Nicole S Glass/Shutterstock.com
Although Republican efforts to repeal and replace the Affordable Care Act petered out last year without producing a bill, one of the key provisions of the law—the individual mandate—was effectively gutted in the Tax Cuts and Jobs Act passed by both houses of Congress in December. The tax reform package zeroed out the tax penalty imposed on Americans who fail to maintain continuous health insurance coverage throughout the year, rendering the requirement moot.
The effective repeal of the individual mandate undermines the ACA’s core principle of holding down health insurance costs by expanding the risk pool, raising fears of an upward spiral in premiums as healthy individuals exit the individual insurance market. In the wake of the mandate’s rollback, however, several states are considering imposing their own requirements that residents obtain health insurance, Lisa Nagele-Piazza reports at SHRM:
Massachusetts has already had an individual mandate in effect since 2007. “Massachusetts largely served as the model for the ACA,” explained Jeffrey Herman, an attorney with Greensfelder, Hemker & Gale in St. Louis.
More states may follow suit. Maryland lawmakers recently introduced a bill that would impose penalties on the uninsured in the state. And an individual mandate is also being informally advocated for or considered by state legislators or representatives of insurance exchanges in a number of other states, including California, Connecticut, Minnesota, Rhode Island and Vermont, Herman said.
Adam Solander, an attorney with Epstein Becker & Green in Washington, DC, tells Nagele-Piazza that he expects many states, particularly “blue states” with Democratic legislatures, to explore individual coverage mandates in the coming year.
US President Donald Trump issued two executive orders on Thursday that stand to upend the individual and small group health insurance markets established by the Affordable Care Act. The first order directs the Labor Department to study ways to allow small businesses and possibly individuals to buy insurance collectively through nationwide association health plans (AHPs), while also looking to ease restrictions on the purchase of short-term insurance policies that don’t have to follow the ACA’s strict coverage requirements, and enable more organizations to give employers money to buy their own coverage through health reimbursement arrangements or HRAs. The second order immediately ends the cost-sharing reduction subsidies the federal government had been paying to insurance companies to induce them to offer affordable coverage to low-income Americans.
Neither of these changes has a direct impact on the way large and mid-sized enterprises provide insurance for their employees, but they could have repercussions for the overall health insurance market and create uncertainty about the future of the ACA. As Stephen Miller explains at SHRM, the first order won’t change anything for larger employers, but could expand health insurance options for smaller ones:
“For most large employers and their employees, the executive order will result in no change in health coverage,” agreed Steve Wojcik, vice president of public policy at the National Business Group on Health, an association of large employers. As for smaller employers and some large employers, “the proposed changes may make it easier for employers to afford coverage and to help their employees pay for coverage if they buy it on their own.” …
While the Affordable Care Act does not mandate that most US employers provide health insurance for their employees, for those who do, the law requires that these health plans cover a specific set of health care products and procedures, including contraception. The contraception mandate has proven highly controversial among certain religious communities, and has been the subject of numerous lawsuits by employers who say the mandate forces them to violate their religious beliefs.
Unwinding the regulatory framework of the ACA has been a core goal of the Trump administration and the Republican majority in Congress, and this particular requirement is among their prime targets. In an executive order issued last month, President Donald Trump instructed federal agencies to “address conscience-based objections to the preventive-care mandate” created by the ACA, and last week, the Office of Management and Budget said it was reviewing an interim final rule that would relax the mandate—though some advocacy groups are already preparing to challenge that rule in court, the New York Times reported. On Wednesday, Vox revealed a leaked draft of the new regulation, which would effectively grant employers a broad exemption from this mandate:
The draft proposal, if finalized, would significantly broaden the type of companies and organizations that can request an exemption. This could lead to many American women who currently receive no-cost contraception having to pay out of pocket for their medication. “It’s just a very, very, very broad exception for everybody,” Tim Jost, a health law professor at Washington and Lee University, told Vox. “If you don’t want to provide it, you don’t have to provide it.” …
It is unclear whether the Trump administration has made changes to the draft regulation over the past week, or what the final version of the regulation might look like. …
If implemented as written, Vox reports, the regulation would allow any employer to request an exemption from the contraceptive mandate based on moral or religious objections—a right currently granted only to certain religiously affiliated organizations and private businesses. The Atlantic’s Olga Khazan at the Atlantic asks the obvious question: How many companies will stop covering birth control, if the Trump administration gives them the option?
Amid major uncertainty over the future direction of health policy in the US, CFO’s David McCann passes along a new survey of 666 employers from Willis Towers Watson which found that most employers don’t intend to make major changes to their health plans, even if Republican lawmakers succeed in their goal of repealing and replacing the Affordable Care Act:
For example, if unlimited lifetime benefits are repealed, employers are more than three times more likely to keep them in place (50%) than they are to reinstitute lifetime dollar limits (15%). And if contraceptive care at a 100% benefit is repealed, employers are nearly six times more likely to maintain coverage at that level (59%) than they are to reduce it (11)%. The survey also found that were the age-26 dependent coverage rule to be repealed — which is not expected to be an element of a potential replacement bill — more than twice as many employers would keep the eligibility age at 26 (48%) than lower it (22%).
All of those ACA provisions have had a positive impact on employee engagement, and employers that don’t maintain them will be viewed negatively from an overall rewards standpoint, says Julie Stone, a national health care practice leader at Willis Towers Watson. …
A bill to repeal the Affordable Care Act and dismantle its associated taxes and regulatory framework passed the US House of Representatives on Thursday by a narrow margin of 217-213, with 20 Republicans joining the entire Democratic caucus in voting against it. The bill, which is (still) being referred to as the American Health Care Act or AHCA, would eliminate the ACA’s taxes on insurance companies and high-income Americans, replace its health insurance subsidy system with refundable tax credits based primarily on age, relax the ACA’s mandate that insurance plans cover essential health benefits, and allow insurers to once again charge higher premiums to older customers and those with pre-existing conditions. The one element of the ACA left untouched by the Republican plan is the provision allowing adults to remain on their parents’ health insurance plans until the age of 26.
While the bill primarily affects the individual insurance market, the provision allowing states to obtain waivers from essential health coverage regulations could also affect plans offered by large employers, the Wall Street Journal reported on Thursday. Under a last-minute amendment to the House bill, large employers would be allowed to choose the benefit requirements of any state, regardless of where they do business, meaning that they could impose lifetime limits on covered expenses or remove caps on out-of-pocket costs for their employees. But that doesn’t mean many employers would choose to do so, as Tim Fernholz points out at Quartz:
House Speaker Paul Ryan withdrew the American Health Care Act, a bill to repeal and replace major components of the Affordable Care Act, from the floor of the US House of Representatives on Friday afternoon after a series of last-minute adjustments failed to convince Republican holdouts to vote for the controversial bill. The failure of the House GOP leadership to pass the bill means that the ACA remains the law of the land, as Ryan acknowledged on Friday.
Having been dealt a defeat on health care reform, President Donald Trump said his administration and Congressional Republicans would set the matter aside for the moment and turn their attention to tax reform, though the speaker said Friday’s “setback” would make that somewhat harder to achieve. In the meantime, the AHCA’s demise leaves open the question of how lawmakers will approach health care reform going forward. The New York Times describes an optimistic scenario in which the bill’s defeat “could be a catalyst if it forces Republicans and Democrats to work together to improve the Affordable Care Act, which members of both parties say needs repair”:
Democrats have been saying for weeks that they want to work with Republicans on such changes, but first, they said, Republicans must abandon their drive to repeal the law. … Rejection of the repeal bill may prompt Republicans to reconsider the political strategy they were planning to use for the next few years.
“We have to do some soul-searching internally to determine whether or not we are even capable of functioning as a governing body,” said Representative Kevin Cramer, Republican of North Dakota. “If ‘no’ is your goal, it’s the easiest goal in the world to reach.”
On the other hand, SHRM’s Stephen Miller writes, the GOP may push ahead with efforts to whittle away at the most unpopular elements of the ACA and try to give employers some regulatory relief through other means, so long as full repeal is not in the cards:
The plan to repeal and replace the Affordable Care Act released by Republican leaders in the US House of Representatives earlier this month quickly attracted bipartisan criticism: Democrats and health care interest groups attacked the proposal, titled the American Health Care Act, for canceling millions of Americans’ health insurance coverage, but some Republicans have also objected to the bill for retaining too much of the fundamental regulatory architecture of the ACA. Most polls taken the week after the AHCA was unveiled showed that more Americans opposed it than supported it, and that more expected it to decrease coverage and increase costs than vice-versa.
On Monday night, the House Republican leadership issued a “manager’s amendment” making a series of technical and policy changes to the bill to address some of the criticism coming from the right-wing and attempt to unite the Republican party around the bill. The amendment proposes more changes to Medicaid, such as allowing states to choose block grants over open-ended federal funding for the low-income public health coverage program or impose work requirements on beneficiaries who are not elderly or disabled. It also accelerates the timetable for repealing many of the taxes associated with the ACA. Health Affairs‘ Timothy Jost provides a comprehensive overview of what has changed.