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In an effort to garner more support for their ACA repeal legislation, House Republican leaders revealed changes to the legislation on Monday night pending the Rules Committee vote before going to the House for their vote. Of greatest interest to employer plan sponsors is the delay in the Cadillac Tax from 2025 to 2026. The bill’s amendment repeals some of the other ACA taxes retroactively to the beginning of 2017 instead of 2018 as originally proposed. Other changes include additional funding to increase tax credits for older Americans and some Medicaid revisions.

 

In light of the changes, the House Freedom Caucus has indicated they won’t oppose the legislation, but they may still have enough “no” votes to kill the bill. President Trump went to the Hill on Tuesday to help the House Leaders secure support for the bill. In the meantime, the CBO is analyzing the changes and is expected to issue a new CBO score before Thursday’s House vote. The Brookings Institution doesn’t expect a meaningful improvement in the score.

 

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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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This article discusses the tax conundrum Republicans are facing as they try to repeal portions of the ACA. In short, legislation passed through reconciliation cannot increase the deficit beyond the budget window. With the proposed repeal of most of the ACA taxes, Republicans are using the Cadillac Tax to “smooth over the budget math.” The Cadillac Tax is disliked on both sides of the aisle so there’s still hope for a full repeal before the 2025 effective date. In the meantime, employer groups like the Alliance to Fight the 40, American Benefits Council, and ERIC continue to oppose the tax.

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Employers recognize the important role of healthy communities in employee well-being. The government plays an important role in creating healthier communities through the support and funding of public health initiatives. That’s why we found The American Health Care Act’s repeal of the Prevention and Public Health Fund concerning. The fund provides money to the CDC to support disease prevention programs. The loss of funding is likely to impact:

 

  • The federal vaccines program which ensures healthcare providers receive the vaccination doses they need and mobilizes responses to disease outbreaks.
  • Public health programs aimed at preventing and reducing the risk of heart disease.
  • Programs to reduce the risk of healthcare-associated infections. One-hundred percent of the money the CDC uses for this effort comes from this fund established under the ACA.

 

Prevention and public health funding addresses community health, and communities are where employees live. Well-being is linked to improved productivity, absenteeism, presenteeism and healthcare utilization – all factors that can impact a business's bottom line. For individuals, health and well-being affects both financial security and quality of life. 

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Just FYI. Since the ACA was enacted, there has been a succession of repeal and replace proposals coming out of Washington, culminating in this week’s House Republican bill. The Kaiser Family Foundation makes it easier to compare and contrast the proposed changes to specific ACA provisions with an interactive tool posted on their website. Click on a provision, for example, “Premium subsidies for individual,” to see how subsidies are currently handled under the ACA and how that changes in the proposed American Health Care Act. Take it a click further to see this same provision in any of five other proposals, including HHS leader Tom Price’s “Empower Patients First” Act from 2015. Given predictions that the AHCA will have a tough time getting to the President’s desk as currently written, you may want to bookmark this page.

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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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Well, now we know. A week ago, House GOP leaders presented an outline of an ACA repeal and replace plan with a key element missing – the source of revenue to fund the tax credits that would replace subsidies to assist people buying individual insurance. Today, Politico reported that in a leaked draft of ACA repeal-and-replace legislation, GOP lawmakers are proposing to do away with all ACA taxes, including the Cadillac tax. The only source of revenue in the bill is a cap on the income tax exclusion for people receiving health benefits through an employer plan. This differs from the Cadillac tax in that it hits plan members directly, rather than the employer or the plan. The draft bill sets the threshold at relatively high levels, but it is easy to speculate that the threshold could come down if this provision alone must pay for the replace plan.

 

Of course, this is only a draft – a leaked draft at that – and our lawyers have only just begun reviewing it. But our earlier analyses have shown that under any cap scenario, lower-income people will see the biggest increase in their effective tax rate. Another concern is that, if the goal of the tax is to penalize the most generous plans, basing the cap on premium cost means that plans with older workers and more women,  and those located in high-cost areas of the country, will be likely to trigger the tax, since these factor all influence cost as much or more than plan design.

 

Give the Politico article a read, and if you’re concerned about the effect of a cap on your employee population, now would be a good time to let your representatives know.

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Mercer hosts a monthly Washington Update webcast, and as you'd imagine, attendance varies based on the current activity in Washington. No surprise to find a large crowd calling in yesterday to hear the latest news. Employee Benefit News shared the highlights in an article. We could see the ACA replacement plan as early as next week. Specific details are still unknown and when announced will likely be modified as the legislative process begins. Stay tuned – more to come.

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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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Rep. Tom Price (R-GA) was confirmed early Friday morning as Health and Human Services Secretary in a 52-47 vote down party lines. The vote comes at the end of a contentious confirmation process, which raised questions from Democrats about his healthcare stocks, his plans for Medicare, and his opposition to the ACA. President Trump said last month that he would file a plan to repeal and replace the ACA “as soon as the Secretary is approved,” but has more recently indicated that a replacement plan could take until next year. Many are now looking to Tom Price’s confirmation for clues about the new administration’s commitment to an ACA repeal-and-replace timetable. According to this Wall Street Journal article, Price is “expected to follow through on an executive order, issued by Mr. Trump on the first day of his administration, directing federal agencies to pare back regulatory elements of the ACA.” The article also speculates that he could overturn the mandate that health plans include contraceptive coverage at no cost to the patient, “a protection that isn’t explicitly written into the law.” More to come on this – we’ll be watching Price’s first days closely.

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