This ACA Brief is the sixth in a series of installments that will closely track congressional and administrative actions relating to ACA provisions that impact large employer-sponsored health plans.

Early Friday morning, at 1:40 a.m., Senate Republicans’ most recent effort to advance health care reform was rejected by a vote of 49 to 51. Titled the Health Care Freedom Act (the HCFA), the bill served as an amendment to the Patient Protection and Affordable Care Act (ACA) repeal legislation passed by the US House of Representatives in May (as detailed in our May 9th ACA Brief).

The HCFA was offered as a limited, or “skinny,” repeal of select provisions of the ACA. Specifically, the HCFA would have reduced the individual and employer shared responsibility penalties to zero and postponed the effective date of the medical device tax until calendar year 2021. Notably, the bill would not have amended or repealed the ACA’s “Cadillac Plan” tax, and would not have repealed ACA changes to health flexible spending account limits or taxes on prescription medications. It also would have altered the ACA’s insurance market reforms, such as restrictions on annual and lifetime limits or essential health benefit (EHB) rules.

Republican leadership offered the HCFA as a placeholder measure, assuring Senate members that a final, more robust repeal bill would be developed in conference with the U.S. House of Representatives. Accordingly, the HCFA contained only the least controversial tax provisions for the Senate Republican caucus. However, senators including Lindsey Graham (R-SC), Ron Johnson (R-WI) and Bill Cassidy (R-LA) publicly expressed concern that the House might forego conference and attempt to pass the “skinny” bill as final legislation. This proved to be the pivotal issue that culminated in Senator John McCain’s (R-AZ) decisive vote against the HCFA alongside fellow Republican Senators Susan Collins (R-ME) and Lisa Murkowski (R-AK).

What this means for large employers

This may not signal the end of health care reform efforts that could impact large employers. On Monday, July 31, a bipartisan coalition of members from the US House of Representatives announced a plan to unveil an ACA “repair” plan in an effort to restart the discussion. The measure would:

  • Amend the current employer shared responsibility rules to raise the threshold for applicable large employer (ALE) status from 50 to 500;
  • Repeal the medical device tax; and
  • Increase flexibility for state innovation programs, including, potentially, programs that impact EHB rules for employer-sponsored plans.

Given the fast-paced nature of ongoing discussions, it is difficult to determine whether this legislation will be taken up by Congress. However, it stands to reason that any future developments will likely result from bipartisan efforts driven by an entirely new set of priorities going forward.