The Affordable Care Act (ACA), enacted in 2010, has been challenged and “under attack” since its inception. Since Republicans assumed control of Congress and the White House in January of this year, the attack has intensified. Predictions of a quick repeal of the law have not been realized. Here’s the latest.

What has Congress done?

After approving a resolution to repeal some provisions of ACA through a budget reconciliation process in January, the House of Representatives released a bill, the American Health Care Act (AHCA), in March. Some of the changes proposed in this bill include:

• Neutralize the employer and individual mandates by reducing the penalty amounts to zero
• Delay the Cadillac tax (40% excise tax on high-value health plans) until 2025 and remove many of the other ACA taxes, such as the annual tax on insurance providers, the medical device tax, the Medicare surtax and a tax on net investment income for high earners
• Encourage the use of individual health accounts by increasing the contribution limits and broadening the possible uses of these accounts
• Offer age-based tax credits to help lower income individuals pay for insurance instead of the premium subsidies currently offered with ACA
• Replace Medicaid expansion with a percapita system in which states receive a set amount for each person covered by Medicaid in certain categories.

[Free Member Webcast: Trump’s 100-Day Look Back: Labor and Employment Law Update]

In general, Congressional Democrats do not support the AHCA. Some conservative Republicans think the bill is too much like ACA and are adamant that ACA be fully repealed. Some moderate Republicans are uncomfortable with the Congressional Budget Office estimates of how many people would become uninsured by the AHCA so they think the bill goes too far. At the end of March, the bill was headed to a full House vote, but was withdrawn when it became obvious there were not enough votes to pass it. During the first week of April, there were discussions among House Republicans to try to come to a consensus. Additional provisions were proposed, but no bill was voted on before the two-week Easter break that began on April 7. It is expected that negotiations will continue when Congress returns to Washington at the end of the month. If Congress is not able to pass a comprehensive repeal bill, it may take a piecemeal approach instead and pursue several bills that each address a component of the law.

What has the Trump administration done?

On the day he was inaugurated, President Trump signed an executive order instructing federal agencies to “minimize the unwarranted economic and regulatory burdens” of ACA and “to exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement” of the law that imposes fiscal burdens on states, individuals, families or health care organizations. In response to this order, IRS extended transition relief from the individual mandate by not rejecting tax returns from individuals who chose not to report if they have health coverage. Also, in February, the Health and Human Services Department proposed new rules to stabilize the individual and small-group insurance markets.

[Keep an eye on Benefits Transition Tracker—your guide to the changes that have already occurred and those to come and to decipher what’s certain from conjecture.]

What might the Trump administration do?

Because the legislative branch of the government (Congress) has not yet been successful in repealing ACA, the executive branch (the presidential administration) may pursue other options through the regulatory process or by issuing sub-regulatory guidance. Some of these options include:

• Redefining the minimum essential health benefits to require less comprehensive coverage within the ten categories of the essential health benefits
• Delay the deadlines and extend the “good-faith efforts” penalty relief for future ACA reporting periods (Forms 1094 and 1095)
• Scale back or delay enforcement of the employer and individual mandates
• Reduce support for the health insurance exchanges by not advertising them during the open enrollment period and not recruiting more insurers to offer coverage
• Encourage states to apply for “innovation waivers” whereby they propose alternatives to Medicaid expansion and the state health insurance exchanges.

There is another way the Trump administration could cripple ACA, specifically the state health insurance exchanges, also known as marketplaces, created by ACA. It would probably be the most consequential action the administration could take, but it does pose significant risks. It involves the third branch of government, the legal branch, and it hinges on a lawsuit (House v. Burwell). In 2014, the U.S. House of Representatives sued the Obama administration saying it had overstepped its authority by spending funds that Congress did not appropriate to reimburse insurance companies for cost-sharing subsidies. These subsidies help offset the deductibles and copayments for low-income people buying coverage on the state health insurance exchanges.

[Listen to this month’s Talking Benefits Podcast, Benefits Curveballs, for more discussion about ACA happenings.] 

The court initially ruled in favor of the House, but the Obama administration appealed the decision. The appeal was not ruled on before Obama left office; when Trump was installed as the new president, the name of the case changed to House v. Price, because Tom Price replaced Sylvia Mathews Burwell as Secretary of the Department of Health and Human Services. The Trump administration asked the court to delay its ruling because it thought Congress would quickly enact legislation to repeal and replace the law, thus making the lawsuit irrelevant.

Currently, the Trump administration has continued to reimburse the insurance companies for these cost-sharing subsidies, but it could decide to stop defending the lawsuit and agree the subsidies are illegal. This would result in health exchange coverage that is unaffordable for enrollees who would have to drop their coverage. It would also cause most, if not all, the insurance companies to leave the exchanges. Allowing the exchanges to fail would result in many more uninsured people which could be a very unpopular political move. On the other hand, some argue that such a collapse would force all members of Congress to work together to pass legislation to address the health care issue.

There are two important dates coming up for the exchanges. Pertaining to the lawsuit, the Trump administration asked for a delay of the ruling on the appeal and said it would submit status reports on its legislative progress to the court every three months starting on May 22. During the past year, a number of insurance companies have dropped out of the exchanges because of financial losses and the uncertainty surrounding the future of the exchanges. The insurance carriers must file their applications and rate tables for participation in the 2018 exchanges by June 21, 2017. We will all know more about the future of the ACA exchanges after those two dates.

What does this mean for employers and plan sponsors?

If the health insurance exchanges fail, more than 12 million individuals could be left without affordable insurance. Although this may not directly affect employers that currently offer health coverage to full-time workers, it could affect early retirees, part-time workers and adult dependents age 26 and older who are connected to these employers.

The bottom line for employers and plan sponsors is that ACA is still the law and you should follow its provisions. However, there may be changes ahead and, as always, stay tuned to the International Foundation. We will keep you informed on the latest developments on the Benefits Transition Tracker, in Today’s Headlines and, of course, here on the Word on Benefits.

Kelli Kolsrud, CEBS
Director, Information Services and Publications at the International Foundation