Next Steps For Health Care Reform

May 12, 2017

As the Senate works on drafting its health care reform bill, employers should expect the current set of benefit mandates under the Affordable Care Act to remain for the foreseeable future.  While it is always difficult to predict the timing and outcome of any legislative effort, the House-passed reform bill will likely provide a broad framework for the Senate to work with, and the GOP leadership will be under pressure for both budgetary and political reasons to pass a bill before the congressional recess in August.  This suggests that the Senate bill will, like the House bill:

  • Replace the ACA's exchange subsidies with some kind of refundable tax credit,
  • Roll back some of the ACA taxes, and
  • Provide states greater flexibility to run their Medicaid programs in exchange for some budget savings.  

However, the Senate bill is also likely to be substantially different than the House-passed bill.  For example, the ACA taxes could be slowly phased out instead of immediately repealed, the tax credits for lower-income Americans are likely to be more generous, and the cuts to Medicaid will not be as deep.  Importantly for employers, Senate rules pertaining to reconciliation bills will not allow any changes to the ACA's benefit mandates, including the age 26 dependent coverage, the prohibition on annual and lifetime limits, and first-dollar coverage of preventive care services.  Several informal groups of Senators have begun working on drafting a bill, which could take until mid-July to finish and be scored by CBO.  Unlike the House, the Senate is required to have the impact of its bill scored by CBO before a Senate vote can occur, which will likely push the bill to cover more people than the House version in order to pass the so-called "Jimmy Kimmel" test.  The Trump administration will be involved in the process, but the Senate will take the lead, and it is unclear at this point when the public will be able to see a first draft of the bill, which may not be until mid-June.  Further, the Senate bill is unlikely to go through the committee process, but instead will be brought directly to the floor when at least 50 GOP Senators have agreed to vote for the bill (the Vice President can cast the 51st vote).  The Senate bill must then be approved by the House or any differences between the two bills will have to be resolved during a House-Senate conference committee, a process that would further delay the legislation.  Although it is possible for the Trump administration to modify some of the ACA's unnecessary regulatory burdens in the interim, those changes will also take some time to go through the rulemaking process.  For employers, this means the current ACA rules and requirements will for the most part stay in place for the 2018 plan year, and possibly longer.