and commentators have suggested that the Republicans would have to enact replacement legislation, not just repeal the ACA, or would have to include a delayed effective date on any repeal legislation. However, several dozen (up to 50, by some estimates) conservative Republicans in the House now want to repeal the ACA without simultaneously replacing it. This group is led by the far-right House Freedom Caucus and also includes some members of the House Republican Study Committee. They do not necessarily oppose replacing the ACA with something else, but they fear the House will get bogged down discussing a replacement and ACA repeal will take a back seat to other more pressing issues. They want to convince Republican leaders to enact a stand-alone repeal bill like H.R. 3762 (the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015), which Congress enacted in late 2015 but President Obama vetoed.
  • Repeal and replace. Feb. 14-17. Republican leaders, including House speaker Paul Ryan (R-WI) plan to introduce their repeal-and-replace (or partially replace) plans in informational meetings this week. Numerous bills and proposals by Republicans include various replacement proposals, such as expanding health savings accounts, replacing subsidies with health care tax credits, allowing employees to decline employer-provided group coverage and instead receive tax credit to purchase individual policies, requiring employers to contribute toward these individual policies the amount they would have paid for group health coverage if the employee so elects, and allowing states to establish high-risk pools (using federal money) and to block-grant Medicaid.
  • Feb. 15.  Not enforce individual mandate? As a result of Trump’s Executive Order, issued January 20th, the IRS quietly changed its instructions (and enforcement?) of the individual mandate. Previously, the IRS system had been programmed to reject individual tax returns (Form 1040) if line 61 was left blank. Line 61 requires taxpayers to state whether or not they had health coverage in 2016. Now, the IRS website says the IRS will accept such returns (and apparently has also informed tax preparation services of this). The IRS has said it will follow up/audit as needed (which probably means not at all), and says the legislative provisions of the ACA are still in effect until changed by Congress and taxpayers are obligated to file and pay as required.
  • Cabinet positions:
    • Andy Puzder withdraws as nominee for Secretary of Labor.
    • Dr. Tom Price confirmed as Secretary of Health and Human Services.
    • Steve Mnuchin confirmed as Secretary of Treasury.
  • Piecemeal replacement bills. Late January – early February. The Republican strategy seemed to be shifting from “repeal-and-delay” to adopting piecemeal replacement legislation while at the same time moving forward with repeal legislation using the budget reconciliation process. (See Nov. 16, 2016 Leavitt article, here  (at https://news.leavitt.com/category/health-care-reform/medicaid-expansion/ ). On February 2, the House Energy and Commerce Committee hearing considered four piecemeal-replacement bills (as of yet unnumbered):
    • Prohibit preexisting conditions limitations and guarantee availability of coverage
    • Align grace period for non-payment of premiums (before discontinuance of coverage) in the marketplace with the grace period under applicable state law. This bill generally reduces the 3-month grace period to a 1-month grace period.
    • Increase the permissible age variation in health insurance premium rates, from 3:1 to 5:1, for policy years beginning on or after January 1, 2018.  This would increase rates for older insureds.  For example, under a 3:1 ratio, if the rate is $400/month for a 20-year old, it could be $1200/month for a 64-year old.  Under a 5:1 ratio, it would be $2,000 for a 64-year old.
    • Require verification for eligibility for enrollment during special enrollment periods in ACA plans and require a report on special enrollment periods (number of people declined and reasons why).
  • January 26, White House ordered a halt to all marketplace (exchange) advertising, media outreach, reminder emails, etc., but the next day resumed all except paid advertising.  This is viewed as an attempt to reduce enrollment in the marketplace.
  • Executive Order. Jan. 20. President Trump’s Executive Order Minimizing the Economic Burden of the PPACA Pending Repeal.  (see prior Leavitt article, here (at  https://news.leavitt.com/health-care-reform/obamacare-trumpcare-executive-order-minimize-economic-burden-ppaca/)
  • Budget Reconciliation. Jan 12 and 13. Use budget reconciliation process to enact legislation repealing all or most provisions of the ACA that directly affect revenue and expenditures. This requires only 51 votes in the Senate (the Republicans have 52 seats), and cannot be filibustered. On January 12 the Senate passed S. Con. Res.3, a concurrent budget reconciliation resolution, and the House passed it the next day. The budget reconciliation process could be used to repeal the individual and employer mandates and the subsidies, as well as taxes and penalties, but it could not be used to repeal the ban on preexisting conditions limits nor to eliminate coverage for dependents up to age 26.
  • Repeal and Delay. Early December. House and Senate Republicans repeatedly stated their intent to repeal the ACA as soon as possible upon their return January 3rd. Back then, the consensus seemed to be “repeal-and-delay” – although there was not agreement on what date the provisions should be repealed by.

What’s next?  Will the IRS also signal that it won’t enforce the employer mandate?  Or is there too much potential revenue at stake (from projected penalties)?  Stay tuned!