The House Republicans released a white paper outlining their plan to provide “High Quality Health Care for All” – the GOP’s proposed approach to replace the ACA. While it lays out some interesting strategies that could potentially be attractive to employers, the paper lacks the details necessary to be able to evaluate the impact on employer-sponsored health benefits as we know them today. And we all know the devil is in the details.
Here are some of the highlights:
- Let’s start with the good news for employers – no more employer mandate. The document doesn't go into detail on what exactly goes away. Presumably scratching the employer mandate would mean no more 30-hours requirement, hours tracking, minimum plan standards, affordable contributions, or reporting (pinch me, am I dreaming?). But none of these are specifically called out in the paper.
- No surprise, the most popular features of the ACA will remain. Dependents will continue to be eligible for coverage until age 26. Lifetime maximums and pre-existing condition exclusions will still be banned.
- The Excise Tax is replaced with a new cap on the employee tax exclusion for employer-sponsored health care coverage. Currently employees are not taxed on the value of the health care benefits provided by their employer. The GOP plan will cap the exclusion “at a level that would ensure job-based coverage continued unchanged”. The authors think employers will keep benefits under the cap and convert the reduced benefits to additional cash compensation. While this theory is continually touted by economists and academics, in numerous Mercer surveys, employers have told us they will not increase wages to “make up” for cuts in benefits.
- Which leads us to Health Savings Accounts. The proposal expands catch-up contributions for spouses and increases maximum contribution limits, among other changes to encourage broader use of these savings vehicles. In addition, HSA contributions won’t count when calculating the cap on the employee exclusion.
- In a show of support for private exchanges, employers would be allowed to fund health reimbursement accounts to be used by employees to buy coverage on a private exchange.
- Other notable features include changes to support insurance competition, medical liability reform, individual tax credits for those not eligible for an employer-sponsored plan, and additional reforms to Medicaid and Medicare.
Employers will no doubt push back on the cap on the tax exclusion. It’s important to note that this is only the beginning – it’s a white paper; not proposed legislation. Step one in what could be a long journey, or – depending upon the election results – no journey at all.