From the ACA to AHCA, Uncertainty Remains

Depending on what day of the week it is, “Obamacare” is either doomed or here to stay. Employers monitoring the future of the Affordable Care Act (ACA) have every right to be puzzled by events in Washington. For HR professionals lost in the shuffle, here’s where we stand right now.

AHCA’s Journey from the House to the Senate

On May 4, the House of Representatives passed legislation to replace the ACA, dubbed the American Health Care Act (AHCA). The measure only narrowly made it through on a 217 to 213 vote and was celebrated by both GOP lawmakers and President Trump at the White House. In addition to eliminating the individual mandate outright, some of the House bill’s original provisions included:

  • Offering $2,000 to $4,000 per year in tax credits to help individuals without employer or government plans purchase insurance

  • Capping federal funding for Medicaid and restructuring how states are allocated those funds

  • Incentivizing Americans to enroll by imposing 30 percent higher premiums for those who go more than 63 days without coverage

  • Permitting states to opt-out of certain ACA provisions, like capping premium differences between age groups

The Congressional Budget Office (CBO), a nonpartisan government agency that evaluates the impact of new legislation, reported that the AHCA would reduce the deficit by $119 billion but lead to 23 million more people being uninsured by 2026.

See how expert consulting and modern technology takes the complexity out of ACA compliance.

The House bill was then sent to a skeptical Senate, where it subsequently generated multiple rewrites from Senate Majority Leader Mitch McConnell (R-KY) and separate proposals from Senators Lindsey Graham (R-SC) and Ted Cruz (R-TX). McConnell’s changes, like providing an additional $70 billion to states for keeping down premiums and out-of-pocket costs, were meant to appease more moderate members of his party. The plan didn’t work, with both conservative and moderate Republicans defecting. Outright repeal, even without a replacement, also appears to be a nonstarter in the Senate.

Though Republicans were able to pass repeal measures under the last administration (only to have them vetoed by President Obama), recent efforts have hit a brick wall. Considering that the GOP controls Congress and the White House, one might ask why the repeal is in question this time around. The answer lies with the party’s razor-thin advantage in the Senate, where they control 52 out of 100 seats. Facing unanimous Democratic opposition, the GOP can afford no more than two defections on a bill. With the AHCA and outright repeal faltering in Congress, lawmakers like Senator Susan Collins (R-ME) are beginning to suggest what was once unthinkable: working with Democrats to fix, not eliminate, the ACA.

Despite Confusion, Compliance Is Not Optional 

Expecting a reprieve from ACA reporting or the law’s other requirements? Though the future of healthcare continues to be up for debate in Washington, the IRS hasn’t used uncertainty as an excuse to relax enforcement. Last February, the agency clarified how it would treat ACA reporting in light of President Trump’s order that it “lessen the burden” of the law’s requirements: it’ll be business as usual.

In its announcement, the agency said that while it would not automatically reject individual tax returns submitted without insurance information, it remained committed to enforcing employers’ ACA obligations.  Additionally, even if Republicans manage to repeal the ACA, the scale and sensitivity of the healthcare industry (nearly 18 percent of the country’s gross domestic product) means any changes in enforcement will be gradual, not immediate.

For the time being, the ACA is alive and well. To be on the safe side, employers should proceed with their required filings as they would have before. As always, the Namely team will closely monitor the progress of healthcare reform in Washington.

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