ACA Check-In: A Fast & Furious Fall for Health Care Reform
  • Health Care Policy & Compliance

ACA Check-In: A Fast & Furious Fall for Health Care Reform

After Congressional efforts throughout this past spring and summer to repeal and replace the Affordable Care Act (ACA) ended in failure, it was thought that the health care reform debate was dead—at least for the rest of 2017.

Not so much.

The action has picked back up in a hurry this fall, with several developments that could impact the health care system in a major way. These include an executive order and announcement from President Trump, two competing bills in the Senate, and the potential inclusion of ACA tax repeal in the Republicans' tax reform package.

Let's take a closer look at each of these developments, and what they mean for the future of the ACA and health care in America.

Directives from the White House

In October, President Trump released his executive order, "Promoting Healthcare Choice and Competition Across the United States.” In it, the president directed federal agencies to take action to:

  • Expand access to health reimbursement accounts (HRAs). This would allow more workers to use tax-free employer contributions through HRAs to purchase their own health insurance plans on the individual market, and allow HRAs to be used to buy non-group coverage.
  • Expand the availability of short-term insurance. This would allow individuals to buy short-term plans that cover 12 months, instead of the current limit of three months.
  • Expand access to association health plans. This would allow small companies to come together (i.e., form associations) and purchase the type of coverage available to larger businesses.1

It's important to note that the guidance under the executive order does not substantially change any key ACA provisions. Rather, it focuses on expanding access to certain types of insurance. We can expect regulations on each of these items in the coming months.

Shortly after releasing the executive order, President Trump also announced that the federal government would stop funding the ACA's cost-sharing reductions (CSRs) for health plans purchased on the Health Insurance Marketplace. The CSRs have been controversial and subject to litigation on the basis that Congress never appropriated funds to pay for them.2 And that's the grounds on which the president made his announcement.

Critics of the directive to end the CSR payments argue that it could destabilize the Marketplace and cause premiums to increase drastically. However, a recent report from Avalere Health, which studied the impact of cancelling the CSR payments, suggests that the change would not cause much disruption for consumers. In fact, most low-income individuals would actually be better off!

According to Avalere's analysis, "nearly 98% of counties with Exchanges operated by will have free bronze plan options for low-income consumers aged 50 earning 150% of poverty or less ($18,090 for an individual or $36,900 for a family of four)." Avalere's experts say the increased availability to free plan options is due to "the Administration’s decision to end cost-sharing reduction (CSR) payments to insurers. This decision has led to substantially higher premium subsidies in 2018, as insurers increase premium levels to make up for the lack of CSR payments."3

This presents an interesting dilemma for both of the health care bills (described below) currently being discussed in the Senate, as they each include funding provisions for the CSRs.

Learn more about the implications of President Trump's health care directives in this on-demand webinar!

Competing Legislative Efforts

Following Republicans' failure to pass a full-scale repeal and replacement of the ACA, there was a call for bi-partisan efforts to "fix" the current law's perceived shortcomings and "stabilize" the individual market. That's materialized into a bill sponsored by Republican Sen. Lamar Alexander and Democratic Sen. Patty Murray.

The Alexander-Murray bill would:

  • Fund the CSRs for two years and make them available to individuals with incomes within 100-250 percent of the federal poverty limit when purchasing coverage on the ACA Marketplace.
  • Add funding for ACA assistance and enrollment programs, which have had their budgets cut recently.
  • Expand access to catastrophic health plans to consumers of all ages, as opposed to just those under the age of 30.
  • Relax state ACA waiver programs under Section 1332, which incentivizes states to create "innovative" ways to improve health care.4

But in a challenge to this bipartisan effort, an alternative bill was recently announced by Republican Sen. Orrin Hatch and Republican Rep. Kevin Brady.

Like Alexander-Murray, this plan would also fund the CSRs for two years, but that's where the similarities end. From there, Hatch-Brady looks a lot more like a reincarnation of previous GOP attempts to partially repeal the ACA, with provisions to:

  • Suspend penalties for the ACA's "individual mandate" for five years.
  • Waive the ACA's "employer mandate" penalties retroactive to 2015.
  • Increase health savings account (HSA) contribution limits to equal the out-of-pocket maximum limit.5

It's unlikely this plan gathers much steam, especially in the Senate, where it would be subject to a Democratic filibuster. But the prospects of any legislative efforts, including Alexander-Murray, could be complicated by what winds up in the Republicans' final tax reform package.

Dive deeper into the ongoing legislative efforts on health care in this on-demand webinar!

Health Care Reform by Way of Tax Reform?

Recently, President Trump, along with a handful of Republican legislators, expressed the desire to use tax reform as a means of repealing parts of the ACA—particularly, the individual mandate, which is considered a tax.

Well, just this week, the Senate released a revised version of its tax plan to include the elimination of the individual mandate's fines, effectively repealing the mandate, beginning in 2019.6 Proponents of this addition point out that repealing the mandate would result in $300 billion in savings that could be used to provide bigger tax cuts for the middle class or to preserve popular itemized deductions.

But it's important to note that nothing has been finalized yet. The tax bill already faced a steep climb to passage before the end of the year, and adding a lightning-rod ACA issue will likely make it that much steeper.

Plus, if the individual mandate were to be repealed through tax reform, it would have profound effects on any forthcoming ACA repeal-and-replace efforts. That’s because, as my good friend and health policy expert Chris Condeluci explained to me, Congress would no longer have the leverage of being able to use savings from individual mandate repeal to sweeten the health care deal – funding for tax credits, offsetting other ACA taxes, etc. – because that savings will have already been absorbed elsewhere.

If it turns out that individual mandate repeal is not included in tax reform, it's possible President Trump will go ahead and issue an executive order on the matter.

As usual, we'll just have to wait and see.

Hear more from me and Chris on key ACA developments – and their impact on employer-sponsored health care – in this free, on-demand webinar!


1. The White House: Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States

2. SCOTUSblog: Judge: Billions spent illegally on ACA benefits

3. Avalere: Most Counties Will Have Free 2018 Exchange Plans for Low-Income Enrollees

4. Text of Alexander-Murray bill

5. U.S. Senate Finance Committee: Healthcare Leaders Propose Bicameral Agreement to Provide Certainty and Relief from Failures of Obamacare

6. U.S. Senate Finance Committee: Description of the Chairman's Modification to the Chairman's Mark of the "Tax Cuts and Jobs Act"