Interesting times…. The Affordable Care Act (“ACA”) and its volumes of regulations have been the law of the land since 2010. Implementation was sometimes messy (the exchange websites), confusing (1095-C coding), and unreliable (late December extensions of filing deadlines). However, it is the law, and employers have spent billions of dollars to comply. While our clients continue to suffer sticker shock during each renewal period, they have made significant investments in compliance, and they worry about new costly disruptions.
Republicans’ message since 2010 has been “repeal and replace.” On November 8, they were given the chance to do just that.
The question is what does “repeal and replace” look like and how would it affect employers. The lead player is certainly President-elect Trump who provides broad outlines for reform. Speaker Ryan is likely the power broker for reform: he has already passed several House bills addressing reform measures. Additionally, he has published a comprehensive legislative blueprint “A Better Way.”
While we may expect broad policy changes over time, the most likely immediate changes may be those that all the players agree on:
- Allow health insurers to sell insurance across state lines. This would increase insurers’ risk pools and would open competition on price and product. This can only benefit employers, many of whom are stuck with limited options in price, products and services;
- Expand HSA participation. This may provide employers an additional-cost shifting solution and can enhance a popular additional benefit;
- Block grant of Medicaid money to the individual States. This will not have a direct impact on employers, but it should result in efficiency over time and lower the associated burdens on the taxpayers;
- Allow individuals to deduct health care premiums. This levels the playing field between employers and individuals and should lead to increased competition in the market between group and individual coverage. This will break the cycle of employee reliance on employer-sponsored health care coverage;
- Eliminate certain mandated coverages, particularly the mandated coverage of reproductive health services. The elimination of this or any mandated coverage will lower the cost of coverage.
- Remove restrictions on introduction of cheaper drugs into the marketplace. This will open the market to more generic drugs, putting pricing pressure on prescription drug plans. This should provide significant savings to employers and insurers.
While any change is disruptive, most of “replace and repeal” looks toward less Government regulation resulting in fewer reporting requirements, fewer mandates, and more choice of coverage. All of this is geared towards reducing costs, which helps businesses. Now the devil is in the details and in the new political leadership in our Nation’s Capital.Ann Duke, Esquire General Counsel Creative Benefits Inc.