September 22, 2017


In This Issue
Fast Facts
Senate Scraps Bipartisan Healthcare Fixes after Trump Administration Announces Opposition
Senate Vote Next Week on Graham-Cassidy Plan to Repeal/Replace Portions of the ACA is Uncertain following Opposition Announcements
NAHU Sends Labor Department’s ERISA Advisory Council Support Letter on Reducing the Burden of Mandated Disclosures
Senate Finance Leaders Introduce CHIP-Reauthorization Bill
How Could Graham-Cassidy Lead to Single Payer? Listen to this Week’s Podcast to Find Out
Compliance Cornered: EAPs Pose Compliance Complications
Did You Miss Yesterday’s Compliance Corner Webinar on Understanding Medicare Interactions with Group Insurance? Watch It Now
Get Ready for Fall by Completing your Annual Marketplace Training
HUPAC Roundup
What We’re Reading
E-mail the Editor
Visit the NAHU Website
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Senate Vote Next Week on Graham-Cassidy Plan to Repeal/Replace Portions of the ACA is Uncertain following Opposition Announcements

Senate Majority Leader Mitch McConnell (R-KY) announced this week that the Senate plans to consider the proposal offered by Senators Lindsey Graham (R-SC) and Bill Cassidy (R-LA) to reconfigure the ACA and give more power to states to implement health reform. McConnell claimed he would only hold the vote if it was sure to pass, but this is in question with announcements by Senators Rand Paul (R-KY) and John McCain (R-AZ) that they will oppose it. This could be the final opportunity for Congress to pass a reconciliation repeal/replace of the ACA before that vehicle expires next Saturday. At this time, NAHU doesn’t support this proposal due to significant concerns about the lack of adequate guardrails for states applying for 1332 waivers, for codifying the ACA’s taxes, including the Cadillac/excise tax and the Health Insurance Tax, and its stymieing of any meaningful market-based solutions. We are also concerned that it could easily allow for the state-based adoption of single-payer healthcare, which would imperil the very existence of private insurance, as well as the role of agents and brokers.

The Graham-Cassidy proposal would dramatically restructure the ACA from the federal government to the states, reduce the scope of the marketplaces, and eliminate the law’s individual and employer mandate penalties (retroactive to 2016), Medicaid expansion and advanced premium tax credits (APTCs). Alaska would be the only state to continue receiving APTCs, under a proposed amendment designed to win support from Senator Lisa Murkowski (R-AK) that many have decried as a Republican version of the “Cornhusker Kickback” that Democrats used to win support of then-Senator Ben Nelson (D-NE) in the 2009 debate over the ACA. That provision was later stripped from the final legislation through the reconciliation vehicle in March 2010.

The Graham-Cassidy proposal would also retain all of the law’s taxes, with the exception of the medical device tax, in order for the funds to then be repurposed as block grants to states to determine how to apply these funds at a state level. Theoretically, Democratic-leaning states could then implement a state-level version of the ACA or make more significant reforms, such as adopting single-payer or a public option, while Republican states could implement their own reforms, like re-establishing high-risk pools and encouraging the use of Health Savings Accounts. States would also have greater authority to implement changes through the ACA’s Section 1332 waivers and to allow for the establishment of small-business association health plans. Additionally, the proposal calls for establishing a temporary state-based market stabilization program, with $10 billion allocated for 2019 and $15 billion for 2020.

While NAHU seeks greater flexibility for states to innovate on health reform, we do not believe that the flexibility proposed under Graham-Cassidy is appropriate. The expansion of state waivers beyond the guardrails in effect under the ACA’s Section 1332 program could undermine employer-based coverage governed by ERISA, which is one of the indispensable pillars of the employment-based system. We have strong concerns about the potential effect on multi-state employer plans, as well as the potential for states to implement proposals such as the proposal currently under consideration by Oklahoma to implement a taxing authority for self-insured employers to help pay for reinsurance. If this were to be adopted, other states would likely see it as a new potential revenue source to help close structural or cyclical budget deficits.

This proposal could also effectively imperil the very existence of private insurance and eradicate the employer-based insurance system. States are directed to implement their own health-reform systems and are given significant freedom to develop programs that are even further reaching than the ACA. California, Colorado, New York and Vermont have all attempted to advance single-payer proposals in recent years through much more complex and arduous processes. This bill would remove those barriers and make it far easier to implement single-payer or a public option in these states. Both of these concepts would have dramatic effects on the healthcare system, the outside market, consumer choice and the role of agents and brokers. The adoption of single-payer would effectively close the private insurance market while a public option would lead to an uneven playing field and gradually erode private-market competition. For more on the difference, click here.

We also have concerns with the retention of the Cadillac/excise tax and the Health Insurance Tax, which, once they are retained in this bill and the funding is redirected to the states, will effectively make them permanent, as states will grow dependent on these funds for implementing their health reforms. The Cadillac tax will impose a 40% excise tax on health plans that exceed certain cost thresholds beginning in 2020, while the HIT is currently under a one-year moratorium and is set to take effect again next year, adding an additional $500 to average premiums per affected family every year. The retention of these taxes will make our call for their permanent repeal problematic, if not impossible, as it will become increasingly difficult when the funds become an expected source of revenue for each state’s annual budget.

Finally, the proposal would lead to a chaotic patchwork of 51 different version of health reform, one for each state plus the District of Columbia. The implementation of the current health-reform law has led to many compliance challenges for employers as states have taken different approaches with regards to provisions like Medicaid expansion and the definition of small group, in addition to the already existing complexities of various state health benefit mandates and labor regulations. Establishing 51 different versions of healthcare systems would cause an enormous compliance burden for employers attempting to navigate the various health systems and their corresponding regulations and requirements.

Senator Cassidy initially offered S. 191, the Patient Freedom Act, with Senator Susan Collins (R-ME) back in January. That bill was similar in scope with the current proposal with Senator Graham, as states could choose to continue using the ACA, switch to a different insurance expansion by 2020 or implement a state-based alternative without any federal assistance. It would have repealed the ACA’s federal mandates, including the individual and employer mandates, age-band requirements, essential health benefits and actuarial value requirements. The Cassidy-Collins plan also included a component to automatically enroll eligible individuals in a high-deductible healthcare plan linked to a HSA, which NAHU opposes for a variety of reasons. NAHU was a leading advocate for the successful repeal of the auto-enrollment provision that was originally included in the ACA.

As with the current proposal, the Cassidy-Collins plan would have retained many of the ACA’s taxes but, unlike the current proposal, it would have largely retained many other ACA provisions unchanged, including guaranteed issue and renewability provisions, mental health coverage requirements, prohibitions on pre-existing condition exclusions and annual and lifetime limits, and would continue to allow young adults to stay on their parents’ plan until age 26. However, this proposal would allow states to choose to establish their own essential health benefits - beyond what is allowed now with the selection of a state benchmark plan - and for insurers to not cover costs with some conditions, similar to earlier iterations of health reform proposed this year.

The Congressional Budget Office (CBO) will not be releasing a full report on the Graham-Cassidy plan prior to the vote, but will release a preliminary assessment of the bill’s impacts. A full report from the CBO is expected to take well into October, and if the Senate is to take advantage of the reconciliation process to pass this bill with a simple majority, the vote must take place before the end of the fiscal year on September 30. The preliminary report will include whether it meets the requirement to save at least as much as the House-passed American Health Care Act (AHCA), but it will not provide point estimates of the effects on the deficit, health insurance coverage or premiums. Therefore, senators will not be able to see the impact of the proposal on their states and constituents, both in terms of coverage losses and the impact on state revenue. Previous proposals have estimated coverage losses at about an additional 20 million, with federal budget savings of $119 billion to $337 billion over current spending by the ACA. Unofficial estimates suggest that 34 states would see reduction in federal revenue – largely those states that expanding their Medicaid programs.

The bill must also be approved for use of the budget reconciliation process by the Senate parliamentarian, Elizabeth MacDonough, who will determine if any elements violate the Byrd Rule that would prevent passage by a simple majority. Prior to voting on the “skinny repeal” of the ACA in July, the Senate attempted to advance the Better Care Reconciliation Act (BCRA), as amended, but it was deemed to be in violation of these rules, including provisions to expand the ACA’s age-rating bands from 3:1 to 5:1, permitting association health plans, as well as language that would have defunded Planned Parenthood and banned abortion coverage in ACA plans. All of these provisions are present in the current Graham-Cassidy proposal and would almost certainly be stricken for violation of the rules. Ultimately, the BCRA garnered the lowest support among any of the Senate’s ACA repeal/replace proposals, with only 43 votes in favor. All Democrats voted against it and were joined by nine Republicans: Collins, Graham, Dean Heller (NV), Lisa Murkowski (AK), Bob Corker (TN), Tom Cotton (AR), Mike Lee (UT), Jerry Moran (KS) and Rand Paul (KY).

At this time, it is unclear if there are enough votes for passage in the Senate. Current whip counts show as many as 48 or49 of the 52 Republican senators expected to vote in favor. Senator Rand Paul (R-KY) and John McCain (R-AZ) are the only firm “no” votes, with Paul arguing that it is a repeal in name only and would in fact retain the vast majority of the ACA, particularly the taxing measures, and McCain once again calling for bipartisanship and a return to regular order as he had in his no vote from July. This bill will also not follow regular order, but will have limited committee hearings, including an informational one next Monday in the Senate Finance Committee. Previously, the Senate Homeland Security and Government Affairs Committee, which original co-sponsor Ron Johnson (R-WI) chairs, was due to hold a hearing on the use of block grants, but this is no longer expected to take place. 

At least 50 votes are needed for the bill to pass, with Vice President Mike Pence casting the tie-breaking vote. All Democrats are expected to vote against the proposal, while Senators Collins and Murkowski are undecided. Along with McCain, they also voted against the “skinny repeal” in July, leading to the vote’s failure. If they support the bill for it to pass the Senate, the bill would then return to the House, which could either vote on it as is or make changes. However, any changes made would mean that the Senate would have to again vote on the bill—and if this happens after September 30, it would require a minimum of 60 votes for cloture. The White House has suggested that while the legislative package isn’t ideal, they have endorsed it as it would be the “final chance to actually get something done.”

If the bill fails to pass the Senate, NAHU is optimistic that Congress will return to bipartisan health solutions rather than partisan and sweeping reforms that will lead to massive market disruption. We are specifically calling for market-stability measures ahead of the 2018 plan year, such as temporary funding of the CSRs, a reinsurance mechanism through the establishment of stability funds and additional state flexibility with regards to Section 1332 waivers. We believe that these should be advanced on a bipartisan basis, as we have advocated for previous reforms to the ACA. Since the law was passed, NAHU has been instrumental in garnering bipartisan support for reforms, including a delay to the Cadillac/excise tax and Health Insurance Tax, and repeal of the small-group expansion and auto-enrollment provisions, the law’s 1099 requirement, the long-term care CLASS Act and the $2,000/4,000 deductible cap.

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