HEALTH CARE: Bipartisan Reform or Single-payer—What Does the Future Hold?

August 29, 2017

When Congress returns in September, health care reform is likely to proceed on a number of tracks in the near term.  Some GOP members in the House and Senate, with help from the White House, will continue to press for broader repeal and replace reform measures, while other members of both parties will work on developing bipartisan reform bills that are narrower in scope and largely focused on the individual market.  Though there is by no means a consensus within the party, many key Democrats will press for moving to a single-payer system, and the Trump administration is expected to pick up its regulatory reform activities as it reviews the recommendations it has received thus far.  Looking ahead, two dates this fall stand out as especially notableOctober 1st, when funding for the Children's Health Insurance Program (CHIP) needs to be reauthorized, and November 1st, when the next ACA open season begins.  Meanwhile, absent delay or repeal, the Cadillac tax is set to take effect in 2020.  

Are Bipartisan Reforms Possible?  Senate HELP Committee Chairman Lamar Alexander (R-TN) has announced he will hold bipartisan hearings in September on how to stabilize and strengthen the individual market with hopes of passing a bill by the end of the month.  Finance Chairman Orrin Hatch (R-UT) said he will hold a hearing on reauthorizing CHIP, which is set to expire at the end of September, and which could become a vehicle for a wide variety of reform proposals from both sides of the aisle.  Democrats will express an interest in moving forward on a bipartisan basis, and will propose incremental steps to expand government assistance and control in an effort to lower premiums and decrease out-of-pocket costs.  Meanwhile, Republicans will propose expanding the use of Health Savings Accounts, Medicaid block grants, funding for state stability and/or reinsurance programs for the individual market, and repealing or delaying some of the ACA taxes.  Any legislation that emerges, however, will likely face serious challenges.  More pressing budget and debt ceiling issues are also likely move front and center in the near term. 
Impact on Employers  This all means employers will have to begin paying the ACA's Cadillac in 2020 unless a delay can be added to the CHIP reauthorization bill, the tax reform bill, or some other measure.  Importantly, during the recent repeal debate, the Senate voted 52 to 48, including two Democrats, for an amendment to permanently repeal the Cadillac tax, showing there could be bipartisan support for full repeal on some future bill.  Meanwhile, the ACA rules on employer-sponsored health care plans have not yet received much attention from regulators, and most of the law’s requirements remain in place.  This means the employer reporting requirements are likely to continue this fall and into 2018. 

Democrats Will Build the Case for Single-Payer  Sen. Bernie Sanders (I-VT) is expected to unveil a "Medicare-for-All" bill next month to accompany Rep. John Conyers' (D-MI) bill, the Expanded & Improved Medicare For All Act (H.R. 676).  Sixty percent of House Democrats (117) have cosponsored the latter.  In a recent op-ed, Sen. Sanders noted that "more and more business people are getting tired" of "the heavy financial cost of health care that the business community is forced to bear … Instead of focusing on their core business goals."  These two measures highlight the many different forms a single-payer system could take, which underscores the need for more analysis of its implications.  The potential impact of a single-payer system on employers will be the subject of an upcoming American Health Policy Institute paper.  Multiple potential presidential candidates have expressed support for Medicare for all, including Sen. Elizabeth Warren (D-MA), who said "it's time for the next step.  And the next step is single-payer."  Although Sen. Sanders acknowledges his bill is unlikely to pass with the GOP in control of Congress, Senate Democrats will press for a public option in every state, lowering Medicare and/or Medicaid eligibility to 55, and lowering the cost of prescription drugs. 

Regulatory Reform Efforts  The Trump administration is expected to pick up its regulatory reform activities as it begins to implement Executive Order 13765 to "take all actions" to minimize the unwarranted economic and regulatory burdens of the ACA and to give states more flexibility and control.  Expanding the state waiver program under the ACA could have serious implications for multi-state employer plans and will be closely monitored.  HR Policy and many of our business community partners have sent letters to the White House and the Department of Health and Human Services recommending specific regulatory changes and will continue to work with the administration on those changes.
Court Orders EEOC to Redo Wellness Program Rules  U.S. District Judge John Bates recently ruled the Equal Employment Opportunity Commission "failed to adequately explain its decision" to allow employers under the ADA and GINA to have any financial incentives in their wellness programs, much less the 30 percent allowed under the ACA.  According to Judge Bates: "Neither the final rules nor the administrative record contain any concrete data, studies or analysis that would support any particular incentive level as the threshold past which an incentive becomes involuntary in violation of the ADA and GINA."  However, to avoid disruption, the Judge left the current rules in place pending new rulemaking by the EEOC, which is likely to occur in 2018.
HR Policy Asks HHS to Continue Bundled Payment Models  This week, HR Policy urged the Department Health and Human Services to continue its episode payment models and cardiac rehabilitation incentive payment model because "cancelling these models or making them optional would eliminate the ability to generate robust evidence of their effectiveness; set back efforts to use bundled payments to improve care delivery in orthopedics and cardiac care; and diminish the chance of bringing bundled payments to scale nationally in the coming years."  The letter also noted that employers are moving aggressively to implement value-based payment models and that delaying implementation of bundled payment programs could negatively affect private payment reform efforts that attempt to complement federal efforts to reduce health care costs and increase quality outcomes. 

AHPI's August paper, "The Need to Strengthen ERISA Preemption"  A new American Health Policy Institute paper explains how health care reform should not place new mandates or burdens on employer health plans governed under the Employee Retirement Income Security Act.  Without ERISA preemption, multi-state self-insured employer-sponsored plans would find it nearly impossible to operate under a variety of cumbersome and potentially conflicting state-based rules.  Yet recent developments in Washington are raising concerns about ERISA's potential to maintain uniform operating rules across multiple states.  Any reforms to the Affordable Care Act should remedy the ACA's current indifference to the vital role that ERISA plays in allowing employers to offer uniform, low-cost health care benefits to employees, no matter where they live or work.

Result from AHPI Study Survey Priorities  A recent survey of AHPI Governors indicated that the top five studies they would most like to see are:
  1. What Regulatory Changes Would Make it Easier for Employers to Provide Health Benefits?
  2. How the Private Sector Can Help Bring About Value-Driven Health Care 
  3. Five Tipping Points for Employer-Sponsored Insurance / Five Things Needed to Be Fixed to Keep Companies In
  4. How Pharmacy Data Will Help Open the "Black Box"
  5. What Employers Can Do to Improve Employee Health