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Graham-Cassidy bill would have ended employer mandate; lacked Senate votes to pass
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An earlier version of this article was posted on Sept. 20, 2017
Sen. Majority Leader Mitch McConnell said on Sept. 26 that the Senate will not hold a vote on
the Graham-Cassidy health care bill, Republicans' last-ditch effort to repeal and replace the Affordable Care Act (ACA), ensuring that the ACA will remain in place for the foreseeable future. Senate Republicans were several votes short of the 52 votes they would have needed to pass the measure.
Employers should plan to remain fully compliant with all of the ACA's health coverage and
"We haven't given up on changing the American health-care system ... We're not going to do it this week, but it still lies ahead of us," McConnell said. "Where we go from here is tax reform."
Sen. John McCain, R-Ariz., Sen. Susan Collins, R-Maine, and Sen. Rand Paul, R-Ky., had announced they would vote against the bill. Sen. Lisa Murkowski, R-Alaska, remained uncommitted and had expressed doubts about the legislation. McCain, Collins and Murkowski voted against an earlier Senate bill to repeal and replace the ACA.
Explaining their opposition, Paul said the bill would not fully repeal the ACA, McCain said he wanted the Senate to follow "regular order" with full committee hearings, and Collins and Murkowski cited concerns over increasing the number of uninsured Americans and limiting Medicaid funding.
Republicans hold a slim 52-48 majority in the Senate. Unless at least two of these senators had shifted their position and supported the Graham-Cassidy measure, it couldn't pass (a 50-50 tie in the Senate could be broken by Vice President Mike Pence).
President Donald Trump had indicated his support for the legislation, which would have repealed the employer mandate and given states more control over health care requirements, possibly making it more complicated for multistate employers to provide all their workers similar health care coverage.
"For employer health plan sponsors, nothing changes for now," said Tracy Watts, U.S. leader for health care reform at Mercer, an HR consultancy, in a blog post. "The ACA is still the law of the land and employers must continue to comply with shared responsibility requirements, prepare for reporting in 2018, and update projections for the excise tax in 2020."
"Looking ahead, lawmakers will likely
pursue targeted modifications to the ACA, including some employer provisions," said Chatrane Birbal, senior advisor for government relations at the Society for Human Resource Management.
Like previous Republican-backed bills,
the amendment to H.R. 1628, sponsored by Sen. Lindsay Graham, R-S.C., and Sen. Bill Cassidy, R-La., would have eliminated penalties imposed on individuals who don't purchase health care (the individual mandate) and against employers with 50 or more full-time equivalent employees that don't provide ACA-compliant health care (the employer mandate). By doing so, it would have effectively eliminated these obligations.
"The clear intent of Congress under Graham-Cassidy is repeal of the employer mandate," said James Gelfand, senior vice president for health policy at the ERISA Industry Committee (ERIC) in Washington, D.C. "States can try to re-impose their own employer mandates, but would do well to review
RILA v. Fielder, in which the state of Maryland was slapped down for trying to impose a health insurance mandate on self-insured plans."
Block Grants to States
The Graham-Cassidy bill would have converted federal payments for the ACA's subsidies, which help low- and moderate-income individuals purchase health insurance on the ACA's marketplace exchanges, into block grants paid to the states. It would have done the same for federal payments to expand Medicaid. The states could have used these block grant funds to set up their own health coverage systems, keeping many of the ACA's key provisions in place, if they chose to do so.
For instance, states could have used these block grants to help those who purchase individual-market coverage to pay their premiums and out-of-pocket costs, and to help those enrolled in Medicaid to afford care. States could also have set up
high-risk or reinsurance pools to help protect insurers from costly enrollees.
Essential Health Benefits
The bill allowed states more independence in defining their own
essential health benefits (EHBs)—the 10 broad categories of medical care that the ACA currently requires fully insured U.S. health plans to cover.
"Graham-Cassidy would give states the discretion to not treat one or more of the 10 broad categories as essential," said Edward Fensholt, a benefits attorney with Lockton Compliance Services in Kansas City, Mo.
"Self-insured health insurance plans are not subject to essential health benefits," Gelfand noted, and so would not be effected by EHB decisions made by states in the wake of the Graham-Cassidy proposal or other EHB waivers.
However, self-insured plans are prohibited from imposing annual or lifetime dollar limits on any essential health benefits they do offer.
States that receive funding under the bill also could have obtained waivers to permit insurers to charge different premiums based on health status, age or any other factor other than sex or membership in a constitutionally protected class (such as race or national origin). States could also have obtained waivers of the ACA's medical-loss ratio rebate requirements. Employer advocates say this approach could undermine the ability of employers that operate in multiple states to provide uniform coverage under the Employee Retirement Income Security Act (ERISA).
'"SHRM supports proposals providing states more flexibility, however, we remain concerned that these practices could lead to the erosion of ERISA and be problematic for multistate employers that offer self-funded health plans," said Chatrane Birbal, senior adviser for government relations at the Society for Human Resource Management.
She noted that SHRM has long advocated for repeal or further delay of the ACA's "Cadillac tax"—a 40 percent excise tax on high-value health plans that is scheduled to go into effect in 2020. "The Graham-Cassidy proposal does not address this issue. As the costs of health insurance continue to rise, the impending Cadillac tax continues to threaten employers and their employees with higher health benefits costs."
[SHRM members-only toolkit:
Complying with and Leveraging the Affordable Care Act]
Like earlier House and Senate ACA-replacement bills, Graham-Cassidy would have changed a number of provisions affecting employer-sponsored health care. For instance, it would have:
A Daunting Deadline
Republicans would have needed to pass health care legislation by Sept. 30 (or shortly afterward, as long as the Senate didn't adjourn) in order to use the budget reconciliation process. Under budget reconciliation, legislation focused on federal spending is not subject to a filibuster and so can be passed with 50 votes in the 100-member Senate. If the bill had been passed by the Senate, the House would have had to almost immediately approve it.
Employer Reporting Requirements
If, despite these hurdles, the measure had been passed by both chambers and signed into law, employers would still have been required to fulfill their 2017 ACA reporting obligations, advised John Hickman, a partner with Alston & Bird in Atlanta. "The ACA information reporting requirements are not addressed" in the bill, he said. "The ACA reporting by employers would still need to be done this year."
"The ACA’s individual and employer mandate penalties would be effectively repealed retroactively to Jan. 1, 2016, although employer reporting obligations would continue to linger at least through 2019," said Scott Behrens and Edward Fensholt, attorneys with Lockton Compliance Services in Kansas City, Mo.
Related SHRM Articles:
Prepare for 2017 ACA Information Reporting,
SHRM Online Benefits, September 2017
The ACA Remains but Targeted Reforms Will Be Sought,
SHRM Online Benefits, July 2017
HSA Provisions in Failed GOP Bills Could Return in Future Legislation. Should They?,
SHRM Online Benefits, July 2017
Related SHRM Resources:
Health Care Reform Resources for Employers
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