If ACA is Broken Can the GOP and Employers Fix it

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If ACA is Broken Can the GOP and Employers Fix it
Calendar23 December 2014

While Republicans will control both chambers in the 114th Congress that convenes in January, there’s not much they can do to seriously weaken the Affordable Care Act over the next two years without a filibuster-proof Senate majority and President Obama wielding a veto pen. The fate of the law now lies – again – across the street from the Capitol at the Supreme Court, where an expected decision in June (King v. Burwell) could strike down federal subsidies in the 36 states where the federal government runs the exchanges.

That would certainly bring cheers from Republicans, but probably not for long. The resulting mess would force party leaders to confront the contentious question within their ranks of whether to try to “fix” the law or let its problems grow. In order to appeal to a broader electorate and win the White House in 2016, however, Republicans may need to show that they can come together on health care solutions.  

To be sure, Republicans are intent on casting votes on repealing the entire law and major components such as the employer and/or individual mandate. Bipartisan interest in changing the law’s weekly definition of full-time work from 30 hours to 40 hours also will get a major push.

Another issue set to get more attention is making employer-friendly legislative changes to the Cadillac excise tax on “high value” plans that goes into effect in 2018. Changes plan sponsors would like to see include eliminating or delaying the tax, and/or excluding health FSAs, HSAs, and HRAs. But don’t look for much sympathy from Republicans. Many view the tax as maybe the only cost-control in the law with teeth, and finding the revenue to offset changes to the tax would be a big policy and political challenge. Changes are always possible, though, if enough employers weigh in.

And the potential fallout from the King case may well give new impetus to these changes. If the justices invalidate subsidies in federally-run exchanges, the president will be in the position of having to do some horse-trading with Congress to deal with the immediate crisis of millions of Americans facing dramatically higher premiums.

But GOP leaders acknowledge that they need to have a more comprehensive reform plan ready. Some lawmakers have begun to introduce replacement measures that would build off of some of the law’s components, such as a plan from incoming Senate Finance Committee Chairman Orrin Hatch of Utah and other key senators. It keeps some of the law’s consumer protections but would eliminate public exchanges and provide tax credits to help small employers and individuals buy coverage. And the tax credits would be funded by capping the tax exclusion for employer-provided health care benefits at 65% of the “average plan’s costs.”

Would a cap on the employee tax-exclusion for employer coverage be preferable to the Cadillac tax? Let’s discuss. And let’s have a conversation about what other policy changes may be needed to support the employer-based health care system as the ACA evolves. The stakes are higher than ever, and employers’ voices will be essential to driving positive change.

 

Mercer has assembled a panel of experts to reflect on key health care reform developments and share their expectations for the future. Geoff Manville is a Principal and Leader of Mercer’s Government Relations Team.

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