This is the one hundred and sixth issue in our series of alerts for employers on selected topics on health care reform. (Click here to access our general Summary of Health Care Reform and other issues in this series.) This series of Health Care Reform Management Alerts is designed to provide an in-depth analysis of certain aspects of health care reform and how it will impact your employer-sponsored plans.
Background: On March 6, Congressional Republicans released the American Health Care Act (AHCA), pitched as the "repeal and replacement" of the Affordable Care Act. (The AHCA is actually currently two parts generated by different committees, but they'll be combined for a vote and we will refer to them as a single bill for purposes of this alert.) This alert is focused primarily on the potential impact of this bill on employers and plan sponsors, although we will also highlight some of the other significant provisions included in the proposal. Notably, while the bill would drive significant changes in the large group market, the AHCA's primary focus and most of its changes impact the individual and small group markets.
Regulatory Outlook:
To be clear, the AHCA still faces significant hurdles before it could become law, including:
- Democrats appear to be uniformly aligned against any efforts to repeal the Affordable Care Act.
- Within hours of the AHCA's release, Republicans faced opposition from one wing of the party with respect to the AHCA's new tax credits, and from another wing of the party with respect to the AHCA's Medicaid expansion phase out.
- Four Senate Republicans have already declared they will not vote for a bill that includes a rollback of the Medicaid expansion (although they subsequently suggested the bill was a step in the right direction).
- The AHCA has also been dubbed "Obamacare Lite" by several conservative interest groups that are influential in Republican circles.
- President Trump's HHS Secretary, Tom Price, has labeled it a "work in progress."
- Congressional Republicans are pushing for a House vote on the bill before the Congressional Budget Office finishes scoring the bill (to determine the impact on cost and coverage). To the extent the CBO estimate becomes available during the voting process, and to the extent the numbers suggest significant coverage losses or increased deficit, that could lead to more defections within the Republican Party.
Process Considerations
While coined a "repeal and replace" bill, the AHCA actually leaves most of the Affordable Care Act in place and builds on/modifies its framework. Due to Senate rules, a complete "repeal" of the Affordable Care Act would require 60 votes, which the Republicans cannot muster (As noted, Democrats in the Senate have generally vowed to fight any efforts to repeal the Affordable Care Act). That said, as discussed in Issue 102, Senate rules would permit modifications to revenue- or budgetary-related provisions through a process called "reconciliation," which only requires 51 votes. As a result, Republicans are limited in what they can address through the AHCA (although President Trump has vowed to address non-reconciliation-eligible provisions, such as permitting the sale of insurance across state lines, through subsequent efforts). It is also important to note that the Senate Parliamentarian has not yet weighed in on whether all of the AHCA's provisions are eligible for inclusion in a reconciliation bill.
What Remains?
As noted above, much of the ACA is ineligible for repeal through reconciliation. As a result, the following provisions will remain in full force and effect, subject to the possibility of future regulatory or legislative action (this list is not comprehensive):
- Prohibition on lifetime and annual dollar limits
- Adult child coverage mandate
- Limit on out-of-pocket maximums
- Insured plan income non-discrimination standard (to the extent the IRS lifts its enforcement moratorium, which seems unlikely before 2020 at the earliest)
- Required coverage for routine costs for clinical trials
- ACA reporting standards**
- Preventive service mandate
- Ban on pre-existing condition exclusions*
- Provider nondiscrimination requirements
- Section 1557 nondiscrimination standards
- Ban on rescissions
- Cadillac tax (eligible for repeal through reconciliation, but retained in the AHCA)**
* Although see Continuous Coverage requirement discussed below
**See detailed discussion below
Next Steps
Congressional mark-ups of the bill begins today, and we can expect various changes to the AHCA before it goes to vote. Early reports suggest Republicans are attempting to push for a quick vote on the bill, which risks criticism of rushing the bill and not permitting for sufficient consideration (similar to the criticism Democrats faced during the Affordable Care Act debate). Republicans are targeting a vote in the House by late March, with a Senate vote to immediately follow no later than April 7th (when Congress goes on a two-week recess).
The following chart aligns how various health care issues are addressed in the existing ACA versus the GOP's currently proposed AHCA.
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