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The GOP’s Proposed ACA Replacement Plan

An employer’s guide to the GOP’s proposed ACA replacement plan

ACA replacement planLast week House Republicans unveiled their Obamacare replacement plan. What does this mean for employers, and how likely is Congress to give it the green light?

Since virtually the day it was passed, members of the GOP have promised to “repeal and replace” the Affordable Care Act (aka Obamacare). Last week, House Republicans took an important step forward in starting the repeal process by revealing their ACA replacement plan, called the American Health Care Act.

What does the proposed plan look like?

Key provisions of the House’s proposal include:

  • The elimination of both the individual and employer mandates. (The provisions of the ACA that require individuals to obtain coverage and certain employers to provide coverage to full-time employees, respectively.)
  • Delaying the Cadillac Tax from taking effect until 2025. (The Cadillac Tax was a proposed tax on high-cost health insurance plans that was supposed to take effect in 2020.)
  • Replacing the existing subsidies, which are tied to a person’s income and the cost of insurance in their area, with age-based tax credits.
  • Expanding the allowable size of health savings accounts (HSAs) that can be coupled with high-deductible health plans.
  • Instituting a penalty for individuals who do not maintain “continuous” coverage.
  • Maintaining popular ACA provisions that prohibit health insurers from denying coverage to people with pre-existing conditions and allow dependents to remain on their parents’ health insurance until age 26.
  • Phasing out federal funds for states that participated in the ACA’s Medicaid expansion program starting in 2020, and transitioning Medicaid funding to a “per capita allotment.”

Read the full text of the bill on the House GOP website.

What do people think about the House’s ACA replacement plan?

Reactions to the proposed plan have, predictably, been mixed. Critics from both parties have been particularly vocal.

Democrats have said that the proposed ACA replacement plan won’t live up to promises from the GOP and President Trump that a new law would truly offer better and affordable care.

“The Republican repeal bill would charge [Americans] more money for less care,” according to a statement released by Rep. Frank Pallone (D-NJ) and Richard Neal (D-MA), the top Democrats on the House Energy and Commerce and Ways and Means committees, respectively.

Several influential members of the Republican party have also spoken out against the proposal, including Sen. Rand Paul (R-KY), who called the proposed plan “Obamacare Lite,” on Twitter.

The American Medical Association also released a statement outlining its opposition to the GOP’s proposed ACA replacement plan.

“While we agree that there are problems with the ACA that must be addressed, we cannot support the AHCA as drafted because of the expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations,” the letter stated.

But the proposed plan has plenty of support, as well, including from President Trump and other industry experts, especially when it comes to how the plan will affect employers.

“Because the employer mandate is not out there, you are going to see more variation of coverage in the future. Employers will work to make sure their benefits that they offer are specifically tailored to meet the needs of their specific populations,” according to James Gelfand, senior VP of health policy for The ERISA Industry Committee.
The Congressional Budget Office (CBO) has yet to score the bill, so as of now there’s no clear estimate of what the plan will cost if implemented, or exactly how many Americans might lose coverage.

What’s next?

Both the Ways and Means and Energy and Commerce committees voted Thursday to advance the bill. A third House committee, the Budget Committee, is expected to take up the measure on Wednesday. Committee members will be in charge of taking the two measures advanced by the other two committees and blending them into one bill. House GOP leaders are looking to have the legislation on the House floor as early as the following week.

Despite the promising early activity in the House, Republicans might still be facing a steep uphill battle to get the legislation through Congress in light of the opposition within the party from the far right.

In all likelihood, there will need to be a number of negotiations, both within the Republican party and with Democrats in order to get the bill through Congress and to President Trump’s desk.

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