Punchy campaign promises are easy. Actually implementing them once you win is the hard part. This is especially true for the Affordable Care Act, aka Obamacare. Trump and Republicans in Congress are already struggling with how to keep their tricky campaign promise: repeal Obamacare without leaving millions of people without health insurance.
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ACA is on the way out…but what will replace it?
But the good news for employers is that Congress has no great incentive to tamper with group health insurance arrangements.
Just this week, Trump dialed back expectations on his promise, noting how complex healthcare is and that a solution will take time to work out—maybe even a year or two. Because his plan lacks specifics, we turned to a GOP document—unveiled last June—that includes their ideas for how to make over ACA. Here’s what Trump and the GOP might do:
- Eliminate the employer mandate and its complicated administrative schemes, including the complex IRS reporting process.
- Eliminate the individual mandate.
- To help individuals without access to employer- based health insurance buy coverage on the market, replace the ACA’s tax credits for purchasing coverage in online public health insurance marketplaces with monthly advance refundable tax credits the individual could use to purchase any policy available to him or her. The GOP plan would allow individuals to buy policies across state lines.
- Eliminate the Cadillac Tax and replace it with a rollback of the exclusion, for income and payroll
tax purposes, of the value of employer-provided health insurance, to the extent that value exceeds
a cap. The cap would be adjusted for age and to account for geographical differences in the cost
of medical insurance. Unlike the Cadillac Tax, the GOP proposal would not count the value of health savings account (HSA) contributions against the cap. - Allow spouses to make catch-up contributions to the employee’s HSA account.
- Allow qualified medical expenses incurred before HSA-qualified coverage begins to be reimbursed tax- free from an HSA account as long as the accounts established within 60 days after the expense was incurred.
- Set the maximum contribution to an HSA at an amount equal to the sum of the maximum annual deductible and out-of-pocket expense limits.
- Expand accessibility for HSAs to certain groups, like those who get services through the Indian Health Service and TRICARE.
- Permit health reimbursement arrangements (HRAs) to make reimbursement of employees’ premium costs for individual coverage—at least for small employers.
- Facilitate the ability of small businesses to band together for health insurance purposes, pooling their risks and leveraging economies of scale. Basically, this amounts to allowing small employers to form self-insured multiple employer welfare arrangements (MEWAs).
It’s certainly a lot of variables and moving parts to consider. But the good news for employers is that Congress has no great incentive to tamper with group health insurance arrangements. Half of all Americans get health insurance through an employer, and surveys show that most group plan enrollees are pretty satisfied with their coverage. We will keep a close eye on this one, but don’t expect a grand solution anytime soon.