The latest Republican proposal to overhaul the Affordable Care Act offers several positive changes for employers, but it also comes with drawbacks, experts say.
Lawmakers are preparing for a possible vote on the legislation, developed by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., in the coming days. Senate Majority Leader Mitch McConnell indicated on Wednesday afternoon that he plans to hold a vote on the legislation next week. Republicans are rushing to pass the bill in the Senate before a Sept. 30 deadline on a process known as budget reconciliation, which requires just 51 votes. The efforts follow several failed attempts to roll back parts of the healthcare law over the summer.
The legislation contains several changes, some of which employer groups back and others that they question.
“It’s a mixed bag,” says James Gelfand, senior vice president of health policy for the ERISA Industry Committee, a national association that advocates for large employers on health, retirement and compensation public policies.
Here’s what employers need to know about the Graham-Cassidy legislation.
It removes employer-mandate penalties: The bill makes a key change to one of the central elements of the ACA opposed by employers — the mandate to offer affordable coverage. The Graham-Cassidy bill zeroes out the penalties for the employer mandate, as well as penalties for the individual mandate to obtain coverage.
“Employers would welcome that,” says Michael Thompson, president and chief executive of the National Alliance of Healthcare Purchaser Coalitions. “The great majority of employers would continue to provide coverage to the great majority of their employees.”
It maintains the Cadillac tax: The proposal being considered would maintain the tax on high-cost plans, the Cadillac tax, as well as the health insurance tax on premiums, despite efforts by employer groups to delay or repeal those taxes. Employers have been especially focused on removing the Cadillac tax, which goes into effect in 2020. The legislation would, however, repeal a tax on medical devices.
“We’re a little discouraged on that front,” says Chatrane Birbal, a senior advisor on government relations at the Society for Human Resource Management.
It includes HSA reforms: In another win for employers, the bill does contain several improvements for tax-advantaged health savings accounts, which can be used in conjunction with high-deductible health plans. The bill would raise the contribution limit on the accounts to match out-of-pocket maximums, reduce the penalty for using the funds on non-approved expenses and expand permitted use of the funds in some cases, including some primary care services.
“The HSA changes are really good and they could be really good for a whole lot of people,” Gelfand says.
Additional chatter: Although the Graham-Cassidy bill remains the focus in the Senate right now, lawmakers have been discussing several other approaches in recent weeks.
Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wa., had been working on a bipartisan bill to stabilize the individual markets and ensure the payment of cost-sharing reduction subsidies for low-income policyholders on the exchanges. Those talks broke down earlier this week before a formal proposal had been introduced, with the lawmakers saying they were unable to reach a deal that would garner the necessary votes.
Employers had been watching the effort closely, in part because weaknesses in the individual markets could have knock-on effects for employers by raising costs for the entire system.
“Employers are concerned to the degree that we don’t have a viable individual market that somehow they’ll have to pick up the bill for people who are uninsured — and they already have a big enough bill,” says the National Alliance of Healthcare Purchaser Coalitions’ Thompson. “They do want to see efforts taken to support a more sustainable individual marketplace.”
Separately, Sen. Bernie Sanders, I-Vt., introduced the 2017 version of his “Medicare for All” plan, a proposal to implement a universal healthcare system backed by the federal government. The bill is not expected to gain any traction this term with Republicans controlling the White House and Congress, but it is considered a messaging document to help build support for the idea.
Under the Sanders plan, a new system would be funded by taxes on individuals and businesses. Employers would pay a premium of 6.2% of income, which Sanders estimates would raise $630 billion annually. It’s extremely early in the consideration of any single-payer plan and many details are unknown, though employer groups said they have concerns about the effort, because it would effectively eliminate employer-sponsored coverage.
Gelfand dismissed the proposal in light of the very tall political hurdles it would face, noting that it is unlikely to gain traction anytime soon.
“I just don’t see it as a possibility,” he says.
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