- On March 7, 2017
On Monday evening, March 6, 2017 the House Republican leadership unveiled its first official version of legislation to repeal and replace the Affordable Care Act. Known as the American Health Care Act, the House Ways and Means and Energy and Commerce Committees will begin their work on “marking up” the legislation this week.
While all of the funding sources for this proposed measure are not completely clear, and the bill does not yet have an official price estimate or “score” from the Congressional Budget Office (CBO), so far the GOP leadership is not proposing to fund the measure through any type of change or cap to the income tax exclusion or payroll deduction for employer-provided health insurance. Kistler Tiffany Benefits strongly opposes any type of change to the employer exclusion so we are very pleased to note that Congress is not currently considering funding health reform changes on the backs of employers and employees who are doing the responsible thing and purchasing health insurance coverage. We, however, are not convinced that capping or eliminating the employer exclusions will not be proposed in future health care reform or tax reform measures. As such, we will continue to press Congress to ensure they recognize the important roll the current employer exclusion plays in the delivery of health care to 177 million Americans. We strongly encourage you to do the same with your representatives.
In addition to preserving the tax exclusion, the legislation addresses many other topics of importance to employers.
Key Provisions of the American Health Care Act:
- Immediate repeal the individual mandate
- Repeal of the employer mandate immediately with the stated intention to reduce the reporting burden by regulation, noting that some employer reporting of coverage offers via form W2 will be needed for tax credit eligibility determinations
- Repeals most ACA taxes in 2018 (including Over-the-counter prescription HSA/FSA limitations, FSA limits, the Medical Device Tax, HIT Tax, the tax deductibility of Employer Part D subsidy and more)
- Delays the “Cadillac Tax”, an excise tax on “high cost” plans till 2025
- Repeals ACA tax credits and cost sharing subsidies and replaces them in 2020 with an advanceable, refundable tax credit for the purchase of individual coverage and unsubsidized COBRA coverage of between $2000-4000 depending on age with (subject to income limits)
- Expands HSA limits in 2018
- Eliminates metal plan requirements for the individual and small group markets
- Expands age rating bands for individual and small group markets to 5:1 in 2018 with the option of state exceptions for greater flexibility
- Allows a 30% premium surcharge for people with a greater than 63-day break in coverage starting in 2018
- Freezes the Medicaid expansion in 2020 and converts it to a per capita program with a fixed federal contribution per enrollee
- Makes many other changes to Medicaid payments and structure that will impact providers and are intended to grant states more flexibility
- Authorizes $100 billion over 10 years for a state and patient market stability fund designed to lower patient costs and stabilize state individual and small group markets.
Important Things the American Health Care Act Does Not Do or Contain
The bill would not fully repeal the ACA. It repeals some provisions and proposes modifications to others. Important ACA and related items that were not addressed by this measure include:
- Capping or changing in the income tax exclusion or payroll deduction for employer-provided health insurance
- No change to the requirement that all coverage must be issued on a guarantee issue basis with no preexisting condition limitations
- No changes to prescription drug pricing
- No changes to the medical loss ratio requirements
- No changes to the ACA Medicare prescription “Donut Hole” Fix
- No changes to requirements for adult dependents up to age 26
- No changes to annual or lifetime limit ban
- No changes to many market reform measures like preventive care requirements, no preauthorization for ER visits, primary care doctor designation flexibility, internal and external appeals requirements, coverage rescission requirements, and more
- No specific provision about coverage across state lines
- No specific provision of a national program to address high-risk individuals with high medical care and claims needs other than the state grant program
- Keeps the Essential Health Benefit requirements
- Makes no changes to specifically contain health care costs, encourage price transparency, or directly incent cost-saving health plan innovations
The American Health Care Act is now dominating the news, but it wasn’t the only health care plan released in the past week. During his address to a joint session of Congress on February 28, 2017, President Trump outlined five policy principles he views as essential for successful health reform change.
- Ensuring that Americans with pre-existing conditions always have access to health coverage and making sure that there is a transitional plan in place for them as the country moves away from existing ACA requirements.
- Expanding the availability of health savings accounts and tax credits for the purchase of health insurance coverage.
- Providing states and governors additional Medicaid program flexibility.
- Creating reforms that will reduce the cost of health coverage and in particular prescription drugs.
- Allowing the purchase of health insurance coverage across state lines.
Notably, neither point four or point five on President Trump’s priority list were featured in the American Health Care Act, one of many indicators that the American Health Care Act is just the initial rough draft of what eventually may result in dramatic health reform change instituted by Congress and signed by the President. Despite rhetoric that this legislation will be passed very quickly, there are already signs that GOP leaders may encounter difficulties reaching consensus, with concerns already being vocalized from both the more moderate and more conservative and libertarian wings of the caucus. As such, there are likely to be changes to the proposed law ahead. But what you can count on is that as health reform changes begin to officially work their way through Congress, Kistler Tiffany Benefits will be sure to keep our valued clients up-to-date on the specifics.