Donald Trump’s election will impact the Affordable Care Act (ACA), also known as Obamacare.
The ACA has caused major tumult for employee benefits professionals since 2010. However, potential regulatory changes may return as a result of the “Repeal and Replace” policy that Donald Trump and the Republican majorities in the House and Senate have proposed. These changes have already been described in legislation called “Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015” that was passed by the House and the Senate, but vetoed by President Obama.
The New York Times published an article the day after the election entitled, “The Future of Obamacare Looks Bleak,” that highlights the potential regulatory changes in this piece of legislation, including:
- Remove expanded Medicaid coverage
- Eliminate insurance exchange subsidies
- End tax penalties for those who do not have insurance
- Repeal taxes that helped pay for Obamacare
- Eliminate the “Cadillac Tax”
- Allow Health Savings Account (HSA) funds to be used for over-the-counter medications
According to the article, the following aspects of Obamacare would NOT change:
- Medicare modifications (such as value-based payments, etc.)
- Requiring insurance companies to cover adult-children up to age 26
- Guaranteed issue of insurance to individuals on exchanges regardless of their medical history
Okay, so what about the Employer Mandate?
According to the Congressional Research Service, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015:
“—would repeal several provisions of the Patient Protection and Affordable Care Act. These provisions include:
- The individual mandate
- The employer mandate
- The excise tax on high-cost employer-sponsored coverage (the Cadillac Tax)
- The medical device tax
- The auto-enrollment requirement for large employers; and
- The Prevention and Public Health Fund (PPHF)”
- There are some employers that did not offer health insurance to full-time employees prior to the ACA. As a result of the law, many of these employers offered “Minimal Essential Coverage” plans to employees. If legislation similar to the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 is put into place, many of these employers may go back to not providing health insurance.
- Because of the potential repeal of the Cadillac Tax, if the overall cost of health insurance continues to rise and employers choose to pay more and more for healthcare coverage for their employees, they will not be penalized for it. Unions will like this policy because they were firmly against the Cadillac Tax.
- An individual market with guaranteed-issue coverage, but NO penalty for NOT buying insurance, would likely result in people with significant health problems purchasing insurance, but “healthy” people would be less likely to purchase insurance. Accordingly, health insurance premiums for individual policies on the exchanges would rise EVEN FASTER than today because of the loss of these “healthy” people paying premiums to offset the losses from covering individuals with health problems.
- Employers will likely be skeptical that the “Repeal and Replace” policies will remain in place for long. In other words, in 4 or 8 years “Repeal and Replace” might itself be repealed and replaced…. with something else.
Keys to Success
Hold on to your hats, the regulatory bumpy ride of employee benefits is not likely to smooth out soon! Success will come to organizations that can 1) adapt the fastest and 2) deliver the most value. The slow will lose. Those leaning heavily on relationships will lose. Conversely, the nimble and innovators will win.
As well it should be. Employees benefit, employers benefit and the health insurance marketplace benefits when people work hard to deliver better value every day.
- The Affordable Care Act (ACA) Has Provided 20 Million People with Insurance, But It Isn’t Perfect
- Only 2 Percent of Employers Want to Put Employees on Public Exchange
- Duke University Cardiologist Weights In on Obamacare
To learn more about how Compass helps employees at more than 2,000 employers become empowered healthcare consumers, please watch this short video: