Now What? A Post-Election Review

With the 2016 Presidential election behind us, many employers are left wondering what will come next for the Affordable Care Act (“ACA”). While there have been numerous efforts in recent years to repeal the ACA, in whole or in part, the upcoming administration may have the best chance of bringing change to the ACA to fruition. While no one can say with any certainty at this time what will come of the ACA in 2017 and beyond, a review of campaign promises and other plans that have been released may shed some light on the mindset of President-elect Trump and other politicians.   

Below is a summary of some of the plans released pre and post-election regarding the ACA for 2017 and beyond. This summary reflects the view of key incoming officials, either through campaign promises or prior sponsored legislation. It is important to note that these sources are not likely very reliable as (1) campaign promises often are just promises and (2) legislation which was previously sponsored in the past eight years often reflected political views but did not reflect what a fully vetted bill might entail as the sponsors knew such legislation would just be vetoed anyway. Therefore, the points below will have to be coupled with revenue provisions and balancing provisions in any bill likely to make it to law. Unfortunately, that leaves us still wondering “now what?”

For now, employers should continue to comply with existing ACA rules and regulations. We will stay on top of changes as they occur and will keep you informed.

President-Elect Trump’s Plan

During the presidential campaign, Trump repeatedly stated that one of his top priorities once in office would be the complete and total repeal of the ACA. On March 1, 2016, he released an outline of his plan to fix the health care industry. Some key highlights of his plan include:

• Repeal the ACA. Trump’s plan includes a blanket repeal of the ACA. Since the election, Trump has commented that there are provisions of the ACA that he would like to maintain such as the elimination of pre-existing condition exclusions as well as the rule requiring coverage of dependents to age 26. In the event of a partial instead of total repeal, a few key provisions most likely to be repealed include the Employer Mandate (“pay or play penalties”), Individual Mandate, ACA taxes (including the Cadillac tax), and a phase out of subsidies for individuals who purchase coverage through state exchanges. It is unclear whether the ACA employer reporting requirement (Form 1095-C) will also be repealed, but for now, the consensus among commentators appears to be that it may remain in place at least until the exchange subsidies are phased out and possibly indefinitely depending on the replacement plan.
• Removal of State Line Restrictions. This entails the modification of any existing laws that hinder the ability for insurance to be sold across state lines in the hopes of increasing market competition and thereby lowering insurance costs.
• Expand Health Savings Accounts (“HSAs”). Trump seeks to expand upon existing HSA benefits by allowing these accounts to be passed along as part of an estate plan without any penalties.
• Fully Deductible Health Insurance Premiums. Trump’s plan would allow individuals to deduct the full amount of all health insurance premium payments and to use pre-tax dollars to purchase health insurance plans in the individual market.
• Medicaid Block Grants. Based upon the fact that most states offer Medicaid benefits beyond the minimum requirements, Trump believes that the states would be best suited to administer their own Medicaid programs. By doing so there would be greater motivation for each state’s government to address misuse of this program.
• Return of State High Risk Pools. With the enactment of the ACA, and its subsequent ban on pre-existing condition exclusions, state high risk pools for previously uninsurable individuals were eventually phased out. However, Trump’s plan seeks to re-establish these pools for state utilization. This would be especially important should a full repeal of the ACA occur which would likely lead to insurers re-establishing pre-existing condition exclusions with most, if not all, plans.

House Speaker Paul Ryan’s Plan

House Speaker Paul Ryan unveiled a six-part GOP policy agenda to replace the ACA on June 22, 2016. Similar to Trump’s plan, this agenda repeals key provisions in the ACA and encourages the ability to purchase coverage across state lines, expanding the use of HSAs, and block-granting Medicaid. However, there are some additional key provisions addressed in Ryan’s plan such as:

• Abolish Mandated Benefits. The ACA currently requires all small group and individual health insurance plans to cover an array of essential health benefits. Ryan seeks to replace many of these mandated benefit plans with more “catastrophic” plans in an effort to reduce costs. Catastrophic plans are a type of high deductible health plan designed to protect individuals from worst case scenarios, like getting very sick or injured but that require individuals to pay most routine medical expenses out of pocket.
• Patient Protections. Since a full repeal of the ACA would also repeal some provisions with strong bipartisan support, this plan seeks to address how to replace these provisions in a post-ACA world. This includes creating pre-existing condition and continuous coverage protections for individuals who are currently insured as a means to incentivize individuals to maintain health insurance. A one-time open enrollment period would be used to allow currently uninsured individuals an opportunity to take advantage of these protections. Additionally, this plan aims to increase the cap on the age-rating ratio so that older individuals are paying no more than five times the premiums of a younger person (the current cap is three-to-one).
• Making Support for Coverage Portable. This plan would provide Americans with financial support to purchase a health insurance plan. This support would be portable between jobs and individual coverage, would carry into retirement years, and would be adjusted for age and inflation.  Excess credits would be deposited into an HSA-type account to be used towards other qualified coverage and/or out-of-pocket expenses.
• Medicare Reform. This plan would provide Medicare beneficiaries with the choice between the traditional program and private plans (via a premium support payment).

HHS Secretary Tom Price’s Plan

 On November 29, 2016, Trump named Rep. Tom Price (R-GA) as Secretary of the Department of Health and Human Services. Price, a long time critic of the ACA, is a supporter of the plans proposed by both the President-elect and House Speaker Ryan. However, he also has his own plan which includes some of the following components that are not found in either the Trump or Ryan plans:

• Fixed Tax Credits. Unlike the financial support payments proposed under the Ryan plan, Price would offer age adjusted fixed tax credits to be used towards individual insurance on the private market only. These credits would also be available to individuals on Medicaid, Medicare, TRICARE, or the VA health plan provided they opt out of that coverage and purchase private insurance instead.
• Re-Establishment of Pre-Existing Conditions. Under this plan, individuals could be denied coverage for pre-existing conditions for up to 18 months unless they had continuous insurance coverage for the 18 months preceding the new policy. There does not appear to be an exception to allow currently uninsured individuals to purchase insurance in order to protect themselves from the return of these exclusions.
• Employee Health Insurance Expense Caps. In an effort to discourage employers from providing excessive insurance benefits to their employees, tax deductions would be capped at $20,000 for family and $8,000 for individual health plans. While a similar provision exists in Ryan’s plan, it does not specify the amount for these caps.

While the incoming administration has laid out a plethora of proposals, it is also important to note that the ability to write, pass and implement these policies will likely not be a fast process. It may be difficult to obtain adequate bipartisan support to enact legislation that is not easily addressed via budget reconciliation measures due to the lack of ties to revenue implications (i.e. patient protections, mandated benefits, etc.). Additionally, a complete repeal of the ACA will likely be an uphill battle without both a replacement plan and a reasonable transition period to avoid repercussions of “taking away” coverage from the millions of Americans that are now covered under the ACA.

 The content herein is provided for educational and informational purposes only and does not contain legal advice. Please contact our office if you have any questions.