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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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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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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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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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Almost immediately following the swearing in, President Trump signed his first executive order directing HHS, DOL, Treasury and other agencies within the government to waive, defer, grant exemptions from or delay provisions of the ACA that impose financial or regulatory burdens, to the extent allowed under the law. So what exactly is allowed? Here are the three main ways the administrative branch can exert influence over the ACA:

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Much has been written recently about President-Elect Trump’s nominee for Secretary of Health & Human Services, Rep. Tom Price (R-GA). A former orthopedic surgeon from suburban Atlanta, Price has served six terms in the House and is currently Chairman of the House Budget Committee. A recent article in The Washington Post reports Congressman Price "got into government to get government off his back."  

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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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G.O.P. Campaign to Repeal Obamacare Stalls on the Details

Robert Pear and Reed Abelson, The New York Times

  • The campaign to repeal the Affordable Care Act has stalled as Republicans struggle to come up with a replacement and a key senator, Lamar Alexander (R-TN), has declared that the effort is more a repair job than a demolition. *A must read*

 

Today in Obamacare: Here’s why it’s so hard for Republicans to agree on replace

Sarah Kliff, Vox

  • This article shines a light on the disconnect between Republican statements criticizing high deductibles and cost sharing and their support for policies that promote high-deductible health plans paired with health savings accounts. Sarah Kliff argues that until Republican rhetoric and policy positions align, it will be hard for the party to coalesce on a plan. *Interesting perspective*

 

Math geniuses size up 5 ACA change ideas

Allison Bell, LifeHealthPro

  • Here’s what the actuaries have to say about some popular health law proposals. *Worth the time*

 

The G.O.P.’s Health Care Death Spiral

J.B. Silvers, The New York Times

  • This op-ed by a former health insurance executive covers the ramifications of “repeal and delay” for the individual insurance market. He agrees that the ACA has its flaws, but repealing it without a viable replacement is not an option if the replacers really want to use private insurers to meet society’s goals of access, affordability and quality in healthcare. *Interesting perspective*

 

How Trump’s immigration ban threatens health care, in 3 charts

Julia Belluz and Sarah Frostenson, Vox

  • Our interest in this article is the reminder that broader immigration reform efforts could impact provider access. It’s certainly a topic to watch since provider shortages present challenges for health plan sponsors. *Skim this one*

 

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With President Trump promising an ACA replacement bill of his own “very soon” and congressional Republicans struggling to reach agreement, two GOP senators – Bill Cassidy of Louisiana and Susan Collins of Maine – are proposing to let states choose their own path. Under the newly-proposed “Patient Freedom Act,” states would have three choices: To continue to operate under the ACA, to implement their own reforms with some federal funding and strings attached, or to design their own reforms without federal help.

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A founding member of the House Freedom Caucus, Rep. Mick Mulvaney (R-SC) is known as a budget hawk -- a deficit hardliner and one of the key Republicans who led the charge to oust former Speaker of the House John Boehner in 2015. As President Trump’s pick to lead the Office of Management and Budget, Mulvaney will be tasked with keeping tabs on government revenue and spending and overseeing the Trump administration’s regulatory actions, which also means he’ll play a central role in health care and entitlement policy.

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