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Changing the Employee Benefit Conversation

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Congress is in the midst of a weeklong recess for the Independence Day holiday and the Senate is working on making changes to the Better Care Reconciliation Act (BCRA), their bill to repeal and replace portions of the ACA. There are several points of contention over the bill, including the gradual elimination of the ACA’s Medicaid expansion, the overall dramatic changes to Medicaid funding, the size and scope of the premium tax credits, general funding structures of the bill and which ACA taxes to keep or scrap, funding for the opioid epidemic, and other issues. Senate Majority Leader Mitch McConnell (R-KY) is seeking to hold a vote sometime in the next two weeks, although at this time, it is unlikely that the bill would be considered next week given the range of disagreements within the Republican caucus, with the week of July 17 likely the earliest it would be considered.

There are currently 10 Republican senators who have expressed opposition to the bill as drafted, and as Congress is using the budget reconciliation process to modify the ACA, Senate Republicans can only afford to lose at most two votes for passage in the upper chamber. With the hard deadline of September 30 for any reconciliation bill to be signed into law during this fiscal year, late last week, President Donald Trump suggested that Congress abandon any immediate plans for replace and focus exclusively on repeal now, tweeting “If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!” His tweet followed a letter sent by Senator Ben Sasse (R-NE), one of the chamber’s more conservative members, urging a similar strategy.

However, the message undermines the president’s argument that he has been making since he was a candidate to do both simultaneously and seems to have completely misunderstood the impasse among Senate Republicans and what the reasons are for those who are opposed—mainly that they don’t want to force repeal without a defined replacement lined up to ensure their constituents don’t immediately lose their coverage. Repealing the law without a replacement would result in 18 million Americans immediately losing their coverage, and growing to 26 million, by eliminating the ACA’s subsidies, Medicaid expansion, and consumer protections, while throwing the individual health insurance markets into chaos with skyrocketing premiums.

Some Republicans had initially suggested this approach in January, but backed away after several moderate Republican senators strongly advised against it for how it would immediately cut benefits and undercut their pledge that nobody would lose their coverage under a Republican plan. Moderates argued that once the benefits were cut, Democrats wouldn’t come to the table and their constituents would blame the coverage losses exclusively on Republicans. Current replacement plans have not been much more favorable on the coverage losses—roughly 22 million Americans to become newly uninsured—while still spending a net of hundreds of billions of dollars on the replacement plan. This has caused the worry by many moderates to find a way to pass a replacement to avoid coverage losses and implement a new plan in one package deal.

The insistence on passing one combined repeal and replace package is because advancing a reconciliation package that only repeals the ACA without a replacement would mean they would need Democratic support on an eventual replacement package. While there are two reconciliation vehicles this year, one was marked for healthcare and the other for tax reform. Using the first reconciliation for repeal-only would mean they would have to use the second vehicle for the replacement and abandon their tax reform plan, or pass a replacement under regular order, which would require 60 votes for passage in the Senate instead of the 51 needed through reconciliation. As Republicans have found it challenging even getting 50 of their own senators to agree with a plan, it would be increasingly challenging to have to get support from, at a minimum, all Republican senators plus eight Democrats to pass under regular order.

To help get agreement on a single package, several senators have proposed changes to the legislation since the bill was released two weeks ago. These efforts are designed to win enough support to reach the approval of 50 senators for passage, assuming Vice President Mike Pence were to cast a tie-breaking vote. Each of these proposals would need to be scored by the Congressional Budget Office (CBO) and cleared by the Senate parliamentarian on following the rules of budget reconciliation. As a reminder, while the House was able to vote on their bill without a CBO score, the Senate does not have that luxury and the full bill text as voted on must have been first reviewed by the CBO.

Proposed changes that have not been formally amended into the BCRA and are yet to be scored by CBO include:

  • Permit insurers to sell any type of non-ACA compliant health plans as long as they also sell at least one ACA compliance plan. This was a change requested by Senator Ted Cruz (R-TX), who was among the first and loudest critics of the BCRA when it was released.
  • Permit individuals to pay for premiums using funds from a health savings account. This would effectively equalize the tax treatment of health insurance for those in the individual market from those who receive employer-sponsored insurance. This was a change was also requested by Senator Cruz.
  • Provide $45 billion over 10 years for substance abuse treatment, specifically aimed at the opioid epidemic. This is targeted at garnering support from Senators Rob Portman (R-OH) and Shelley Moore Capito (R-WV), both holdouts who have asked for more funding than the $2 billion in 2018 initially provided for opioid funding in the BCRA.
  • Retain the ACA’s net investment tax, valued at $172.2 billion over 10 years, to help offset the costs for low-income individuals to purchase health insurance with tax credits. The tax is a 3.8% surcharge on investments for individuals who earn more than $250,000 per year. Retaining the tax would also help to ease perception of the bill as a tax-break for the wealthy while cutting benefits for lower-income Americans.
  • Retain the ACA’s Medicare tax increase, valued at $58.6 billion over 10 years, which adds 0.9% in additional taxes for high-income individuals. This could also help to offset additional benefits for low-income individuals to purchase insurance.
Posted 4:01 PM

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