As President-elect Trump continues to promise to make repeal of the Affordable Care Act his administration’s first order of business, Democrats on Capitol Hill are vowing to go to the mats to save the law’s consumer protections, and potentially its employer and individual mandates.
The fight over the next few months is setting up to be a nasty one. Republicans stumbled out of the gate in the first week of the 115th Congress, failing to present a unified message as to how to dismantle the ACA.
The so-called “repeal and delay” approach favored by many Republicans would cut the funding mandates of the ACA through the budget process. That would potentially include repeal of the individual and employer mandates, the Cadillac Tax, the tax on higher-earners’ capital gains and the medical device tax.
Under that strategy, repeal would be phased in, buying Republicans time to come up with a replacement.
That approach seemed to have the support of President-elect Trump going into the new legislative session.
But Sen. Rand Paul, R-KY, the one-time candidate for the Republican nomination and a staunch critic of the ACA, fired a shot across the bow of his own party on the first day of the new Congress, cautioning against the perils of repealing the law without having an adequate plan to replace it.
“If Congress fails to vote on a replacement at the same time as repeal, the repealers risk assuming the blame for the continued unraveling of Obamacare. For mark my words, Obamacare will continue to unravel and wreak havoc for years to come,” wrote Paul in an opinion piece published on rare.us on January 2nd.
“Removing the mandate to buy insurance while leaving in place the dictate that people can wait to buy insurance until after they are ill will only accentuate the bankrupting of the insurance industry,” added Paul.
That will lead to more chaos, thinks Paul, and the prospect of insurance companies lining up in Washington for taxpayer bailouts.
For benefits brokers serving the employer-provided market, perhaps the most immediate question their clients face is what will happen with the ACA’s employer mandate.
Technically, it is possible the mandate could be reversed on January 20th, the day President-elect Trump is inaugurated, says Shandon Fowler, senior director of employer portfolio and product strategy at Benefitfocus, a provider of cloud-based benefits administration platforms for employers.
“But realistically that is not going to happen so quickly,” Fowler told BenefitsPRO.
Fowler says the primary question Benefitfoucs is fielding from its clients is whether or not the employer mandate will go away this year.
That curiosity has nothing do with employers’ interest in dropping benefits, and everything to do with their compliance requirements, and costs, under the ACA, says Fowler.
“The majority of employers would love to see those go away,” he explained. “There are material costs to complying with the law’s reporting requirements. You can make the case, as employers do to us, that those costs are deferring other investments, with respect to benefits design and other areas of their operations.”
Compliance with 1094 and 1095 reporting for employers with more than 50 fulltime employees went into effect last year for the first time, of course.
Employers had the benefit of extended employee notification and IRS filing deadlines last year. This year, that won’t be the case. Employer deadlines will be hard and fast—January 31 for getting forms to employees, and March 31 for employers’ filings to the IRS.
“We are not advising anyone to ignore those deadlines for this year,” said Fowler. “Complying has a huge impact on employers. Focusing on facilitating compliance so employers can think more strategically about benefits is a central part of our benefits management platform. We don’t see that going away.”
Health care providers, insurance companies, and employers have collectively spent billions updating systems to comply with the ACA.
The prospect of unwinding the funding provisions of the law without a plan to replace it creates risk across the market, even for those employers that would love to shed the onerous reporting requirements that come with offering benefits.
“It’s never possible to turn the clock back,” notes Fowler. “Politically, doing something is always harder than doing nothing. That’s the reality Republicans are running up against.”
Betting on an immediate repeal of the employer mandate is simply too risky, said Fowler. Employers should be well into the process of prepping employee notification requirements, which will be due less than two weeks after the inauguration.
Beyond that reality, Mr. Trump has indicated that he favors Sen. Paul’s approach to reform.
By the end of the first week of the new Congress, Trump called Paul, offering support for repealing the ACA only when a replacement plan is ready, according to message from Paul’s Twitter account.
If the President-elect maintains that position, repeal of the employer mandate will be impossible in the early weeks of the new Administration, and will likely take at least several months of as part of the larger negotiations for a new law.
For his part, Paul is said to be preparing a compilation of the best ideas Republicans have for replacing the ACA so that a new law can be proposed as soon as possible.
Fowler says Health Savings Accounts are all but guaranteed to be emphasized in whatever plan is produced by Republicans. In his conversations with lawmakers and their staff, Fowler says Democrats are also showing genuine interest in growing the role HSAs in the health care economy.
What will become of the employer mandate, and employers’ reporting requirements after this year, remains to be seen.
Employers that would like to do away with it can take stock in the fact that they are not alone in their distaste for the mandate, and its expensive reporting requirements.
“There’s not much love for it on Capitol Hill, on either side of the political aisle,” said Fowler.