HR Management & Compliance

ACA ‘repeal’ bill eases employer requirements, faces uphill battle in Senate

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

The measures in H.R. 1628 that affect employers are relatively uncontroversial, according to Eric Schillinger, a contributor to Federal Employment Law Insider and an attorney at Trucker Huss. Senate Republicans probably will push back against some of the changes affecting Medicaid and the individual market, Schillinger said, but “the employer provisions aren’t attracting the same controversy.”

House bill details

The House bill was approved May 4. Like an earlier bill that failed to garner enough votes, the legislation focuses largely on the individual market.

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

Rather than repeal those 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 likely will appear in any future Senate healthcare bill, Schillinger said. But one new provision of the AHCA that could potentially allow employers to reduce healthcare costs may be on the chopping block.

Known as the “MacArthur” amendment because it was proposed by Representative Tom MacArthur (R-New Jersey), 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, which include emergency services, prescription drugs, and pregnancy, maternity, and newborn care.

Because an employer can adopt any state’s requirements as a benchmark for its plan—regardless of whether 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 passage of the ACA, most group health plans had those limits, Schillinger said. It could certainly result in lower costs for employers if they choose to adopt them again. The amendment, however, is less likely to appear in the Senate’s bill than other provisions, 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.

Even if senators introduce an entirely different bill, as some have promised, 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 two “no” votes from GOP senators.

Finally, if the Senate does manage to pass a new bill, the legislation would 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.