The House of Representatives took the first affirmative step towards repeal and replacement of the Affordable Care Act (ACA) today. After a failed attempt to pass legislation earlier this year, the House gathered the needed votes to pass the American Health Care Act (AHCA) by a narrow 217-213 margin this afternoon. However, given that this is only the first preliminary step in a longer process, and given that the AHCA would probably be substantially revised before final implementation, employers should take no immediate actions in response to this development.
Summary Of House Legislation
The main focus of the House’s legislation is on the individual insurance market, but some of these changes would impact employer plans if finalized. The following are key changes that would take effect if the House version of the AHCA went into effect:
- Pre-existing condition exclusions would be able to be eliminated in states that request a waiver;
- Medicaid expansion would be repealed;
- Income-based exchange subsidies would be replaced with age-based tax credits;
- The difference between insurance costs for a younger person and an older person could increase;
- Essential health benefits in insurance plans could be eliminated if a state requests a waiver; and
- The individual mandate penalty would be eliminated.
While these items would not directly change the coverage offered by an employer’s group health plan, they could impact the market in which many employers shop for health insurance coverage.
The notable change for employers would be the repeal of the employer mandate, which requires employers to choose either offering coverage or face the risk of paying a penalty. The elimination of the employer mandate would allow employers to be more flexible when deciding on which employees would be offered coverage. In addition, if this version of the ACHA passes, Health Savings Accounts and Flexible Spending Accounts limits would increase.
At this point, the House bill must be sent to the Senate for consideration. This process will likely lead to revisions by the Senate, and if the ACHA emerges from that legislative chamber successfully, a second vote by the House of Representatives would be required for passage. Because the future of a Senate vote is uncertain, and because we cannot yet predict what the final version might look like, employers should make no changes to their current compliance strategy until legislation has passed both houses of Congress and is signed by the president.