On March 6th, House Republicans introduced their bill to repeal and replace key provisions of the Affordable Care Act. We anticipate the legislation will be considered by the House Energy and Commerce and House Ways and Means Committees starting tomorrow, formally kicking off the legislative process. Here are some highlights of the House GOP proposal:
-- Zeroes out the individual mandate and employer mandate penalties: The legislation – which focuses on provisions of the ACA with a budgetary impact, also known as budget reconciliation, – zeroes out the ACA’s penalties for 1) individuals who fail to get coverage and 2) for large employers who fail to offer coverage to full-time employees and their dependents. The rules of the budget-reconciliation process limit the ability of Congress to repeal the employer mandate and employer-reporting rules at this stage of the process. We continue to work for full repeal as most of the policy requirements and burdensome parts of the law are in the employer mandate.
-- Medicaid expansion: The House GOP bill would allow states that have expanded Medicaid to continue to enroll people into their programs at the ACA’s enhanced federal match rate until Jan. 1, 2020, after which enrollment would be frozen to new entrants. States could create their own expansion programs to start in 2020, or use supplemental funds to extend coverage to people, pay providers impacted by uncompensated care, or accommodate other arrangements.
-- Replaces ban on pre-existing conditions with a “continuous coverage incentive”: Beginning with the 2019 plan-year open-enrollment season, the legislation provides a 12-month lookback period to determine if applicants had a lapse in coverage for more than 63 days. In those cases, issuers can assess a flat 30 percent late-enrollment surcharge on top of their base premium.
-- Tax credits: The legislation replaces the ACA’s income-based premium tax credits that currently help people buy health plans through government marketplaces with an advanceable, refundable tax credit based on age and family size. To be eligible, an individual must generally not have access to government health insurance programs or an offer of insurance from any employer. This provision would provide significant relief for employers by eliminating the complex income-reporting requirements under the ACA. To qualify for the new tax credit, individuals would be required to get a letter from their employer certifying that they do not qualify for employer-sponsored health insurance coverage. The IRS would add a box on the W-2 forms for employers to inform employees of their health insurance status.
-- Cadillac tax extended: The House GOP considered but then dropped a proposal to cap the current exclusion for employer-provided insurance coverage. Instead, their legislation extends the 40 percent excise tax on high-cost employer-sponsored health coverage, also known as Cadillac plans. The tax is currently set to take effect in 2020, but the legislation moves the effective date to 2025.
Much of the final language in the ACA repeal-and-replace bill is still under discussion. The legislation faces significant hurdles in the Senate, where a narrow Republican majority makes passage more difficult. As always, we are continuing to advocate for health care reform that reduces costs and regulations for employers. These changes cannot be done through the budget-reconciliation process alone; we need true reform that makes much-needed improvements to help both the individual and employer marketplaces thrive.