ACA Rhetoric vs. Reality

With bold campaign promises and now evolving messages from Republican leaders, employers across the nation are challenged with separating rhetoric from reality and fact from fiction.

Rhetoric: “On day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.” (Trump campaign promise)

Reality: Given the reality of the effort required to create a new law, we expect employers to continue to be subject to Affordable Care Act (ACA) reporting requirements for the foreseeable future.

Through the budget reconciliation process, a repeal of sorts is possible. But eliminating coverage for the more than 20 million insured through the ACA via the legislatively created Marketplaces would likely result in a political nightmare for the Republican party. A replacement of the legislation is also quite complicated.

Reality of repeal

If the Republicans propose a repeal of the ACA legislation, Democrats will have enough votes to successfully filibuster and stop the proposal within the Senate. However, Trump and the Republicans do have a path to a repeal of sorts through the use of the budget reconciliation process.

Budget reconciliation allows for expedited consideration of certain legislation that has a budget impact.

Reconciliation can only occur when the provision impacts budgetary items. So with this option, Republicans could potentially eliminate penalties and subsidies, but not laws that mandate, for example, pre-existing conditions, or allowing coverage of dependents through age 26. The latter are popular and pieces of the law that consumers and the Republican party highly regard.

If subsidies or penalties were eliminated, coverage for more than 20 million insured through the Marketplaces or through Medicaid expansion could be canceled. This could be a political disaster for the Republicans, and could have significant impact to the Congressional members who are up for mid-term elections in 2018.

Therefore, from a political standpoint, it would be very difficult for Republicans to repeal the legislation without an effective and affordable replacement.

Reality of replacement

The ACA is now deeply rooted within our healthcare system. Replacement of the ACA will take considerable effort and agreement across the White House, Congress, and possibly the Supreme Court. In addition, the needs of other players, such as the states and insurance carriers, will also need to be considered as they have an important role in the success of any new healthcare laws.

Republicans have recently proposed multiple, and in some cases, competing plans for ACA replacement. Their first step will be to come to agreement on new legislation. Below is a condensed list of some apparent similarities and differences of the proposed Republican policies in comparison to current legislation:

Potential similarities:1-3

  • Employer-based health care
  • Coverage of pre-existing conditions
  • Coverage of dependents to age 26

Potential differences:1-3

  • Emphasis on national insurance sales across state borders
  • State-regulated health insurance
  • Focus on health savings accounts
  • Elimination of the Cadillac tax, individual and employer mandates
  • Full premium tax deductions
  • Elimination of subsidies for low- and middle-income individuals and families
  • Removing barriers to importing prescription drugs from other countries

Successful implementation of these changes would be quite difficult as many of the ACA requirements play together to provide balance for key stakeholders. For example, the individual mandate was intended to encourage enrollment of young and healthier individuals who have less expensive healthcare needs in addition to those who have costlier needs. Insurers participating in the exchanges have relied on the individual mandate to balance out the cost of covering pre-existing condition exclusions. Without a mandate, they would need to find another means to incent a broad group of Americans to purchase coverage, helping to spread the risk for insurers. Because of the interconnectivity between the requirements, it’s quite possible the ACA will just be renamed, but stay largely intact.

Regardless of the details of the replacement program the Republicans propose, new laws take time to write, pass, and set in motion in terms of administration, as we have seen with the ACA. So perhaps it’s most important for employers to understand that:

  1. Change will be complicated and take significant effort.
  2. Proposed policies do not appear to eliminate the need for employer reporting on healthcare coverage or tax compliance.
  3. Healthcare reform will continue to be a long-term challenge for employers.

With several big questions remaining around the pending Republican plan, employers are faced with significant uncertainty. Employers need a partner that adapts to change. Health e(fx) is specifically designed to help employers manage complex business challenges related to an ever-changing healthcare environment. The greater the challenge, the greater we are at solving it. We are the best solution for supporting employers through healthcare reform and to help them survive the challenges of healthcare reform today and tomorrow.

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References

  1. The Motley Fool. A Side-by-Side Comparison of Trumpcare and Obamacare.
  2. A Better Way Healthcare Policy Paper.
  3. Business Insider. Trump Says He’s Willing to Keep 2 Key Parts of Obamacare that He Couldn’t Repeal Anyway.