Congress released its much-awaited replacement of the Affordable Care Act this week — the American Health Care Act — which repealed a few major provisions of the ACA while keeping some of the current law intact.
Kim Buckey, vice president of client services at DirectPath, a company focused on employee engagement and health care compliance, believes the proposed bill "falls short of the mark."
"There are a lot of provisions in here that are great to have but come with a price tag — and I’m not sure yet that the bill has addressed where the money is going to come from to cover those expenses," says Buckey.
"I will be interested to see what the CBO score comes in at. I suspect once we have that information, as well as a report on how this is going to affect coverage, there will be a lot more discussion about this bill."
One of the major repeals that would affect employers and insurance providers is the removal of the employer mandate. Under the ACA, employers with more than 50 employees must provide insurance coverage.
Ann Duke is the director of mandatory compliance at PrimePay, an online payroll and HR services company, and helps clients meet requirements of the ACA. She says she doesn’t believe removing the employer mandate would mean employers will stop providing coverage, but rather ease their burden with regulations.
“Everything that came along with [the ACA] was all kinds of regulatory requirements,” Duke says. “You had part-time or variable-hour employees, and you had to implement fairly complex formulas for determining who was to be offered coverage and who was not.”
She also says this could create better choice of available insurance products for employees.
But Susan Combs, CEO of insurance brokerage firm Combs and Company, worries about removing the employer mandate, as well as the individual mandate.
“I know many people tout that requiring health insurance is ‘unconstitutional,’ yet you don’t hear people saying that in regards to auto insurance,” Combs says.
“It’s all about mitigating your personal risk and you have a duty to do so. The mandates help to balance out the risk pool. It is very important to have the high utilizers in with the young and healthy, this in turn helps to manage and control the costs.”
And when it comes to costs, the proposed bill suggests tax credits rather than subsidies, which Combs thinks will be a positive for those living in large cities, like New York City, where her business is located. The bill proposes that individuals making $75,000 or less are eligible for a tax credit.
“Living in NYC, less than 1 percent of my clients were eligible for a subsidy with the threshold being 400 percent of the federal poverty level or approximately $47,000 per year,” Combs says.
“I think this will definitely help out more people in the metropolitan areas where incomes are higher but so are living expenses. However, if you are making $30,000 a year as a 25-year-old and only getting $2,000 to help with your insurance costs, I don’t think that will be incentive enough for that 25-year-old to not roll the dice and not take insurance.”
But Combs says from her point of view as a broker, she is also glad to see the employer exclusion part of the Affordable Care Act removed under the proposed bill.
“This was the part that would have no longer allowed employers and employees to save on FICA when contributing to premiums in a group health setting,” Combs says.
But Combs does have reservations about some parts of the bill.
“I’m concerned about the age rating ratio changing from 1:3 to 1:5,” she says. “Many consumers don’t get that this means that if a 20-year-old was paying $200 per month for insurance, that a 64-year-old, on the same plan, is currently capped at paying $600 per month. With the new proposed bands, that would go up to $1,000 per month. The increased tax credits won’t scratch that surface.”
Duke says she thinks this bill is a good first step, as it could open up the marketplace and create fewer regulations and reporting requirements, but she is concerned about compliance.
When the ACA became law, companies had to adjust their benefits practices to make sure they complied with the law.
“They spent a lot of money early in complying by buying services or whatever they needed to do to comply and they don’t want to spend the same amount of money again to comply with something new,” Duke says.
Buckey says the process of health care reform (and this proposal's future in grander reform) is still in the very early stages, so from a compliance standpoint, "the law is still the law."
"SBCs are still required; it’s likely ESRR reporting will be needed in some form through at least the end of this year, so I would encourage employers to continue collecting the necessary data until definitive direction is provided," Buckey says.
Brian Robertson, executive vice president of Fringe Benefit Group, says focusing on employer provided benefits shouldn’t even be a focus in the bill.
“Congress did seem to recognize with this iteration that employer sponsored health insurance covers over 170 million Americans. For the most part, that is working and should be supported,” Robertson says. “Solving for the individual market should be the focus and creative ideas still need to be surfaced.”
In addition to the employer and individual mandate, the proposed bill will repeal the subsidies for out-of-pocket costs.
It also changes how the government subsidizes premium costs, adjusts the Medicaid expansion part of the ACA, allows users to save more in a health savings account and allows insurers to charge older Americans more money.
Combs thinks the limits on HSAs is a good additon to the proposed bill because "it's your money, so why not be able to put away more in that capacity, especially with higher maximum out-of-pocket limits?"
While Buckey agrees that HSAs are a good resource, she does say the concept can confuse people.
"With the emphasis on HSAs in this bill, I don’t see it meeting President Trump’s conviction that the new plan will be simpler and easier for people to understand," Buckey says. "There will be a lot of communication and education needed — from employers and the government alike — about how these accounts work, how to budget for health care expenses and how to make wise choices about using funds in those accounts."
What's next for "Trumpcare" might be up in the air, but one thing is certain: "At the end of the day, insurance will still be around and brokers will be needed more than ever to help navigate what's to come," says Combs.