|Reconciliation Repeal of ACA Includes Plan to Cap the Employer Exclusion|
Republicans are moving forward with their plans to repeal significant portions of the ACA through the budget reconciliation process and, earlier today, a discussion draft of the reconciliation bill was leaked showing plans to cap the employer exclusion of health insurance based at 90% of the plan’s actuarial value that would be taxable for income and payroll purposes. It would be tied to the group health plan with thresholds adjusted by the consumer price index, plus 2%. Police, firefighters, and first responders would be excluded, as would health savings accounts, vision, and dental plans. The cap on the exclusion is being done to help offset the lost revenue from their plan of repealing all of the ACA’s taxes, including the Cadillac/excise tax beginning in 2020. NAHU strongly opposes any efforts that would cap or otherwise change this critically important tax benefit for preserving the employer-based system of providing health insurance and the potential for setting a precedent that could further erode the value of employee benefits.|
The reconciliation bill would also eliminate the ACA’s premium tax credits and the individual and employer mandates. In place of the individual mandate, consumers would face penalties for not maintaining continuous coverage by increasing the cost of the premium by 30% for the duration of a year. Consumers would be given tax credits to purchase private market coverage based on their age instead of income. Those under the age of 30 would receive a credit of $2,000, while that amount would be $4,000 for those over the age of 60. There would be no income limitations for qualifying for the tax credit, instead the only condition on the tax credit would be that it couldn’t purchase an insurance policy allowing for an elective abortion.
The legislation calls for $100 billion in “state innovation grants,” which would help subsidize the sickest and costliest enrollees through the creation of new high-risk insurance pools. The bill calls for changing the current 3:1 age-rating bands to 5:1. It would also significantly undo the Medicaid expansion provision by 2020 by allowing states to continue to cover the expansion population, but with significantly less federal funding. Medicaid would have new per-beneficiary caps instituted, and states that expanded Medicaid would have their enrollment levels frozen at current ACA funding levels, while states that didn’t expand would get supplemental funding for safety net hospitals.
Republicans are expected to publically release the draft reconciliation bill next week and may begin committee markup hearings on the reconciliation package shortly thereafter, although that timetable remains in flux. The current reconciliation draft was sent to the Congressional Budget Office last week to be “scored”—to determine how much the legislation would cost the federal government, both in lost revenue and additional spending. Republicans purposely included as many repeals of provisions of the ACA as senate parliamentary rules will allow under reconciliation through the Byrd rule.
Last week, congressional Republicans and Health and Human Services (HHS) Secretary Tom Price met to review a menu of options on how to repeal the law, although any semblance of consensus, both on the complex policy details and strategy, remains elusive. The House Energy and Commerce and Ways and Means Committees created a brief that outlines that core principles of their repeal and replace efforts, but unlike the leaked reconciliation bill text, it offered few specific details. Representative Steve King (R-IA), one of the more conservative members of the chamber, expressed concern that Republicans were establishing a precedent that health insurance is an entitlement, further demonstrating the divisions of the party as it attempts to come to a consensus.
The lack of consensus among Republicans was also shown this week by yet another plan introduced to replace the health law. On Tuesday, Representative Darrell Issa (R-CA) released a discussion draft of legislation that would allow all Americans to enroll in coverage through the Federal Employees Health Benefits Program. Issa argues that his plan, the Access to Insurance for All Americans Act, would give Americans access to affordable, high quality, privately-run health insurance plans that guarantees coverage for pre-existing conditions and allows for coverage for dependents until age 26—two of the most popular features of the ACA. NAHU has been in conversation with Representative Issa and his staff over the legislation details. We are concerned about proposals that could undermine the existing employer-based system, of which, Issa’s plan to allow consumers to bypass employer coverage and enroll independently in the federal program without the assistance of agents and brokers, could potentially do so.
A continuing thorn in the process is the ongoing confusion over whether President Trump will be submitting his own plan to Congress, with the help of HHS Secretary Tom Price, as congressional Republicans are looking for guidance on who should be making the first moves. On Wednesday, President Trump announced that he would deliver his own plan, saying, “Maybe mid to early March we'll be submitting something that I think people will be very impressed by.” White House Press Secretary Sean Spicer seemed to confirm that, saying that the White House would be submitting a plan in the next couple of weeks. Previously, Trump claimed that he would submit a plan as soon as Secretary Price was confirmed. But Secretary Price again dismissed claims that the White House was working on its own plan, reportedly telling congressional Republicans that the Administration wouldn't be sending them a bill. Price did however claim that the president is advocating for repeal and replace to be done simultaneously. President Trump is due to give an address to Congress next Tuesday where we hope to get a more definitive answer as to whether he will be delivering his own plan.
Among the biggest issues in developing a cohesive plan is over what to do with Medicaid expansion, as nearly two dozen Republican governors expanded the program, including Vice President Mike Pence when he served as Indiana governor. This week, two states moved forward on plans to expand their programs despite ongoing negotiations to eliminate the expansion. Kansas, which has a Republican dominated legislature and a Republican governor, voted in its state house 81-44 on Thursday to expand the program to upwards of 200,000 residents. Meanwhile, in Maine, Medicaid expansion will be on the November ballot after supporters collected more than 66,000 signatures for a ballot initiative. The legislature previously supported the measure, but was blocked by Republican Governor Paul LePage.
On Wednesday, Senator Lisa Murkowski (R-AK), a key vote for the Senate passing its reconciliation package, announced in a speech to the Alaska legislature that she would oppose any effort that would undo Medicaid expansion, saying, “So as long as this Legislature wants to keep the expansion, Alaska should have that option.” Alaska expanded Medicaid in the state through an executive order by Independent Governor Bill Walker in 2015, which now provides coverage to nearly 30,000 residents. Murkowski also expressed in her address to the legislature that she would oppose a reconciliation bill that would eliminate funding for Planned Parenthood, which is in line with earlier statements by Senator Susan Collins (R-ME), who also said she would oppose a reconciliation bill that would defund the organization. The current reconciliation draft would defund the organization. As Republicans have 52 members in the chamber and need 51 votes for passage, the loss of both of these votes could upend the reconciliation package.
The loss of Republican support is especially important as Senate Majority Leader Mitch McConnell (R-KY) declared that he doesn’t expect any Democratic support in the repeal/replace process. McConnell claimed, “We don't expect any Democratic cooperation on the replacement of Obamacare...or tax reform. We as Republicans expect that both of those issues—which are very big issues—will have to be tackled Republican-only.” There are 10 Democratic senators who are up for re-election in 2018 in states which President Trump won and would be likely supporters for agreeing on a compromise deal to get bipartisan support, and would be critical should moderate Republicans back away from the deal.
Former House Speaker John Boehner (R-OH), who left Congress in 2015 amid frustrations of working with his own party, opined this week that he expects Medicaid expansion to remain law. He also noted that much of the existing ACA infrastructure would remain unchanged, such as protections for pre-existing conditions and subsidies for consumers to purchase private market coverage, and that any changes to health reform would be relatively modest and merely a fix. He also expressed skepticism that congressional Republicans would be able to quickly repeal and replace the law and cautioned against repealing without a replace, saying, “anything that happens, it’s your fault, you broke it,” and adding, “if they pass repeal without replace, they will never get to replace.”
Other issues that Republicans are in disagreement about include how to handle the ACA’s taxes. Many in Congress want all of the law’s taxes repealed immediately, a sentiment favored by the House Freedom Caucus, while others argue that keeping the taxes will be necessary to pay for any replacement plan that Republicans eventually put forward. The health insurance tax (HIT) is likely to be included in an ultimate repeal, but the Cadillac/excise tax is less certain, as that offers significantly more revenue to help offset the costs of a replacement. Given that the reconciliation draft would implement a cap on the employer exclusion of health insurance, NAHU is very concerned about this proposal moving forward in final packages given the detrimental effects it would have on the employer-based system.
As the Trump Administration and congressional Republicans continue to push for repeals of the law, they are also facing growing concern, both from Democrats as well as within their own party, in addition to heated town halls led by activists calling for Republicans not to dismantle the law, evoking scenes from 2009 when activists called on Democrats not to pass healthcare reform. Additionally, recent public opinion polling on the law is further complicating efforts to swiftly repeal and replace the law, as several show support for full-scale repeal of the law diminishing as proposals to change the law move from hypothetical to reality.
A poll released yesterday by Pew Research found that 54% now approve of the law compared to 43% who disapprove, marking its biggest shift in support since the law was passed. Similarly, a new poll released this week by Politico/Morning Consult reveals an even split among supporters and detractors of the law, with 45% of voters opposing the ACA while 46% support the law, and that support for repealing the law has dipped eight percentage points since Trump took office. Roughly a quarter of respondents say they want the law fully repealed, another quarter want the law expanded, and another quarter want parts of the law changed, while 12% want to keep the law as-is. Independents are a significant cause of the shift in public opinion, as 52% of them now support repeal, down from 61% in January. A majority or plurality of respondents also supported eight of nine key provisions of the ACA (the individual mandate being the lone exception). Roughly two in three respondents want to keep the pre-existing condition protections, 63% want to retain the provision for insurance up to age 26, and 59% want to retain the employer mandate provision.
Additionally, the Kaiser Family Foundation released a new poll today that finds more Americans now viewing the law favorably than unfavorably, with 48% supportive and 42% against. This marks a five-point swing in favorability since December. However, that poll also found an equal split among those who wish to repeal (in whole or in part) the law at 47% versus the 48% who want to keep the law. Kaiser also conducted a listening session on Trump voters and found that the primary concern was out-of-pocket costs and high deductibles. These voters were also concerned with surprise medical bills and prescription drug costs and nearly universally rejected the Republican plan for high-deductible plans coupled with health savings accounts.
The polling follows increasing contentiousness at congressional town hall meetings held by Republicans in recent weeks as Democratic activists appear to be lifting the playbook of the Tea Party from the 2009-10 healthcare debates. Planned Parenthood has helped organize more than 300 events across all 50 states this month to show opposition to efforts to dismantle the healthcare law. Democrats have targeted several key legislators, including Senator Chuck Grassley (R-IA), who serves on the finance committee, as well as House Majority Leader Kevin McCarthy (R-CA). Grassley said that the protesters were disappointed with the election results but that, “It's all legitimate. If Hillary Clinton had been elected president, people from the conservative end of the spectrum might be doing the same thing.”
Contentious protests were also held at town hall meetings with Senator Tom Cotton (R-AR) and Representatives Marsha Blackburn (R-TN), Dave Brat (R-VA), and Tom McClintock (R-CA), all of whom faced crowds yelling about possible losses in health insurance under Republican proposals and asking the lawmakers to show them their replacement plan. McClintock responded to the protesters, claiming that the election win gave Republicans “a very clear mandate” to repeal the healthcare law.
For his part, President Trump has denounced the town hall uprisings, tweeting on Tuesday, “The so-called angry crowds in home districts of some Republicans are actually, in numerous cases, planned out by liberal activists. Sad!” White House Press Secretary Sean Spicer responded to Trump’s comments, alleging that the protesters aren’t constituents of the particular legislator they are protesting, nor are they enrolled in ACA marketplace coverage. Spicer called the protests “not a representation of a member's district, it's a loud group of people being disruptive for media attention.”
NAHU encourages members to participate in town halls to help constructively drive home our message of market stability. Following Capitol Conference, we now have customized talking points for each member of Congress. If you would like to receive your member of Congress’s talking points, please email firstname.lastname@example.org with the name of your member of Congress and details of your meeting or event you will be attending.
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