After ACA Repeal, Most Employers Would Keep Some Provisions

The November election will chart health care reform’s future

By Stephen Miller, CEBS May 27, 2016
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The future of the Affordable Care Act (ACA) will be hotly debated this election season, with a renewed push to repeal should the GOP triumph, and at least modest revisions if the Democrats keep the White House, according to speakers at the recent International Foundation of Employee Benefit Plans (IFEBP) Washington Legislative Update.

The Brookfield, Wis.-based IFEBP, a nonprofit membership association for benefit plan professionals, also released a new survey report, 2016 Employer-Sponsored Health Care: ACA’s Impact.

If the ACA is repealed, the report revealed, 78 percent of employers would like to keep in place at least some of the mandated changes they have already made to their health plans. The provisions employers most want to keep—which affect health insurers and would need to be reinstated in new legislation if the ACA is repealed—include:

Elimination of pre-existing condition exclusions (38 percent of respondents favor keeping).

Coverage of adult children to the age of 26 (31 percent).

Increased wellness incentives (31 percent, again).

No cost-sharing for preventive care (25 percent).

“Employers have seen certain ACA provisions have a positive impact on their workforce,” said Julie Stich, CEBS, research director at IFEBP. “Mandates such as the elimination of pre-existing condition exclusions and coverage of children until age 26 have allowed employees and their families to receive health care services that have made a positive impact on their physical, financial and emotional well-being.”

Respondents named their biggest compliance challenge with the ACA as:

Reporting and disclosure issues (53 percent).

Cost issues (21 percent).

Employee communications (10 percent).

Tellingly, 11 percent of organizations have adjusted their schedules so that fewer employees work the minimum number of hours to qualify for full-time employee medical insurance.

To avoid the 40 percent “Cadillac tax” on high-cost health plans, over a quarter (28 percent) of employers are currently working on plan design changes and an additional 38 percent intend to do so before the tax takes effect in 2020. Among these employers, the most common actions taken or planned are moving to a high-deductible health plan (43 percent), shifting costs to employees (42 percent), dropping higher cost plans (31 percent) or reducing benefits (30 percent).

“Whether or not the Cadillac tax goes into effect, it will have left an impact on the health care landscape,” said Stich. “Employers are taking cost-shifting measures to avoid the tax and these efforts are shaping how Americans use and receive health care coverage.”

Big Changes Ahead—Maybe

At the IFEBP’s Legislative Update event, three possible post-election scenarios were presented by Randolf Hardock, a partner with law firm Davis & Harman in Washington, D.C., and former benefits tax counsel at the U.S. Department of the Treasury. The possible outcomes were:

Split government, with one party winning the presidency and another taking the House and/or Senate.

Likely result: “More of the same gridlock, with only changes with broad bipartisan support likely to move forward,” absent a crisis—such as health insurers abandoning the public exchanges—Hardock said.

Republicans take the presidency and keep control of Congress.

Likely result: ACA repeal, tax reform and regulatory rollback. With the likelihood of only a slim GOP majority in the Senate, Democrats would have the filibuster to block changes. But a way around a filibuster is by using the budget reconciliation process, in which only a majority vote is needed to pass measures relating to spending and revenues—which is how the Democrats pushed the ACA itself through the Senate in 2010 after losing their filibuster-proof 60-member supermajority following a special election.

“If the GOP takes the presidency and Congress, the ACA as we know it will be gone—gutted through the budget reconciliation process,” Hardock predicted.

Democrats win the presidency and take control of Congress.

Likely result: The ACA stays and necessary fixes are passed through the budget reconciliation process if they lack bipartisan support.

Should the election go the Republicans’ way, an initial alternative blueprint to the ACA might be found in the proposed Burr-Hatch-Upton Patient CARE Act, said James Gelfand, senior vice president for health policy at the ERISA Industry Committee in Washington, D.C., which advocates on behalf of large U.S. employers. Among its provisions, the CARE Act would:

Close HIPAA gaps for continuous coverage to address pre-existing conditions.

Include coverage of dependents up to age 26.

Ban lifetime limits on how much plans pay out.

Expand coverage with refundable tax credits.

Expand use of health savings accounts.

Another GOP Alternative Introduced

In May 2016, two Republican lawmakers introduced their own health care plan. The bill from Rep. Pete Sessions (R-Texas) and Sen. Bill Cassidy (R-La.) does not fully repeal the Affordable Care Act but, as described by The Hill, it would eliminate the mandates for individuals to have coverage and for employers to provide it, as well as requirements for what an insurance plan must cover. The core of the plan is a $2,500 tax credit that any citizen would be eligible for and use to purchase health insurance.

Health policy analyst John Goodman, writing at the Health Affairs Blog, has more about the Sessions/Cassidy bill.


Wither the Cadillac Tax?

Both presumptive Democratic presidential nominee Hillary Clinton and presumptive Republican nominee Donald Trump have said they favor repeal of the Cadillac tax, making it possible this could be the one big change that goes through whichever party wins the White House, Hardock and Gelfand agreed. But to keep in place the ACA’s subsidies and tax credits for many who buy coverage through public exchanges, as Democrats favor, alternative funding would need to be found.

Limiting the tax deduction for employer-provided health care is one alternative way of raising revenue that has been discussed. “Ending or capping the employer exclusion is something around which it might be possible for the Democrats to make a deal,” Gelfand said, although his organization and other employer advocates are strongly opposed to that possibility.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

Related SHRM Article:

Hearings Ponder Future of Employer-Provided Health Care, SHRM Online Benefits, April 2016

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