By Jennifer S. Kiesewetter
On January 13, 2017, the U.S. House of Representatives (“House”) took fate in its hands and set the repeal of the Affordable Care Act (“ACA”) in motion. With a party line vote of 227 to 198, the House approved a budget resolution allowing Congress to repeal certain key provisions of the ACA without filibuster from the Democrats. This same resolution passed the Senate on January 12, 2017, with a 51-48 vote, also along party lines. The now-passed budget “blueprint” instructs both the Senate and the House to draft repeal legislation by January 27, 2017. Two committees in each the Senate and the House are charged with drafting the repealing legislation. This legislation, like the budget resolution, is also immune to filibuster and may be passed with a simple majority in both the Senate and the House.
So what does this mean? Is the ACA still law?
The budget resolution that has been passed by Congress does not in and of itself repeal the ACA. So, as of now, the ACA is still the law. However, the passage of the budget resolution is an enabling first step that needed to occur to walk the repeal through the legislative process. However, because the Republicans are utilizing the budget resolution process for repeal, the entire ACA cannot be repealed. Major provisions of the law can be repealed, though, including, provisions with respect to the insurance marketplaces, Medicaid-expansion provisions, and the employer and individual mandates, among others.
Without meaningful replacement, approximately 22.5 million people will likely lose insurance coverage due to the repeal of the insurance marketplaces’ subsidies. The repeal will eliminate any subsidies being provided for lower income Americans to help offset premiums and other cost-sharing measures. With fewer people able to secure coverage under the marketplaces without financial assistance, the marketplaces will become unstable, with only the sickest individuals retaining coverage, thus further increasing costs.
The Republicans have proposed different types of subsidies as replacement, some of which have been proposed as a flat tax credit based on age of the individual as opposed to income. Another proposal would give all Americans a standard tax deduction for the purchase of health insurance. The impact of these proposed subsidies on the marketplaces, as currently designed, is unknown.
As of January 1, 2017, thirty-two (32) states, including the District of Columbia, have expanded Medicaid under the ACA. The Republican legislation is expected to eliminate the federal funding provisions for such expansion. As a result, approximately 12.9 million people would lose Medicaid coverage, according to the Urban Institute. With respect to replacement, the Republicans have proposed giving the states more control over their Medicaid programs. Like the marketplaces subsidies, the impact of the withdrawal of federal funding is not yet known on full loss of coverage.
Employer and Individual Mandates
The proposed Republican legislation is expected to eliminate both the employer and individual mandates, where larger employers are required to offer qualified health insurance coverage to their full-time employees and individuals are required to obtain minimum essential coverage, or both employers and individuals could face tax penalties. The Republicans have proposed allowing insurers to charge individuals more when they have a break in coverage, thus encouraging individuals to maintain continuous coverage. Additionally, Republicans have proposed the establishment of high-risk pools, which would help subsidize insurance for those with chronic health conditions. However, at this point, until more guidance is offered on replacement legislation, the rippling impact of the elimination of the mandates is unknown.
For the approximately 150 million people covered under employer-sponsored plans, many may lose certain consumer protections they currently enjoy under their plans under proposed legislation. Although these provisions are immune from change under the current budget resolution process, these provisions could be impacted by other forthcoming legislation.
For example, President-Elect Donald Trump has stated that he plans on keeping the ban on pre-existing conditions and coverage for young adults to age twenty-six (26). However, Senate Republicans have recently voted against legislation that would preserve these provisions, thus making such provisions vulnerable. Other vulnerable coverage protections are mental health, treatment and addiction prevention programs, and birth control.
When Can We Expect Replacement?
Replacement legislation does not have as clear of a path as repeal. Unlike the repeal path, any replacement legislation will require a “super-majority,” not just a simple majority, meaning, for example, in the Senate, sixty (60) votes will be required for passage. Thus, the Republicans must get cooperation from Democrats to gain the required support for a replacement bill.
Additionally, not only is the content of the new legislation unclear, the timing of the replacement is unclear as well. Disagreement currently exists as to the replacement legislation as well as the timing of the replacement, which could directly impact the repeal of the ACA itself. From the Republican camp, Congressmen have stated that repeal and replacement could occur two (2) to four (4) years from now. The next few months will be legislatively instrumental in providing guidance as to content and timing.
For now, the ACA is still the law. Further, it is unclear how much longer the ACA, in its present form, will remain the law. Since most employer-provided plans and the marketplaces have just started their new plan years, the earliest we could start seeing changes implemented to the current health care law would occur for plan years and tax years beginning in 2018. However, we are now to the point where the fates have released their grip on the future of health care. The control now initially lies with Congress, which has the daunting task of seeing through the repeal process, but more daunting, working through the replacement process. This is a process to which we must all pay careful attention, as the largest national reform to the health care system since Medicare in 1965 is about to go through another historical overhaul.