With all of the political fireworks around the passage of the American Health Care Act (the Obamacare repeal and replace act) by the House of Representatives, there are a few things that employers should bear in mind:
- If a repeal and replace bill is ultimately passed by Congress, it is likely to look very different from the bill passed by the House. Key Republican leaders in the Senate are promising to rewrite the bill. So, it is very difficult to anticipate what a final bill will actually do.
Stated another way, for now employers have better – and more real – things to do; including complying with the law as currently in effect and trying to manage health care costs.
- The employer “wins” in the AHCA still leave much to be desired:
- Although the bill eliminates the tax on employers who fail to provide affordable health care, the related employer reporting provisions remain in the Code. (Section 6056).
- The “Cadillac tax” on high cost health plans is not truly repealed. Rather, it is merely postponed until 2026.
- In order to avoid a filibuster in the Senate, the bill must focus on provisions that affect the federal budget; this prevents the bill from addressing other provisions of the ACA that are troublesome to employers
- Employees may be anxious about the effect of this debate on their employer-sponsored health care. You will need to walk the fine line of reassuring employees, without making commitments about future benefit levels.
- The AHCA (or anything resembling it) will create significant opportunities to rethink your health care design. For example, maximum contributions available under HSAs and FSAs will increase dramatically. Also, changes in how states define “essential health benefits” may give employers in the large group market opportunities to re-impose lifetime and annual limits and eliminate caps on employee out-of-pocket costs (with respect to benefits not treated as “essential health benefits” by any state). It may be too soon to identify plan changes yet – but not too soon to put this issue on your radar screen as the legislative process continues.
- Although insurance companies may have more latitude to charge more for older individuals or to underwrite based on health status, employers do not. This may mean that employer-sponsored coverage becomes a “safe haven” for individuals who cannot find coverage on the individual market. So, cost control measures and plan design may become more important than ever.
It is easy to get caught up in the spectacle of political battle. The real risk is that the spectacle becomes a distraction from the things employers can do now to manage health care costs.