The bill goes by the name Better Care Reconciliation Act of 2017. After a quick review, here are our initial thoughts on the implications for employers.
- We are wary of changes that could induce states to opt out of major parts of the ACA and create their own healthcare rules. The Senate bill eases the ACA’s section 1332 waiver application process to encourage more states to develop their own plans for reducing premiums, increasing enrollment, and increasing access to comprehensive coverage. Waiver of the essential health benefit requirement could be possible with a section 1332 waiver. We will take a deeper look into this issue and post about it next week, since it may be something we need to pay attention to.
- What happens to the individual market? The bill continues CSR payments through 2019. While this is good news for insurance companies and the individual market, zeroing out the individual mandate penalty and not including a continuous coverage requirement, on the other hand, may further destabilize the individual market. Tax subsidies based on age and income are capped at 350% of FPL, as compared to the ACA’s cap at 400% of FPL. Also, it seems that individuals who are eligible for employer coverage (employees, spouses, and dependents) would not be eligible for tax credits, regardless of affordability or minimum value. We’ll have to run some models to understand the implications for pre-65 retirees.
- Repeal of Medicaid expansion along with funding cuts still signals potential cost shifting to private payors. The bill would maintain the Medicaid expansion program for three years with a three-year phase down. It also ties federal spending on Medicaid to a slower growth rate beginning in 2025. This will put pressure on the States to rethink who and what they can afford to cover. Hence, there’s reason to anticipate cost shifting to group plans in the out years as the number of uninsured rises and federal spending contracts.
- HSA expansion in 2018. The Senate bill includes expansion of account contribution limits, allows spouses to make contributions and includes language to cover OTC drugs.
- Excise Tax delayed; many other ACA taxes repealed. While employer groups have been actively advocating for total repeal of the excise tax, the Senate bill, using slightly different language on the specifics, delays the excise tax until 2026.
As expected, the bill retains many of the popular ACA market reforms like dependent coverage to age 26, no annual/lifetime dollar limits and no pre-existing condition limits. And the bill eliminates the employer mandate by zeroing out the penalty.
Now comes the really hard part for the bill’s sponsors -- getting the votes necessary to pass the bill it in the Senate. Republicans can only afford to lose two votes, but when the “discussion draft” was released this morning, at least three Senators immediately voiced their opposition. Let the “discussion” begin!