In Focus: Senate Health Bill Revised in Attempt to Win GOP Votes

Measure would allow use of HSA dollars to pay health premiums

Stephen Miller, CEBS By Stephen Miller, CEBS July 17, 2017
In Focus: Senate Health Bill Revised in Attempt to Win GOP Votes

For the first time, people could use their health savings accounts (HSAs) to pay for health care premiums for individual-market plans with pretax dollars, under a revised version of the Better Care Reconciliation Act, the Senate GOP leadership's bill to repeal and replace the Affordable Care Act (ACA).

While the change would not seem to directly affect active employees with coverage through their workplace, it could encourage employees to build up HSA funds during their working years to pay premiums for post-employment health coverage—including Medicare-supplement health policies. That, in turn, could make HSAs a more attractive employee benefit, and encourage more employees to select a high-deductible health plan option that can be coupled with an HSA.

One revision could affect executives and other high-earning employees—and could be a factor in structuring compensation packages: The bill retains the ACA's 3.8 percent tax on net investment income for certain high-income taxpayers and the ACA's additional 0.9 percent Medicare payroll surtax on earned income on wages above $200,000 (individuals), $250,000 (joint filers), and $125,000 (spouses filing separately).  

An Attempt to Win Over GOP Skeptics

The revised Senate bill is broadly similar to the earlier measure that Senate GOP leaders hoped to vote on before the Fourth of July recess, though the new version includes some additional provisions meant to entice reluctant Republican senators with varying policy concerns. The new draft bill, for instance, would not include any changes from current law to the net investment income tax or the additional Medicare payroll tax paid by certain high-income people. The bill would allow people to use HSAs to pay insurance premiums, a policy change that Republicans said would increase health care coverage.
(New York Times

An Appeal to Conservatives and Moderates

The bill made these changes to appease moderates:

  • A $45 billion fund to help people with opioid addiction.
  • An extension of three ACA taxes: the 3.8 percent tax on investments by the wealthy; a 0.9 percent Medicare surtax for the wealthy; and a tax on insurance executive's compensation.
  • $70 billion to states to help stabilize the cost of health care and implement new reforms.

And these changes to appease conservatives:

  • HSAs, accrued from pretax dollars, could be used to pay for health insurance premiums.
  • Catastrophic health plans would be offered and people could be eligible for tax credits to help pay for them.
  • A health plan with narrow coverage but cheaper premiums would be offered for people in the individual market.
    (NBC News

More Changes Ahead

Senators are already angling for more changes. An amendment from Sen. Lindsey Graham, R-S.C., would direct much of the ACA's federal funding directly to the states. Several moderates, however, are worried that the bill would hurt people with pre-existing conditions. A number of Republicans also are uncomfortable with spending reductions to Medicaid.

How ACA Employer Provisions Differ from the Republican Health Care Bills

A chart detailing how provisions relating to employer-sponsored group health plans and health-related employee benefits differ under the ACA, the House bill to repeal and replace the ACA (known as the American Health Plan Act) and the Senate bill.
(SHRM Online

[SHRM members-only toolkit: Communicating with Employees About Health Care Benefits Under the Affordable Care Act] 

Even Without the Mandates, Workplace Health Benefits Are Here to Stay

Both the House and Senate GOP ACA-repeal bills would effectively end enforcement of the ACA's individual and employer mandates around health care. Even absent enforcement of these mandates, it's expected that few employees would opt out of paying for employer-sponsored coverage, and few employers would choose to stop providing group health coverage to their workers. But it's is likely that some employers would pare back employee eligibility to enroll in their plans.
(SHRM Online)


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