by Kari Stevens, managing counsel and team leader, Health Care Reform Consulting and Communications at Cigna

The next era of U.S. health care reform has begun and I, along with my team, am focused every day on understanding the latest so we can help our employer clients successfully navigate in this highly regulated environment.   

There’s been a lot of activity over the past few months – I’ll break it down and provide some insights. Things are rapidly developing in D.C. every day, so be sure and check InformedOnReform.com for the very latest news!

What’s Happened So Far

Republican-led efforts to repeal and replace the Affordable Care Act (ACA) began swiftly on Inauguration Day, with the President issuing an Executive Order to “waive, defer, grant exemptions from or delay implementation of any ACA provision that imposes fiscal burden…” Shortly thereafter, the U.S. House Republicans drafted a bill, the American Health Care Act (AHCA), which was debated on the House floor in March but withdrawn before a full vote. Amendments were added to garner enough Republican support for passage in early May (May 4 news alert).  

In order to pass this bill without bipartisan support, Republicans are relying on the budget reconciliation process. However, this process limits what provisions may be in the bill to those with federal budgetary and spending impact. This means that full repeal of the ACA is not possible in this one action. Nevertheless, the AHCA bill is the first of several milestones in the overall repeal and replace process. The effort now moves on to the U.S. Senate where it faces new challenges.

What’s Next

Now with the Senate, Republicans have established a 13-person Working Group focused on drafting a bill to repeal the ACA. They can amend the House AHCA bill or create a separate bill, which may contain parts of the House version. In the Senate, a simple majority (51 votes) is needed for passage and there are only 52 Republican senators. This means even with a Republican majority, the AHCA may face an unclear path forward.

In order to get a bill to the floor for a vote, the Senate must follow procedural rules that don’t apply in the House. The nonpartisan Senate Parliamentarian must review and confirm the bill and any amendments to ensure they comply with the rules for reconciliation, known as the Byrd Rule. The Parliamentarian’s analysis requires a Congressional Budget Office (CBO) score (cost estimate). The AHCA CBO score was published on May 24 and will likely factor into the working group’s strategy.

Identical versions of the bill must pass both chambers before being signed into law by the President. If the Senate passes a bill that isn’t identical to what the House passed, there are two paths forward: 1) the House could pass the Senate bill and send it to the President; or 2) a bicameral conference committee with representatives from both the House and Senate could meet to negotiate a new compromise bill, which would need to be passed by both chambers before going to the President for signature into law. It’s currently unclear which path might be used in this instance.

What Might Impact Employers in the House Bill?

While the AHCA is likely to change before it becomes law, here are some provisions within the AHCA that may impact employers:

• Repeal of the individual and employer mandate penalties – Removing the penalties essentially nullifies the mandates. It could also raise questions about the continued necessity of related ACA provisions such as Large Employer and Minimum Essential Coverage Reporting.
• Delay of the Cadillac Tax until 2026 – Initially slated for 2018 and currently delayed until 2020, the Cadillac Tax would be further delayed to 2026 under the AHCA.
• State waivers to define Essential Health Benefits (EHBs) – States could obtain a waiver to define their own EHBs, with potential impact for fully insured plans issued out of that state and for all plans covering any EHB.
• More flexibility for Health Savings Accounts (HSAs) – Employers (and employees) may find HSAs more appealing with removal of restrictions for over-the-counter medications, reduced tax penalty for use on non-qualified expenses and increased contribution limits.

As a general matter, with ongoing changes in the individual market from the AHCA or otherwise, employees are expected to continue to look to their employers for innovative, affordable, and high-quality health benefits. 

Keeping You Informed

Bookmark InformedOnReform.com for the latest developments.  In the meantime, remember that compliance with the ACA is required unless and until official guidance to the contrary is issued. For a customized timeline and more information about ongoing annual responsibilities and employer deadlines under the ACA, visit YourACARoadmap.com.