What is the ACA’s future under Donald J. Trump’s presidency? (Benefit Minute)

Posted in: Benefit Minute, Employee Benefits

As the White House transition begins, the reality of what President-elect Trump may accomplish is setting in.  In addition to winning the White House, Republicans control both chambers of Congress and have made it a top priority to repeal and replace the Affordable Care Act. However, the Republican majority in the Senate is not large enough to be filibuster-proof, which will likely inhibit Trump’s ability to fully repeal and replace the ACA absent unprecedented bipartisan support.

Budget reconciliation legislation

Trump should be able to dismantle key revenue-related provisions of the ACA through budget reconciliation legislation (this was used to ultimately pass the ACA in 2010), which requires a simple majority in the Senate and presidential approval. Only budget-related items can be repealed in this manner, which include:

  • Individual mandate;
  • Employer pay or play;
  • Premium tax credits for Marketplace plans (perhaps phased out over 1 or 2 years);
  • Medicaid expansion;
  • Limit on health care flexible spending account salary reductions; and
  • Various taxes including the medical device tax, the health insurer tax, the Cadillac tax and the additional Medicare tax on high-earners.

Provisions of the ACA that are not budget-related will be more difficult to repeal without a filibuster-proof majority in the Senate. These include the insurance market reforms, such as coverage for children under a parent’s plan until age 26, elimination of lifetime and annual dollar limits on benefits, medical loss ratio requirements, guarantee issue of insurance,  ban on rescissions, elimination of pre-existing condition exclusions and 100% coverage of preventive care services. Some of these items are among the more popular provisions of the ACA, so it is likely that these requirements will survive in some fashion.

Other possible actions

Without legislative action, there are other steps that the new president could take to slow down or halt ongoing enforcement and administration of the ACA. These include directing agencies to stop enforcement of provisions already in place, stop regulatory efforts in process, stop reinsurance payments to insurers until Treasury is first repaid and stop defending pending ACA lawsuits, including the legality of cost-sharing subsidies. However, this could destabilize the insurance market since insurers will be negatively impacted. He could also return more authority back to the states by dismantling healthcare.gov (thereby making the states solely responsible for the Marketplace) and loosening the criteria to provide innovation waivers to states which pursue innovative strategies for providing their residents with access to high quality, affordable health insurance.

Replacing the ACA

Once some or all of the ACA is repealed, the next questions are: what will replacement look like and how will it be accomplished? Trump’s objective seems to be to transfer control of the healthcare industry from the federal government to private enterprises, states and consumers. The challenge is not new: providing access and choice to consumers while making healthcare affordable.

A replacement plan is not yet well-formed and there are differences within the Republican leadership regarding the shape of future healthcare law.  However, Trump’s comments and Paul Ryan’s reform proposal include the following possible elements for replacement legislation:

  • Allow sale of insurance across state lines;
  • Allow a tax deduction (or tax credit) for the purchase of individual health insurance policies;
  • Expand Health Savings Accounts;
  • Improve provider price transparency;
  • Turn Medicaid over to the states via block grants;
  • Create high-risk pools to provide financial support to individuals with significant medical expenses; and
  • Reform the medical liability system.

A replacement plan could also include a limit on the employee income tax exclusion for employer-provided health coverage as a means to fund the tax break that may be made available to those who purchase non-group health insurance.  The limit could either be based on the cost of the employer-provided coverage or the income of employees receiving the coverage.

At this point, it is impossible to know how, when or if the promise of repeal and replace will be carried out, and it is unlikely that full repeal of the ACA would occur before a workable replacement plan is passed.  The final product could be an amended version of the ACA that conforms to the Republican vision of healthcare in America.  In the meantime, we recommend that employers stay informed and continue to comply with existing law (including the reporting due in January 2017) until any changes are enacted.

PSA closely monitors ACA updates and other regulatory developments. Check out the PSA Benefit Minute for regular ACA updates or contact me at tbull@psafinancial.com

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