Repeal and Replace: Our Assessment

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Tuesday, January 24, 2017 10:26:00 AM Categories: Health Reform
The current debate swirling around the Affordable Care Act (ACA) "Repeal and Replace" is often full of opinion but short on facts. This update will reverse these proportions by expressing a few (clearly identified) opinions with the bulk of the focus on facts.
 

Opinion:
The debate over ACA "Repeal and Replace" will center on the Senate.

Facts:

The Senate has two ways it can handle repeal efforts:

  1. Budget Reconciliation: This requires a simple majority of 51 votes to pass. This process limits both debate and amendments. The use of this process requires approval by the Senate Parliamentarian. Prior repeal bills were approved for this process so that approval seems likely.
  2. Standard Legislative Process: Legislation considered by the Senate is subject to extensive calls for amendments and can be filibustered. Ending a filibuster requires a super-majority of 60 votes.
The Budget Reconciliation process does not apply to all aspects of the ACA. The features of the ACA that can be impacted are reducing or increasing amounts for:
  • The individual mandate penalty
  • The employer mandate penalty
  • The "Cadillac Tax" (currently delayed to 2020)
  • Individual subsidies for purchasing coverage on the State Exchanges
  • Limits on contributions to spending accounts
  • Insurer subsidies for risk stabilization
  • Payments to States for expanded Medicaid coverage
The features of the ACA that would be outside Budget Reconciliation and subject to standard legislative processes include:
  • Mandate for covering dependents to age 26
  • Prohibition on use of pre-existing conditions
  • 90 day limit on waiting periods
  • No lifetime or annual coverage limits
  • Independent external review of denied claims
Opinion:
Based on statements from a number of Senate Republicans, repeal without something to replace the ACA is unlikely to get Senate approval.   How long it will take Republicans to fashion such replacement legislation is unknown.
 
Once repeal and replace legislation is passed, employer responsibilities will be defined by enabling regulations. The promulgation of regulations typically takes six months or more. The reporting of plan value on W-2 forms and the filings of IRS forms 1094/1095 remain in force until withdrawn by regulatory action.

Bottom Line: Until regulations are finalized, employers should continue ACA compliance efforts.

 

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