What's the Future of Health Care Reform Now?
- On Sept. 26, 2017, Republican leaders in the Senate acknowledged they lacked enough votes to pass the Graham-Cassidy bill, signaling failure for the latest Republican effort to repeal and replace the Affordable Care Act (ACA).
- Republican leaders in the Senate say they will now focus on other priorities, such as tax reform.
- A number of options remain to address health care reform.
- The ACA and all its provisions remain intact.
Latest ACA repeal-and-replace effort fails in Senate
On Sept. 26, 2017, the latest Republican effort to repeal and replace the Affordable Care Act (ACA) failed when Senate leaders decided not to bring the Graham-Cassidy bill to a vote, conceding that they couldn’t pass it. This may represent the GOP’s final attempt to make good on its years-long campaign promise to repeal the ACA.
At the end of July, after months of working on various iterations of repealing and replacing certain provisions in the ACA, the Senate rejected what appeared to be the last attempt to install a potentially more robust version of health care reform, using the budget reconciliation vehicle. But in recent days the Senate made an unexpected partisan push to revive this effort. Supporters aimed to substantially revise the ACA prior to the Sept. 30 cut-off for the fiscal year 2017 budget.
Graham-Cassidy deferred responsibility for healthcare oversight to the states. Each state would have had to build its own infrastructure to support healthcare marketplaces. State legislatures would have been charged with implementing policies to shore up their markets, potentially requiring employers doing business in more than one state to support different rules. The Graham-Cassidy bill called for states to absorb the cost of building and retaining health insurance systems while balancing the needs of their populations.
The legislation did not garner widespread enthusiasm from Congress and the public. Earlier this week, Senate Majority Leader Mitch McConnell, R-KY, acknowledged that he lacked the votes to pass the Graham-Cassidy bill. Now the clock has officially run out for the fiscal year 2017 budget. The repeal-and-replace drive appears to have no path forward in the near future. The ACA and all its provisions remain intact.
Prior to Graham-Cassidy, some Republican senators worked across the aisle with Democrats, even holding hearings on legislative ideas. These lawmakers hoped to draft a bill that would stabilize health insurance markets and encourage health insurance carriers before the Sept. 27 deadline to finalize participation in the 2018 government marketplaces. These bipartisan efforts stopped abruptly when Republicans pivoted their attention to the Graham-Cassidy bill. Now that the clock has run out on these partisan efforts, the negotiations on legislation to help stabilize markets have resumed.
Republican leaders in the Senate have indicated that they will now focus on other priorities, particularly tax reform. All members of Congress recognize the work that needs to be done on the ACA, but how to proceed remains up in the air.
What options remain to address health care reform?
Combine ACA repeal with tax reform in upcoming budget reconciliation
Some Republican senators have recommended that the FY 2018 budget reconciliation instructions combine tax reform and ACA repeal. Republicans had planned to use the fiscal year 2018 budget reconciliation to address tax reform exclusively. Although it is theoretically possible to address both issues under one reconciliation instruction, it’s impractical to do so with two politically volatile topics. Lawmakers can use reconciliation only once a year for a single bill that addresses revenue. This means that both tax reform and repeal-and-replace would need to be resolved at the same time in one bill.
Repealing and replacing the ACA has proven an unattainable goal for the Republican caucus since President Trump took office in January. Tax reform is also a heavy policy lift for the GOP. Although, in broad strokes, there seems to be some party-wide agreement on the topic, the devil is in the details. Tax reform is particularly intricate. Adding the simultaneous burden of health care reform would be nearly unworkable.
Use FY19 budget instructions
If the Republicans use the fiscal year 2018 budget instructions to address tax reform alone, the next opportunity for a partisan effort to repeal and replace the ACA comes in the fiscal year 2019 budget. (Remember, lawmakers can use budget reconciliation only once in a fiscal year.) The difficulties that Republicans have faced in passing any repeal and replace legislation may grow larger as time passes and the ACA becomes more entrenched.
Institute bipartisan fixes to the current law
In September, the leaders of the Senate Committee on Health, Education, Labor and Pensions (HELP), Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., held bipartisan hearings with the aim of drafting legislation to stabilize health insurance markets. The Republicans have resumed these discussions to ensure the markets’ short-term stability.
These bipartisan dialogues to repair portions of the ACA tend to follow established legislative procedures, (hearings, committee processes, and engagement of stakeholders). Adherence to expected procedures generally leads to incremental alterations in current law rather than volatile changes, encouraging market stability.
Implement executive action
Outside of legislative action, the president can change the trajectory of current law. You may recall that on Jan. 20, 2017, the day of his inauguration, President Trump signed a general executive order to ease the regulatory burden of the ACA before implementing a repeal. Keep in mind that making changes through the regulatory process can be lengthy and complex. Any changes to current regulations are limited by the confines of the statute. This guidance is posted on the Internal Revenue Service’s website and notes that:
“…The recent executive order directed federal agencies to exercise authority and discretion available to them to reduce potential burden …”
It also states that “… legislative provisions of the ACA law are still in force until changed by the Congress, and taxpayers remain required to follow the law and pay what they may owe.” The IRS makes clear that the current law — the Affordable Care Act — is currently unchanged, and the employer requirements and associated penalties for noncompliance are still in effect.
The states represent another dynamic at play in health care reform. Uncertainty about the ACA’s future has spurred state-level efforts to address potential detrimental effects on state health markets. Many state proposals are, or intend to use, a provision in the ACA that took effect in 2017: Section 1332 state innovation waivers. It allows the states to obtain waivers from certain ACA requirements to support state systems that ensure health coverage is as comprehensive, as affordable, and covers as many residences as would have be covered under the ACA.
These waivers, if approved, may also grant states pass-through funds that the federal government would have otherwise spent. Governors and state legislatures are looking to implement policies to shore up their markets, which may mean that employers would have to support different rules in different areas. Revising these waivers was part of the HELP committee’s original bipartisan efforts. If bipartisan negotiations resume, waivers may again be part of the dialogue.
What does this all mean for businesses?
Employers must remember that the ACA repeal-and-replace efforts this year have not changed anything. The ACA and all its provisions remain in force, including employer shared-responsibility mandates and reporting requirements. It’s important to stay informed about legislative efforts to change the ACA, but the situation now is up in the air. As always, Paychex will monitor the issue closely and report on any changes.