Senate Rejects Health Care Freedom Act

By Chatrane Birbal Jul 28, 2017
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Earlier this morning, the Senate rejected the Health Care Freedom Act (also known as the "Skinny bill") by a vote of 49 to 51, ending immediate efforts to repeal and replace the Affordable Care Act (ACA). This proposal was offered as a substitute amendment to the House-passed H.R. 1628, the American Health Care Act (AHCA). Republican Senators John McCain (AZ), Susan Collins (ME) and Lisa Murkowski (AK), voted with all Democrats and two Independents against the Health Care Freedom Act. The Senate health care reform proposal was being considered through the budget reconciliation process and only amends the tax provisions of the ACA, including provisions affecting employer-sponsored plans.

Following the Senate's vote, Majority Leader McConnell stated that the bill would be returned to the legislative calendar, meaning it can be brought back to the floor for consideration in the future. Looking ahead, it is possible that the House and Senate will hold public hearings and markups to continue the health care discussion and to make bipartisan modifications to the ACA.

It is also possible that any future health care proposals to modify the ACA will contain some provisions included in the House and Senate considered bills. Earlier in the debate, the Senate adopted by a vote of 52 to 48 an amendment offered by Senator Dean Heller (R-NV) to repeal the "Cadillac" tax on high-value, employer-sponsored health insurance.  Under the ACA, beginning in 2020 a 40 percent excise tax will be imposed on high cost employer-sponsored health coverage benefits exceeding certain thresholds ($10,200 for individual coverage and $27,500 for family coverage).  SHRM has long supported the repeal of the "Cadillac" tax and advocates in support of bipartisan, bicameral legislative proposals that have been introduced to repeal the tax.

The Health Care Freedom Act, which failed, also contained several provisions of interest to HR and the workplace: 

  • Reduces Employer Mandate Penalty for Eight Years - Under the ACA, certain employers are required to provide health insurance or pay a penalty. This bill proposed to reduce the employer penalty to zero for failure to provide health insurance coverage for eight years (through 2024).

  • Reduces Individual Mandate Penalty - Under the ACA, individuals are required to purchase health insurance or pay a penalty. This bill proposed to reduce the penalty to zero for failure to maintain health insurance coverage.

  • Repeals the Limit on Contributions to HSAs - Under the ACA, the amount an employer or individual may contribute to a HSA is limited to $3,400 for self-only coverage and $6,550 for family coverage. This bill proposed to allow individuals to put $6,550 and families to put $13,100 into a tax-free HSAs for three years (2018 to 2020).

  • Allows States to Waive the Essential Health Benefits (EHB) Requirements - Under the ACA, insurers are mandated to cover 10 essential health benefits. The ACA also allowed states to seek waivers (known as Section 1332 waivers) from certain requirements of the law. States that apply for the Section 1332 waiver could opt out of covering the 10 essential health benefits in plans.

SHRM did not take a position on the American Health Care Act, the draft Better Care Reconciliation Act or the Health Care Freedom Act, as we remain concerned about the potential implications on employer-sponsored coverage and the coverage these plans provide to over 177 million Americans. SHRM does support specific provisions included in the bills, such as the reduction of the employer mandate penalty, the inclusion of a delay of the ACA excise tax, and the changes to health savings accounts and flexible spending accounts.

 As health care discussions continue, SHRM will advocate in support of employer-sponsored health benefits and will be vigilant of legislative efforts that could have an adverse impact employer benefits. To that end, earlier in the health care discussion SHRM urged lawmakers to do no harm to the employer system. Read SHRM's analysis of the employer-related provisions included in the American Health Care Act and the Better Care Reconciliation Act


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