***** UPDATED: June 28, 2017 ****
On June 22, Senate Republicans issued a discussion draft entitled the "Better Care Reconciliation Act of 2017", which is the Senate version of Affordable Care Act (ACA) repeal and replace legislation. The House of Representatives narrowly passed their version of ACA repeal and replace legislation, the American Health Care Act (AHCA), on May 4, 2017. Senate Majority Leader Mitch McConnell (R-KY) set a goal for the Senate to vote ahead of Congress' July 4 recess, though it is still unclear whether the vote will take place in that timeframe. There is also a question whether or not there are the 50 votes needed to pass the 142-page bill. So, while the vote timing and tally remain uncertain, there is much we do know about the bill, its implications and what to look out for next.
Highlights of the Senate Bill
- Both the individual and employer mandates would be eliminated after 2015, with notably no requirement for purchasing or maintaining coverage.
- Cost-sharing subsidies for low-income individuals on the marketplaces would be eliminated beginning in 2020.
- Most ACA taxes would be eliminated — such as the medical device and the net investment income taxes — with the excise tax on high-cost health plans, commonly referred to as the Cadillac tax, remaining in place and effective in 2026.
- Insurance subsidies for the ACA marketplaces would be scaled back from 400 percent of federal poverty level to 350 percent beginning in 2020.
- The ACA's Medicaid expansion would be phased out over a period of three years, with reduced funding beginning in 2021 and the elimination of all funding by 2023.
- The Medicaid program would be overhauled by ending the open-entitlement provided by the federal government, capping federal funding, and allowing states to receive lump sum block grants for certain beneficiaries.
- Minimum essential benefits — such as maternity care, prescription drug coverage and emergency services — would remain in place. However, states may waive out of certain benefit requirements.
- The prohibition on annual and lifetime benefit limits would be preserved, but states may waive out of these requirements.
- Insurance issuers may charge five times more (up from three times) for older individuals than younger.
- The amount that may be saved pretax in a health savings account would be increased, and spouses would be able to make additional contributions.
- Preexisting coverage and dependent coverage until age 26 would be left untouched. However, Politico reports that states could waive out of certain requirements that would weaken benefit coverage as applicable to preexisting conditions.
The Senate needs 50 votes for the bill to pass, but with only 52 Republican Senators, supporters can only afford to lose two Republican votes, with the expectations that all Democratic Senators will vote in opposition and Vice President Pence would support it should he need to vote to break a tie. Some Republican Senators have expressed initial concerns with the bill, though it is still too early to know how they will ultimately vote.
The bill will next head straight to the Senate floor for open debate and amendment. Several amendments are expected to be offered and adopted, so the bill could be significantly revised.
The Congressional Budget Office (CBO) announced plans to release its score on the proposed bill early the week of June 26, 2017. The release of the CBO score may shed some additional light on which Senators are in favor of the bill, and those who may oppose it. Keep in mind that even if this bill passes the Senate, it would still need to go back to the House for a vote, since it's a different bill than the AHCA bill the House had previously passed in May.
Guidance for Employers
As the news of the Senate's repeal and replace legislation will create great debate over the next week and perhaps longer, employers should remember that the ACA is still the law and, accordingly, should continue all ACA –related compliance activities. In addition, it seems extremely likely that any bill passed and signed into law will have a transition period of several years during which individuals would be eligible for tax credits and employers would be required to report offers of employer-sponsored health coverage to the IRS. As the American Health Care Act showed, proposed legislation may not be enacted, and nothing changes until a bill is signed into law by the President. As proposed ACA repeal and replace legislation evolves, employers should be aware of potential new legislation, but should primarily focus on the task at hand — complying with the current law.
On June 26, 2017, the Senate issued an updated draft of the Better Care Reconciliation Act (BCRA). The BCRA now includes a "continuous coverage" provision meaning starting in 2019, individuals who had a break in continuous insurance coverage for 63 days or more in the prior year will be subject to a six month waiting period before coverage begins. Consumers will not have to pay premiums during the six month period. The provision is meant to discourage people from waiting until they're sick to purchase health insurance.
Also, on June 26, 2017, the Congressional Budget Office (CBO) issued its score of the updated BCRA. The CBO projects that the BCRA would leave 22 million more Americans uninsured over a decade. The estimated coverage losses are just slightly lower than the House-passed version of ACA "repeal and replace" legislation. The Senate legislation would also cut the federal deficit by $321 billion over 10 years, driven by cuts to Medicaid and less assistance for people purchasing private coverage on their own. Those savings exceed the $119 billion target set by the House bill.
What's Next? Senate Republicans have put off a procedural vote on the BCRA until after the July 4th recess. A new blog will be posted when new information is available after the Senate makes additional changes to the bill and votes in the coming weeks.
Follow our Road to Repeal series, as we report on this proposed legislation's path through the Senate vote – whether this week or in coming weeks depending on the Senate's timeline.
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Other articles in this series:
ACA Road to Repeal: American Health Care Act
ACA Road to Repeal: Compliance in a Shifting Regulatory Landscape
ACA Road to Repeal: The AHCA Passes the House — What It Means for Employers Now
ACA Road to Repeal: Zombies vs. Vampires
ACA Road to Repeal: What Does Repeal and Replace Really Mean?
ACA Road to Repeal: Executive Order
ACA Road to Repeal: If the ACA Is on Its Way Out, What Comes Next?
ACA Road to Repeal: A State-Based Approach to ACA Replacement
ACA Road to Repeal: Will High-Risk Pools Return?