Repealing the Affordable Care Act: Potential Business Implications
Update: On March 24, the Speaker of the House of Representatives withdrew the ACA repeal-and-replace bill and stated that the ACA will be left intact for the time being. Please click here for the latest update.
Prior to the 2016 presidential race, small business owners ranked health care as their top election priority, according to a Paychex survey. Sentiments about the Affordable Care Act (ACA), commonly referred to as Obamacare, were divided, however: 38 percent of those surveyed wanted to see the legislation repealed, while 27 percent wanted to see it expanded.
Meanwhile, President-elect Donald Trump made the “repeal and replacement” of the ACA a central tenet of his campaign, stating, “On day one of the Trump administration, we will ask Congress to immediately deliver a full repeal of Obamacare.”
Since winning the general election, however, Trump has said he’s likely to maintain some aspects of the ACA, such as allowing children up to age 26 to stay on their parents’ insurance plan, and prohibiting the exclusion of people with pre-existing conditions. But numerous political and practical considerations may make sweeping changes to Obamacare unlikely, at least in the short term.
Potential Alternatives to ACA
The President-elect has said he’d pursue ACA alternatives such as various market-based reforms. The possibilities include:
- More flexible use of health savings accounts;
- Sale of insurance across state lines;
- Making Medicaid a program funded by block grants for the states; and
- Allowing people to deduct the cost of health insurance premiums on their personal income tax returns.
But a replacement plan poses many challenges. Designers must flesh out policies to support the health care markets and passage through Congress.
Adhering to ACA Rules Until Further Notice
In the interim, ACA requirements remain for businesses, including the Employer Shared Responsibility filing. It’s important to know that the Internal Revenue Service has:
- Extended the date for furnishing Forms 1095-B and C to employees to March 2, 2017; and
- Indicated the “good faith effort” standard to avoid related penalties would continue for 2016, for furnishing statements to employees, and for filing statements and returns with the IRS.
As early as January, Congress is expected to take up legislation repealing a number of ACA provisions. The repeal bill will likely move through a budget process known as reconciliation that only requires 51 votes in the Senate to pass, as opposed to the typical 60. Under this process, only changes that impact revenue and spending amounts can be made. As a result, if passed it would not be a complete repeal of Obamacare and many key provisions of the law would remain in place.
Among those provisions expected to not be repealed are the 1095 reporting requirements to IRS. Furthermore, there will likely be a transition period that will extend subsidies and Medicaid expansion while a replacement bill is being worked on.
It is too early to predict exactly how the legislative process plays out and what the impacts will be on our healthcare system. Many industry experts and think-tanks have warned that passing repeal legislation without a replacement in place could destabilize the insurance markets. The nonpartisan Urban Institute, for example, has predicted dire consequences, including sharp increases in the number of uninsured and a near collapse of the non-group insurance market.
For now, businesses, along with the general public, must wait to see what the Trump Administration and Congress will do with the ACA.