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Affordable Care Act Future Uncertain

Now that we will have Donald Trump as president and the GOP retaining control of Congress, all bets are off on the future of the Affordable Care Act.

It’s likely that Trump will hand over the health insurance reform portfolio to Speaker Paul Ryan, who along with the House leadership in July published a blueprint for how they would like to repeal and replace the ACA.

Trump assailed the ACA during the campaign, saying he would abolish it. But that may be easier said than done as Democrats in the Senate would certainly mount filibusters to keep some legislation from passing the upper house.

And it could turn out to be extremely unpopular now that 20 million more Americans have health coverage than before the law was enacted.

There’s a chance that Trump and congressional Republicans will push to end the individual and employer mandates, eliminate ACA insurance reforms such as minimum essential benefit packages, and pare back and restructure the premium subsidies.

But those moves would send tremors through the market, unraveling the ACA system and could lead to millions of people losing coverage.

This is what we know about the president-elect’s plans for America’s health care. He has proposed:

  • Eliminating public health insurance exchanges.
  • Setting up free health savings accounts for people with high-deductible insurance plans.
  • Setting up state-based high-risk pools for people with medical conditions that make it hard to get coverage on their own.
  • Allowing insurers to sell coverage across state lines to “boost competition and drive down prices.” This idea may yield the benefits some think as insurers would have to set up doctors networks in other states.
  • Eliminating the “Cadillac” tax on high-priced health plans. This, however, could lead to a tax on the funds that employees use to pay their premiums. Currently most employees pay their premiums with income earned before it is taxed.

He has not specifically mentioned the employer mandate. Some observers have said that if the ACA is repealed that he would retain the employer mandate but at the highest threshold of 100 full-time employees and not the current 50.

The House Plan

The House plan includes the following:

  • Expanding the use of health savings accounts linked to high-deductible health plans, so that patients can direct their treatment and “shop around” for the best deal for procedures.
  • Supporting coverage portability, whereby individuals would purchase a health care plan that they can take with them from job to job. The plan would include a universal, advanceable and refundable tax credit for individuals and families.
  • Only allowing employees to pay for their premiums on a pre-tax basis up to a certain level (meaning that above a certain premium level, they would have to pay for the premium using income that’s already been taxed).
  • Allowing small businesses to pool together to buy health insurance, in order to garner economies of scale – and thus less expensive coverage.
  • Allowing consumers to buy insurance across state lines.
  • Preserving employee wellness programs.
  • To tackle costs, the plan includes reforming medical liability laws to reduce large awards for medical malpractice.

The unknown

The big question mark is how far the appetite will go for an outright appeal of the ACA, as it would be a major market disruption, particularly for the millions of people who now have coverage through their jobs or health insurance exchanges.

Just eliminating exchanges would leave a huge hole in the market and something viable would have to replace it.

Any attempts to repeal the ACA will also be met with stiff resistance from Democrats, who could mount a filibuster to keep legislation from advancing. However, if the changes are embedded into the budget, the filibuster rules would not apply and the Republicans could push it through on a simple majority vote.

Finally, because an outright elimination would strand millions of Americans without health insurance, it is unlikely that Republicans would try to repeal it without a replacement.

The best strategy for our clients now is to stay the course and continuing complying with the law. No changes will be immediate and we will keep you informed of changes here as they occur.

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