There is no minute like the last minute! This seems to be the differentiator for the Senate's final run at passing a repeal-and-replace bill under budget reconciliation rules – a window that closes on September 30. While you can check out our latest Washington Weekly for details on Graham-Cassidy, including the process and timing, I thought it would be helpful to frame up the biggest issues for employers should the bill be signed into law.
- Cost shifting. If Graham-Cassidy passes, employers are likely to see higher health care costs. Why? Block grants to the states combined with changes to basic Medicaid funding will provide less federal support for individual and Medicaid coverage. That may drive up the number of uninsured -- which in turn would likely trigger provider cost shifting to private payers. Employers will need to be even more vigilant with cost management efforts.
- State power. In addition to cost-shifting, block grants could create other challenges for employers. One concern is that as more control shifts to states, employers will have to deal with a patchwork of requirements. While ERISA provides protection for self-insured plans, states may look for new ways to generate funds to make up short-falls in funding for public programs. Some might decide to mandate coverage for individuals (like Massachusetts did) – indirectly imposing certain benefit requirements on employers -- or to impose new taxes on employers or insurers.
- Cadillac tax is still a thing. The excise tax is not addressed in the Senate bill, so without other intervention it will go into effect in 2020 whether the bill passes or not. Treasury has yet to release draft regulations and the clock is ticking. The Alliance to Fight the 40 and other advocacy groups are still lobbying for repeal or, at a minimum, further delay. In the meantime, it is a good idea to revisit projections for how your plans will fare if the tax is effective in 2020.
- In fact, much of the ACA wouldn’t go away. Graham-Cassidy does not repeal all of the ACA. Employers will still have to comply with reporting and other administrative requirements while the details to support the new law get sorted out in the regulatory process. Graham-Cassidy also doesn’t eliminate various ACA health plan design mandates – like limits on waiting periods, child coverage to age 26, first dollar preventive care and bans on pre-existing condition exclusions. So the passage of the bill wouldn’t mean reverting back to pre-ACA practices and plan designs.
- Health Insurance Tax goes into effect in 2018. The HIT is a tax on insured health plans -- including retiree medical plans -- and the Senate bill leaves it in place. Most plan sponsors with insured plans are sitting on two sets of rates for 2018. If you’re one of them, right now it looks as if you will need to insert the "loaded" rates into your budget and the open enrollment materials.
The run-up to the vote will be interesting. We are watching closely and will definitely have more to say on this topic.