On March 6, 2017, House Republicans released legislation to repeal and replace the Affordable Care Act (ACA).
The 123 page proposed bill is expected to move to the House of Representatives mark-up process as soon as March 8 and will continue through a revision and negotiation process. If the bill passes in the House and advances to the Senate, language within a final version may shift; however, for those awaiting traction and a pattern to emerge among the several prior “repeal and replace” proposals, the American Health Care Act is now in motion.
A modification to the tax exclusion for employer-sponsored health plans is NOT included in the proposed legislation. During the first week of February, Oswald’s leadership spent several days in Washington, DC, advocating on behalf of our clients. On the Hill, we reiterated that changing the tax will further increase employer and employee costs when both are bearing the brunt of health insurance cost-shifting. While relieved by this result, given the current climate and approaching markup process, we will continue to monitor this issue closely.
The proposed legislation eliminates several ACA taxes and mandates, including the ACA employer coverage mandate (and penalty exposure). As the final version moves forward, Oswald will provide clarity as the timeline and potential retroactive impact is assessed.
Further, the individual coverage mandate is eliminated, yet the ban on pre-existing condition exclusions remains. As a result, healthier individuals may choose not to purchase insurance, which will increase premiums if there are a disproportionate number of older or less healthy individuals within the pool. To address this, the plan proposes a 30% penalty for lapses in coverage.
The ongoing challenge to repeal the 40 percent excise tax on high-value plans (the “Cadillac Tax”) continues as the proposed legislation delays the tax from 2020 to 2025. Predications indicate a significant number of plans will trigger the tax by 2025 if adjustments are not made to the threshold. Of note, during 2016, more than 2/3 of members of the House and 90 Senators supported repealing the tax.
The proposed legislation is the combined efforts of two House Committees: The Ways and Means Committee and the Energy and Commerce Committee. Within the approaching markup process, members of the House will negotiate and persuade, as needed, to reach the necessary 218 votes. The House has 237 Republican members and only able to lose 19 votes and still pass the bill.
Importantly, as a budget reconciliation bill, the scope is limited to budget-specific provisions. Importantly, a reconciliation bill requires a simple majority vote in the Senate, rather than the typical 60-vote requirement to avoid a filibuster.
According to Chairman Kevin Brady (R-TX), the high-level goals of the Ways and Means Committee are:
According to Chairman Greg Walden (R-OR), the high-level goals of the Energy and Commerce Committee are:
As we did when the ACA was introduced into the legislative process, Oswald will closely monitor all upcoming developments and provide timely updates.
Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information.