*It is unclear from the Ryan proposal whether pre-existing condition exclusions would be banned in their entirety, or if the ban would only extend to individuals who maintain continuous coverage (in either the employer or individual market, or some combination thereof).
Obstacles: -Requires use of budget reconciliation process
-Only reaches revenue components of law
-Does not address “replace” promise from campaign
-Repeal of individual mandate could disrupt insurance industry
In the wake of the Democratic Congress’s loss of a supermajority in early 2010, the Democrats were forced to use an archaic, little-known process called “reconciliation” to pass the Affordable Care Act and to avoid the inevitable Republican filibuster. In short, this process allowed Congress to reconcile already-passed House and Senate versions of the law through budgetary/revenue tweaks. The process can only be used to correct budgetary/revenue items though. It cannot otherwise be used to repeal a non-budgetary, substantive provision of the law.
Congressional Republicans used this experience as a roadmap earlier this year to pass a “repeal” of the Affordable Care Act (which didn’t garner much press because it was ultimately vetoed by President Obama). It wasn’t a true repeal because, as noted above, Congress could only repeal budgetary/revenue provisions of the law using this process.
While that effort would not necessarily be reflective of a Republican post-election effort, it is important nonetheless because it offers clues into how the Republican Congress might proceed following Trump’s swearing in, on January 20, 2017. Notably, at that time Republicans seemed aware of the fact that it would be politically unpopular to immediately revoke the subsidy afforded to those persons enrolled in the Marketplace, so instead the law would have delayed repeal of the Marketplace tax credit for two years. Presumably, the rationale here was that this would give Congress the opportunity to arrange for an alternative (or more likely, to force bi-partisan compromise on the issue after this reconciliation bill, which was a “poison pill,” of sorts, passed). Further, certain high-profile surrogates of Trump have already indicated that the law will not be repealed until a suitable replacement is in place.
While not a comprehensive overview, the below chart highlights which provisions would have been impacted under that law (and the proposed effective date).
It remains to be seen whether this process will be readily available to the newly formed Congress. Notably, many members of Congress who voted for this partial repeal have gone on record indicating they may not have voted for the law if they had reason to believe President Obama would not veto it.
Further, as noted above, a repeal of the individual mandate, without further action to incentivize individuals to enroll when healthy, could create a so-called “death spiral” in the health care insurance marketplace where only sick persons enroll, driving up the overall cost of coverage.
Individual Mandate (retroactive to original effective date)
Employer Mandate (retroactive to original effective date)
Transitional reinsurance program fee
Ban on reimbursement for over-the-counter drugs
Additional tax on non-medical disbursements from
health savings accounts
$2,500 cap on health flexible spending account deferrals
Medical device tax
Health insurer fee
Limit on deduction for Medicare Part D subsidy
Additional Medicare tax on high earners
Repeal in two years
Marketplace Advanced premium tax credits
Small employer healthcare tax credit
Modifications through Regulatory Action
Likelihood: - High
Obstacles: -Requires agency regulatory process
-Only reaches interpretive portions of regulations
-Does not address repeal and replace promise from campaign
In addition to Congressional action to repeal all or part of the Affordable Care Act, the Trump administration could work through the regulatory agencies to modify certain interpretive aspects of the law. For example, one identified target that has raised the ire of conservatives is the inclusion of free birth control for women. The Affordable Care Act itself does not specify that contraceptives are a covered expense. However, when the Department of Health and Human Services issued its regulations defining preventive care, they included contraceptive coverage for women. A direction by the Trump administration to his new Secretary of HHS could accomplish this change. We are monitoring other similar changes that could be accomplished without the involvement of Congress.
In sum, the only thing certain following yesterday’s election is that there will be more uncertainty for years to come. For the time being, the Affordable Care Act remains in effect and in full force, so we strongly encourage employers to proceed accordingly unless and until a new law is signed into the books changing that landscape.