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Mercer

Despite last week’s cold snap, the bloom of cherry blossoms along Washington DC’s Tidal Basin is now under way – a peaceful sight that belies this stormy moment in Congress, where new healthcare legislation is being debated and the headlines seem to shift from moment to moment. However, one thing is for sure: any legislation affecting the US healthcare system must consider the impact on employer-sponsored health insurance – the source of coverage for 177 million Americans, 16 times the number enrolled in public exchanges.

 

That’s why the leadership of MMC companies Mercer and Oliver Wyman created a health policy group to help formulate MMC’s views on ACA repeal-and-replace legislation. Our efforts led to the issue of a policy paper that showcased original Mercer research on changing the tax treatment of employer-sponsored coverage.  

 

Last month, we took this research to the US House of Representatives to meet with policymakers actively working on the newly proposed American Health Care Act, or AHCA. We demonstrated that the excise tax on high-cost plans, currently law under the ACA, is not an effective method of penalizing rich “Cadillac” plans because plan design is only one factor affecting plan cost and often less important than location and employee demographics. 

 

This would also be true of a cap on the employee individual tax exclusion for employer-provided health benefits, a provision included in an early draft of the AHCA and favored by powerful voices such as House Speaker Paul Ryan (R-WI), House Ways and Means Chair Kevin Brady (R-TX) and new HHS head Tom Price. Mercer had also modeled the impact such a cap would have on the effective tax rates of Americans based on their income. The hardest hit, by far, would be lower-paid workers with families. Some staffers faced with this information for the first time were visibly struck.

 

When the bill was released for mark-up, the cap on the exclusion was not included, and the Cadillac tax was delayed until 2025 (and possibly 2026). But while we were pleased with this outcome, we also knew the bill was a long way from becoming law and the cap could easily resurface.  

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Today is the seven-year anniversary of the signing of the ACA, and we spent it with our eyes glued on the House, waiting for a vote to repeal the law. It looks like the vote is delayed, so too soon to call if it’s lucky number seven for the Republicans or the Democrats. 

 

 

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What happens to the ACA has serious implications for employers. In response to the recent introduction of the American Health Care Act, which seeks to repeal much of the ACA and replace it with new policies, we’ve prepared a very brief survey to gauge employer response and ensure your voice is heard. 

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The Congressional Budget Office (CBO) estimates that House Republicans' legislation repeal and replace much of the Affordable Care Act (ACA) will reduce federal deficits by $337 billion and increase the number of uninsured by 24 million -- for a total of 52 million uninsured people -- by 2026.

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On Monday the CBO released its much-anticipated score of the American Health Care Act, the Republican legislation to repeal and replace the ACA. The CBO projection shows a loss in healthcare coverage for 24 million Americans over the next decade, accompanied by a reduction in the federal deficit of $337 billion. The state Medicaid programs are taking the biggest  hit, with a decrease in funding of $880 billion during the same time period. In the short term, the CBO projects that health insurance premiums in the individual market will increase 15-20% and 14 million fewer Americans will have coverage as soon as next year.

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Last week’s flurry of activity in DC has turned into a full blizzard following the release of the Republican bills to repeal and replace the ACA. It’s proving challenging to see through this political storm, so I thought I’d share what we know so far.

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On Monday evening, just as those of us on the East Coast were getting ready to call it a day, House Republicans unveiled the repeal and replace bill we’ve all been waiting for.  While we haven’t finished our analysis yet, we have selected a few of the many articles on the bill for your perusal, including a long piece in the New York Times.  One major headline: The bill didn’t include a cap on the tax exclusion for individuals covered in employer-sponsored plans, which was a welcome surprise since it had been included in an earlier leaked draft.  But the unpopular Cadillac tax remains.  The bill “repeals” the Cadillac tax only until 2025, which means it would still cast a shadow over employers’ long-term strategic planning.

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This has been a busy week for healthcare in DC -- and the week’s not over yet! On the heels of the leaked Republican reconciliation bill language last Friday (that is already being described as out of date), the governors arrived over the weekend for a National Governors Association meeting that included dinner at the White House on Sunday. While the President tweeted that they “might” talk about healthcare, you can be sure the future of the Medicaid program and, more specifically, Medicaid funding, was at the top of the governors’ list of topics. Certainly, the 31 states that expanded Medicaid fear the funding implications of a block-grant program.

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A leaked discussion draft of House Republican legislation to repeal and replace much of the Affordable Care Act (ACA) largely tracks earlier GOP proposals, including a cap on the employee tax exclusion for employer-provided health coverage. The February 10 draft includes the following proposals:

 

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Starting the day after the Presidential election, I have devoured every bit of information about the fate of the Affordable Care Act as we know it. From “repeal and replace” to the new “r” word – repair – there has been an abundance of positioning and pontification on the topic. Meanwhile, we have just published a Marsh & McLennan Companies Health Policy Paper that reflects our best thinking from both Mercer and Oliver Wyman as it relates to the road ahead for healthcare reform. 

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Be careful what you wish for. Mercer has long been a member of the Alliance to Fight the 40, a group dedicated to convincing Congress to repeal the 40% excise tax on high-cost plans. Now, while the excise tax is likely to be thrown out along with many other parts of the Affordable Care Act, GOP lawmakers are contemplating capping employees’ tax exclusion for employer-sponsored health plan premiums – and many of the threshold numbers being bandied about are more onerous than the excise tax thresholds.  Unlike the excise tax, which would be paid by employers or health plans, a cap on the exclusion would mean employees would pay income and payroll tax on the value of their health coverage that exceeds the threshold amount.

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You’ve been providing health benefits to your retirees for years. You’re glad you can: It rewards loyalty, protects people that you consider to be valued colleagues, and promotes engagement within your business. But as health reform adds to administrative burdens and the need to control cost intensifies, it feels like each day there’s less time to manage the retiree program.

 

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