Employer-Sponsored Health Plans May Rise in Perceived Value

Congressional Budget Office foresees 22 million increase in uninsured under Senate measure

Stephen Miller, CEBS By Stephen Miller, CEBS June 27, 2017
Employer-Sponsored Health Plans May Rise in Perceived Value

Millions more people would be without insurance coverage under the Senate's plan to repeal and replace the Affordable Care Act (ACA), the Congressional Budget Office (CBO) projected on June 26. That could increase the perceived value of employer-provided coverage.

The CBO's estimate that 22 million more Americans would lack health insurance in 2026 under the Senate's bill also poses a new and possibly fatal challenge to Republican Majority Leader Mitch McConnell's efforts to secure enough GOP votes to pass the measure.

"With 52 seats in the majority party, Senate leadership can only afford to lose two Republicans, with Vice President Mike Pence breaking the tie," said Chatrane Birbal, senior advisor for government relations at the Society for Human Resource Management.

The CBO report on the Senate's Better Care Reconciliation Act (BCRA) determined that growth in uninsured Americans under the bill would be only slightly fewer than the 23 million increase estimated under the House of Representatives' ACA repeal and replace measure, the American Health Care Act (AHCA).

By 2026, an estimated 49 million people would be uninsured under the Senate bill compared with 28 million who would lack insurance that year under current law, the CBO reported. The rise in uninsured Americans would largely be due to eliminating enforcement of the individual mandate, which requires most individuals to obtain insurance or pay a penalty.

Table 4 of the full CBO report forecasts that some 4 million Americans who currently have employment-based coverage would be without insurance next year under the Senate bill. (According to the U.S. Census Bureau, more than 177 million people—61 percent of all covered Americans—get their health insurance through an employer.)

Zeroing out the employer-mandate penalties would allow large employers to drop coverage, although the competition for talent would mitigate against that decision. Meanwhile, eliminating the individual mandate penalties would allow employees to forgo enrolling in an employer-sponsored plan so as to avoid paying premiums.

Republicans contested the CBO's number being interpreted as a "loss" of insurance under the House measure and were critical of the findings regarding the BCRA as well. House Speaker Paul Ryan told Fox News, "It's not that people are getting pushed off a plan, it's that people will choose not to buy something they don't like or want."

The CBO also estimates that enacting the BCRA would reduce the federal deficit over the 2017-26 period by $321 billion, which is $202 billion more than its estimated net savings for the House-passed AHCA.

Bill Tweaked to Gain Votes

Also on June 26, Senate Republicans released a revision to the draft BCRA, modifying the version made public on June 22. Further adjustments are likely to follow in an effort to cobble together the 50 Senate Republican votes the measure will need to pass.

The revision provides that consumers who had a break in coverage for 63 days or more would be subject to a six-month waiting period before their coverage begins. This is meant to address concerns that the BCRA, without penalties for individuals who don't maintain continuous coverage, would encourage people to go without insurance until they become ill or suffer an accident.

"Such a waiting period is important to ensure that people don't jump in and out of the insurance pool when they're sick or healthy, respectively," said Avik Roy of the Manhattan Institute, a conservative think tank in New York City.

The House bill addressed this issue by allowing insurers to add a surcharge on consumers who sign up after a long lapse in coverage.

[SHRM members-only toolkit: Complying with and Leveraging the Affordable Care Act]

Republican Holdouts

Following the release of the draft BCRA last week, five Republican senators announced they would not support the measure as currently written, primarily because it was either too generous with federal spending or not generous enough. The dissenting senators were:

  • Ted Cruz, R-Texas
  • Dean Heller, R-Nev.
  • Ron Johnson, R-Wis.
  • Mike Lee, R-Utah
  • Rand Paul, R-Ky.

Also expressing serious concerns about the bill were:

  • Lisa Murkowski, R-Alaska
  • Rob Portman, R-Ohio
  • Susan Collins, R-Maine

After the CBO report was released, Collins tweeted that she will vote no on the BCRA.

In addition, Sen. Ben Sasse, R-Neb., had not yet said how he will vote.

"It's anyone's guess about the prospects for a Senate vote this week," said independent health care analyst Paul Keckley, managing editor of The Keckley Report, an industry newsletter.

Passage in the Senate "assumes arm twisting and deals with 7 of the 9 hold-outs based on amendments to the law and deal-making," similar to what occurred in the House before that chamber passed its version of repeal and replace, he noted.

While a vote initially had been expected before the July 4 recess, McConnell subsequently announced that further action on the bill would take place later in July when Congress reconvenes—an admission that he lacked enough votes to move ahead.

"We're still optimistic we're going to get there and get a result better than the status quo," McConnell said on C-SPAN.

Employer-Supported Provisions

SHRM has not taken a formal position on the Senate bill and did not take a position on the version that the House passed in May, "as we remain concerned about its potential implications on employer-sponsored coverage, and the health care coverage these plans provide to over 177 million Americans," Birbal said.

SHRM does support the reduction of the employer mandate penalty "and looks forward to working with Congress to repeal the mandated employer coverage and reporting requirements, which are an administrative and financial burden to employers," she noted.

In addition, "SHRM applauds the inclusion of a six-year delay of the ACA excise tax on health care plans but will continue to advocate to fully repeal the tax." SHRM also "fully supports the repeal of the restrictions on the use and limitations on contributions to health savings accounts and flexible spending accounts," which are provisions in both the Senate and House bills.

Related SHRM Articles and Resources:

Even Absent a Mandate, Workplace Health Benefits Are Here to Stay, SHRM Online Benefits, July 2017

Senate Health Care Bill Would End Employer Mandate Penalty, Keep Cadillac Tax, SHRM Online Benefits, June 2017

How ACA Employer Provisions Differ from the Republican Health Care Bills
A chart detailing the differences between the employer provisions of the Affordable Care Act and the Republican health care bills.

Health Care Reform Resources for Employers

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