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New President, New Congress; A WPI Insider Briefing on the ACA

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President Trump and congressional Republicans campaigned on the promise to "repeal and replace" the Affordable Care Act (ACA). Littler Mendelson's Workplace Policy Institute (WPI) offers a glimpse into where we stand.

As congressional Republicans seek consensus among themselves and the White House about the contours of legislative action and timing, President Trump made his intent to fulfill his campaign promise clear on his first day in office. One of the President's first official acts on Inauguration Day was to sign an executive order "Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal" (ACA Order).

The ACA Order states that it is "the policy of my Administration to seek the prompt repeal" of the ACA. Pending repeal, the ACA Order announces "it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market."

Furthermore, the ACA Order includes the phrase "to the maximum extent permitted by law" which is recognition that the power of the regulators to nullify or modify the ACA in whole or in part is limited by the contours of the statute itself and the rulemaking requirements of the Administrative Procedure Act (APA). A change of the enforcement policy as contemplated by the executive order can come without congressional action, yet cannot revoke the underlying statutory requirements without legislative action. Furthermore, as the ACA Order notes, to the extent that carrying out the directives requires revision of regulations issued through notice-and-comment rulemaking, the agencies must comply with the APA and other applicable statutes in promulgating any regulatory revisions.

'Three buckets' to 'repeal and replace'

Action taken by the federal agencies pursuant to the ACA Order will be one of the three buckets that has been described as comprising repeal and replacement of the ACA. Repealing portions of the ACA and replacing it with what proves politically and procedurally viable through the reconciliation process is another bucket. Congress has already begun this process by passing a budget resolution that sets the stage for the use of reconciliation to pass legislation in the Senate through an expedited process requiring mere majority approval. The ACA reconciliation bill passed by the Republicans in the last Congress and vetoed by President Obama serves as a marker for the bill. Among other things, it eliminated the penalties for the ACA employer and individual mandates and the unpopular "Cadillac" tax.

In response to a growing call to repeal and replace as much of the ACA as possible along with rising concerns about disruptions to individuals, the insurance market and health care industry, Republicans are exploring what components of the "replace" legislation can be included in the reconciliation bill. Looking to prior Republican proposals, the legislation may contain provisions on Health Savings Accounts (HSAs), tax credits for purchasing health insurance and high-risk pools. Capping the exclusion for the favorable tax treatment of employer-provided health coverage also appears to be on the table as a way to help pay for the legislation and reduce healthcare costs.

The third bucket

The use of the budget reconciliation process to achieve fully the GOP vision for repealing and replacing the ACA is limited. Only provisions with a budgetary impact can be included in the filibuster-proof reconciliation bill. Thus, provisions of the ACA that do not change the level of federal spending or revenues or the debt limit cannot be eliminated or modified through this expedited process. While the onerous employer mandate penalties can be eliminated, it appears that the reconciliation process may not be used to revoke the onerous employer reporting requirements. Provisions that fall outside of the reconciliation process fall within a third bucket of actions. These require congressional action, but must be considered through "regular order" — meaning that 60 votes are needed for Senate passage. Accordingly, such standalone bills will require bipartisan support. Thus far, Senate Democrats have remained united in their opposition to dismantling the ACA. Whether this will extend to subsequent bills to fill out the parameters of what comes in its stead remains to be seen.

Posted In: Congressional Activity; Affordable Care Act (ACA); Executive Branch

Want to know more? Read the full article by Ilyse Schuman and Michael J. Lotito at Littler Mendelson

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