House Republicans, Short of Votes, Withdraw Health Care Bill

American Health Care Act, despite amendments, rejected by GOP's conservative flank

Stephen Miller, CEBS By Stephen Miller, CEBS March 24, 2017
House Republicans, Short of Votes, Withdraw Health Care Bill

​Photo by Gage Skidmore

Affordable Care Act 'Will Remain the Law of the Land,' Ryan Says

After several hours of debate on Friday, March 24, House GOP leaders, with support from President Donald Trump, withdrew the American Health Care Act (AHCA) from further consideration. It was a dramatic acknowledgement that they had been unable to find sufficient votes to repeal and replace the Affordable Care Act (ACA).

"Obamacare will remain the law of the land," House Speaker Paul Ryan, R-Wis., said during a press conference shortly after the bill was pulled. "We're going to be living with Obamacare for the foreseeable future."

All Democratic representatives were poised to vote against the AHCA, joined by most members of the House Freedom Caucus, a group of the most conservative Republican lawmakers, and some Republican moderates. According to reports, supporters of the measure would have fallen from 10 to 22 votes short.

The GOP’s rightwing flank had opposed the bill, dubbing it “Obamacare Lite” because it didn’t go far enough in eliminating all of the ACA’s insurance coverage requirements, and because they saw the AHCA’s system of age-based tax credits for people purchasing nonemployer policies as a new entitlement little better than the ACA’s existing income-based subsidies.

Some moderate GOP representatives felt the AHCA would leave too many Americans with no or limited health insurance.

Ryan said that House Republicans will now turn their attention to tax reform and other priority issues. Trump, speaking from the White House, also said that the administration’s focus would turn to tax reform, and he suggested that the ACA would have to experience a collapse before Congress would be able to come together to pass a replacement bill, given the polarization not only between Republicans and Democrats, but within the GOP itself.

However, there were reports the following week that Republican lawmakers were continuing to work behind the scenes to see if a compromise on the AHCA might yet be reached by the party's conservatives and moderates. How much to read into these efforts remained unclear.

With the ACA remaining as law—at least for the time being—employers should plan to continue complying with its wide-ranging coverage mandates and all employee tracking and reporting requirements. (See SHRM Online's follow-up article, As ACA Remains Law, Focus Turns Back to Regulatory Relief.)

The story below was posted on March 24 prior to the developments described above.

A vote planned for Thursday, March 23, on a bill to repeal and replace the Affordable Care Act (ACA), backed by the House GOP leadership and President Donald Trump, was postponed after it became clear that opposition by conservative Republicans would deny the measure enough support to pass, and rescheduled for Friday, March 24, following an ultimatum from Trump.

Whether the American Health Care Act (AHCA) can pass and overturn President Barack Obama's signature health care law—along with the coverage mandates and reporting requirements it placed on employers—was still unclear.

Following a marathon negotiating session that continued late last night, last-minute additions to the bill included:

  • Allowing states to define the law's essential health benefits.

  • Temporarily keeping the current ACA's 0.9 percent Medicare surcharge on wealthy consumers for another six years.

  • Adding $15 billion to the bill's $100 billion Patient and State Stability Fund for mental health and substance abuse services.

The GOP Freedom Caucus, a group of the most conservative Republican lawmakers, had called for repeal of the ACA's essential health benefits required of individual and small-group insurance plans. They also opposed providing tax credits to people who purchase health policies on the individual market, claiming this would create an expensive new entitlement little better than the ACA's subsidies for low- and moderate-income health care purchasers.

The bill initially repealed the extra 0.9 percent tax on those making more than $200,000 a year, or $250,000 for those filing jointly. Sen. Mark Walker, R-N.C., told Inside Health Policy that temporarily keeping the extra Medicare tax was floated as a way to get moderate Republicans to sign on to the GOP bill.

Earlier, the AHCA had been amended in committee to delay by an additional year the "Cadillac tax" on high-value employer health plans, from 2025 to 2026 (the tax had previously been delayed by Congress until 2020). The 40 percent excise tax would be levied on the value of group health plans above certain dollar thresholds: $10,200 for individual coverage and $27,500 for family coverage, indexed for inflation in future years. The tax is opposed by employer groups that advocate its complete repeal—including the Society for Human Resource Management—and could be revisited if the AHCA is passed by the House and moves to the Senate.

Trump's Ultimatum

After House Speaker Paul Ryan, R-Wis., announced Thursday's vote would be postponed, White House Budget Director Mick Mulvaney told House Republicans that the president was finished negotiating and wanted a vote today. If the bill doesn't pass, Trump will leave the ACA in place and move on to other legislative priorities. Congress, however, as an equal branch of the federal government, is free to set its own agenda and deliver legislation to the president on its own timetable.

Essential Health Benefits at Issue

"Repealing the ACA's essential health benefits was considered as a means of getting the GOP conservatives on board," wrote Susan Nash and Amy Gordon, partners at law firm McDermott Will & Emery in Chicago, in an e-mail to SHRM Online. To try to keep moderate support, the final language would leave the matter to the states.

The ACA and its implementing regulations require coverage of essential health benefits (EHB) and actuarial value. Nongrandfathered, fully insured plans in the individual and small-group markets and plans in the exchanges are required to provide EHB coverage in 10 separate categories that reflect the scope of benefits covered by a typical employer plan.

The ACA defines a small employer as those having at least one but no more than 50 or 100 employees (states have the discretion to expand their small-group markets to include employers with 51 to 100 employees).

However, self-insured small-group plans, as well as all large-group plans and all grandfathered plans, are not required to offer essential health benefits.

"There are many employers and individuals who were also not fans of the ACA's essential health benefits, for example maternity benefits that were required to be paid for by men and women who were no longer of child-bearing years," Nash and Gordon told SHRM Online.

What would happen if a measure that eliminates the required EHB were to be enacted (admittedly, still a big if)?

"We believe that some employers may look at their medical benefit coverages and possibly alter their plans to no longer cover all of the essential health benefits, depending on the needs of their participants," Nash and Gordon said. "Other employers, some of whom were already covering the essential health benefits prior to the Affordable Care Act, may simply do nothing."

Even if EHBs are no longer mandated at the federal level, "existing state-mandated benefits will remain. States could also pass new bills mandating something comparable to EHBs," wrote Rebekah Bayram and Barbara Dewey, consultants and actuaries with the San Diego office of Milliman, an actuarial services firm, in an e-mail to SHRM Online.

Should the ACA be repealed and interstate health plan sales allowed, "plans regulated by states that have more state-mandated benefits may find it hard to compete on price with plans from states that have fewer state-mandated benefits," they noted.

Senate Reconciliation Limits

"The GOP's approach to reforming health care reform starts by moving to repeal and replace specific ACA provisions through the budget reconciliation process, under which tax- and revenue-related legislation aren't subject to a filibuster and can be passed by the Senate with a simple majority," explained Chatrane Birbal, a senior advisor for government relations at the Society for Human Resource Management. Using reconciliation, measures can be passed in the Senate by 51 votes; "Republicans currently hold 52 out of 100 seats in the Senate, although Vice President Mike Pence can break a tie vote," she noted.

House GOP leaders believe that including provisions in the proposed AHCA such as repeal of EHB and related affordability and actuarial value requirements would subject the bill to a Democratic filibuster. Members of the Freedom Caucus argue that the Senate rules can be interpreted to allow a broader range of provisions to be passed through reconciliation.

[SHRM members-only toolkit: Managing Health Care Costs]

What's Next?

If the AHCA fails to pass in the House, or if it does pass but fails in the Senate, "our assumption is the Republicans will try and pass a new bill that further meets the hold-out Republicans' concerns," even if Trump steps back from involvement, said Gordon and Nash.

"Despite the current postponement, I think it is a bit premature to talk about complete failure," said Carolyn Smith, an attorney with Alston & Bird in Washington, D.C. "A lot could happen in the next few days."

"This is fish-or-cut-bait time," added Earl Pomeroy, senior counsel at Alston & Bird. "The speaker and president are having more difficulty rounding up the last few votes to pass the bill than I expected. If they do get the bill out of the House, it will be changed substantially in the Senate," where the Republican majority is slimmer and more compromises with GOP moderates may be required.

"That reality is making these ongoing negotiations even more difficult," Pomeroy suggested.

Despite the intransigence of some GOP representatives and senators, "the Republican majority has a strong interest in fulfilling the campaign promise to repeal and replace the ACA," Smith said. "It's still likely that they will re-group and get a bill through the House," and then begin negotiations to see what can be passed in the Senate.

Related SHRM Articles:

GOP's Health Care Bill Highlights an HSA Divide, SHRM Online Benefits, March 2017

Re-reforming Health Care Involves 'What-Ifs', SHRM Online Benefits, March 2017

Will the GOP's ACA Replacement End the Employer Mandate and Required Reporting?, SHRM Online Benefits, March 2017

'Cadillac Tax' Remains in GOP Health Care Repeal, Replacement Bill, SHRM Online Benefits, March 2017

SHRM Health Care Reform Resource Page

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