Obamacare Repeal: Dead for Good, or Just for Now?

Obamacare Repeal: Dead for Good, or Just for Now?

It's quite possible that C-SPAN has produced more compelling TV than HBO recently, what with all the debate around health care reform.

Two months after the House of Representatives narrowly passed the GOP-backed American Health Care Act (AHCA), the Senate appeared ready to move forward with its own legislation to repeal and/or replace the Affordable Care Act (ACA). But almost immediately following the motion to proceed on a bill, Senators voted down the Better Care Reconciliation Act (BCRA). The next day, they voted down the Obamacare Repeal Reconciliation Act (ORRA).

And then, in what is sure to go down as one of the most dramatic moments in modern Congressional history, Sen. John McCain joined Sens. Susan Collins and Lisa Murkowski in crossing party lines to vote down a third GOP proposal to repeal parts of the ACA. (Side note: if you haven't yet seen the video of McCain's decisive thumb-down, it's worth at least a couple of viewings.)

The so-called "skinny repeal" bill – which, among other things, would have repealed the ACA’s individual mandate and delayed the employer mandate – was seen by many as a last-ditch effort by Republicans to overhaul the health care system. And since the bill failed, it looks like any plans to make changes to Obamacare will be put on hold…for now.

Get the inside scoop on the future of health care reform!

How would the GOP health care bills have impacted employers?

While much of the Senate's recently attempted legislation centered around non-employer-sponsored health care (i.e., Medicaid and the individual market), there are several areas where, if passed into law, employers would have seen changes – some more welcome than others.

Employer and Individual Mandates

The BCRA, ORRA and skinny repeal plan all would have effectively eliminated the ACA's so-called "individual mandate" and "employer mandate" by zeroing out the penalties for noncompliance.

Getting rid of the employer mandate penalties would have likely meant an easing of reporting requirements for companies with 50 or more workers. Under the ACA, these employers must track and report on employee eligibility for health coverage – a major challenge for groups who don't have an automated IRS reporting solution.

On the other hand, removing the individual mandate could be problematic for employers. It's reasonable to predict that, without the threat of a penalty, employees – namely younger, healthier ones – would be less motivated to enroll in their employer's health coverage. And as a result, employers could experience the negative effects of adverse selection in an older, sicker risk pool.

Health Savings Accounts

Republicans had proposed to raise contribution levels and ease restrictions on the increasingly popular health savings account (HSA). Among other changes, the legislation would have:

  • Made HSA contribution limits equal the out-of-pocket maximums for high-deductible health plans (HDHPs)
  • Allowed spouses ages 55 and older to make catch-up contributions to the same HSA
  • Lowered the tax on HSA distributions for non-medical expenses from 20 percent to 10 percent
  • Allowed HSA funds to be used for over-the-counter medical items

It's worth noting here that, despite the lack of an ACA replacement on the horizon, it's likely that Congress will introduce stand-alone legislation on HSAs in the near future.

See the latest trends in HDHP enrollment and HSA contributions!

Individual Market

Employers might have seen indirect impacts from the GOP bills' proposed changes to the individual health insurance market.

A controversial provision in the BCRA would have allowed states to "opt out" of the ACA's minimum essential health benefits (EHB) requirements. According to some, this policy would open the possibility of individuals losing much-needed coverage. Employers with a large part-time, non-benefits-eligible population could find themselves in a situation where employees are missing work or coming into work sick because they can no longer afford a public exchange health plan.

It's also possible that an unstable individual market would create demand for an expansion of employer-sponsored health care to those who are currently ineligible.

What's next for Obamacare?

Senate Majority Leader Mitch McConnell has indicated that his chamber will move on from health care to other pressing matters, such as national defense and the 2018 budget, while more than a few legislators have called for bipartisan work on trying to improve the ACA moving forward.

In the meantime, much uncertainty remains, especially with respect to the individual insurance market. Congressional leaders have expressed concerns about their ability to push through a "stabilization package" in time to avoid additional carriers from exiting the individual market exchanges. And the White House appears to support the idea of “letting Obamacare fail,” and could take steps to undermine the law, such as holding up cost-sharing reduction payments to carriers and/or refusing to enforce the individual mandate.

What can employers do?

For better or worse, we're still in wait-and-see mode. The bottom line is that the ACA is still the law of the land. And with the busy open enrollment season approaching, employers will need to stay the course for now.

The focus for employers should remain on combating rising health care costsdiversifying their benefit programs, and improving employee engagement and decision making.

But that doesn't mean you can take your eye off of Washington. The good news is, we're here to help you stay in the know.

Watch the on-demand webcast, ACA Here to Stay? Next Move for Health Care Reform, featuring health policy expert Chris Condeluci, to learn what's on the horizon for Obamacare – and how it will impact employee benefit programs.