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May 08, 2017
ACA ‘Repeal’ Bill Eases Employer Requirements, Faces Uphill Battle in Senate

Now that the House has passed the American Health Care Act (AHCA)—an Obamacare repeal and replace proposal—the ball is in the Senate’s court. And while Republicans there say they won’t adopt the House version wholesale, most of the provisions easing requirements for employers are likely to appear in the Senate’s bill as well.

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health insuranceThe measures in H.R. 1628 that affect employers are relatively uncontroversial, according to Eric Schillinger, an associate at Trucker Huss. Senate Republicans probably will push back against some of the changes affecting Medicaid and the individual market, Schillinger told BLR®, but “the employer provisions aren’t attracting the same controversy.”

House Bill Details

The House bill was approved May 4. (See Modified AHCA Narrowly Passes House.) Like an earlier bill that failed to garner enough votes, the legislation is largely focused on the individual market.

But, also like the previous bill, it pulls back on some employer requirements. First, it proposes to reduce the penalty for noncompliance with the Affordable Care Act’s (ACA’s) employer mandate (which requires larger businesses to offer workers affordable health insurance) to zero. It also delays the effective date of the “Cadillac tax”—a 40% tax on high-value plans—from 2020 to 2026.

Rather than repeal these requirements altogether, lawmakers addressed only the provisions’ financial aspects so they could use a budget process known as “reconciliation.” It allows them to avoid a filibuster, should the bill be taken up in the Senate, Schillinger explained.

Those two changes are likely to appear in any future Senate healthcare bill, Schillinger said. But one provision new to the AHCA, which could potentially allow employers to reduce healthcare costs, may be on the chopping block.

Known as the “MacArthur amendment” because it was offered by Rep. Tom MacArthur (R-NJ), the provision allows states to waive certain ACA requirements, including one that requires insurers to cover 10 “essential health benefits.” The waiver would apply to lifetime limits and out-of-pocket caps on those benefits. (The benefits include things like emergency services; prescription drugs; and pregnancy, maternity, and newborn care.)

And because an employer can adopt any state’s requirements as a benchmark for its plan—regardless of whether or not it does business in that state—the MacArthur amendment seemingly opens the door for employers to return to plans that have lifetime limits and no out-of-pocket caps, Schillinger said.

Before the ACA, most group health plans had these limits, Schillinger said. It could certainly result in lower costs for employers if they choose to adopt them again.

That amendment, however, is less likely than the other provisions to appear in the Senate’s bill, he said.

Next Steps

Senate Republicans apparently have their work cut out for them. To start, some of the AHCA’s provisions might be outside the scope of what lawmakers can do within the Senate’s reconciliation process, Schillinger said.

And then, even if they introduce an entirely different bill, as some have promised to do, they might not have enough votes to pass it. In the House, 20 Republicans voted against the AHCA; a Senate reconciliation bill could withstand only 2 “no” votes from GOP senators.

Finally, if the Senate does manage to pass a new bill, the legislation will have to go to the House for consideration, or to a conference committee so both houses of Congress can hammer out a compromise.

As for a timeline, Schillinger said the Senate will want to pass a bill by the end of May. The issue is holding up other priorities, “so there is some sense of urgency to try to get this legislation through by the end of the month,” he said.

Kate TornoneKate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.

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