Some laws are fairly straightforward. Others -- typically, those that tackle more complicated or vexing social problems -- are substantially more complicated. The more complicated laws often resemble jigsaw puzzles: a collection of separate statutes designed to collectively accomplish a specified set of societal objectives. The Patient Protection and Affordable Care Act (PPACA) certainly falls into the "jigsaw puzzle" category.
PPACA's sheer size and scope makes it difficult for even those familiar with the subject matter -- the health care delivery system -- to approach it with a coherent understanding as to what the overall puzzle looks like (or, should look like). It also is why PPACA is destined to remain a political lightning rod: complicated legislation is easy for both supporters and detractors to distort and misrepresent. Nonetheless, those who have looked closely at PPACA's statutory jigsaw puzzle already understand that:
- PPACA, likely by design, is a work in progress: there is no final picture one can see which can be used as a guide to help put together the puzzle the right (and most cogent) way.
- Many of the individual puzzle pieces were poorly drafted and simply do not fit together well (and in some instances, do not fit together at all).
Some examples already have emerged and by now are well known. That individual mandate penalty? Really, it's a tax, according to last month's Supreme Court decision. And the hope that the Supreme Court's decision would bring much-needed closure to the legal controversies surrounding PPACA was dashed by news that yet another legal controversy has surfaced: whether the uninsured working poor will only be able to purchase taxpayer-subsidized coverage on one of the new health insurance Exchanges in 2014 if a state -- rather than the federal government -- actually sets up and operates the Exchange. Some legal scholars say "yes" and point to the language used in the relevant tax statute. Numerous PPACA proponents furiously insist "no" and point to recent tax regulations that gloss over the statutory distinction. Stay tuned.
No doubt, other poorly-crafted puzzle pieces will appear. We have already identified a handful of other, similar statutory "glitches." Some may prove to be real traps for the unwary, while others may prove to be nothing more than an excuse to engage in more political theatrics. But the overwhelming majority of PPACA's provisions are real and clear enough, and full implementation of thousands of pages of statutory change now is less than 18 months away. Political theater has its place, but to most employers it just brings uncertainty -- and there comes a time when one needs to be pragmatic. That time has come.
So what should a prudent employer do? Understand and accept that change is certain and fast approaches, and that an employer needs to prepare for it -- including, perhaps, choosing between offering comprehensive health insurance to all of its U.S.-based full-time employees and their dependents, or face a potentially substantial annual tax penalty. But understand also that the law remains a work in progress, and that key parts of the regulatory scheme are flawed -- whether as a result of drafting errors, attempts by the present Administration to rationalize what Congress wrote in 2010, or otherwise -- and that a politically-divided Congress is not likely to fix any of the statutory problems that now exist anytime soon. So while politicians stake out their respective policy positions, employers need to move to comply with that which is both clear and clearly-applicable and understand what remains unresolved and/or potentially capable of being challenged or avoided.
As legal counsel, we believe it is important to practice discernment and to differentiate between valid rulemaking and potentially untenable rulemaking. When the economic stakes are high -- and PPACA certainly raises the economic stakes for the large majority of employers in this country -- it is vital that employers be in a position to decide for themselves what to do. Accordingly, between now and the end of 2012, we will be publishing a series of articles, analyses and commentaries to help employers piece together how PPACA affects them. Some of the content will be of general interest: healthcare Exchanges; new reporting and disclosure obligations; identifying the employer/employee within the scope of the employer mandate; and similar topics. Other content will focus on specific challenges and opportunities employers in certain industries are likely to face, because the financial burdens imposed by PPACA will weigh more heavily on some employers than on others -- and those new financial burdens are potentially disruptive. Many articles will identify and explain new requirements and rules that are simple, straightforward and non-controversial. Other articles will identify poorly-crafted "puzzle pieces," where the statute isn't clear, where following the statute may have unintended consequences, or where federal agencies appear to have taken legally-untenable positions that employers may decide to challenge or (where possible) avoid.
In the end, we expect that each published piece will find its own audience, and that each employing organization ultimately will be able to put together a cogent picture for itself by collecting those pieces that are relevant to it. Accordingly, we encourage all employers to at least consider each piece published as part of this newsletter, and to practice discernment when deciding what is best for them and their respective organizations.
The first articles -- essentially building blocks to lay the basic foundation for the series of articles -- follow below. The first piece is a simple, straightforward overview of the employer mandate. The second is a timeline for employer-sponsored group health plan compliance initiatives under PPACA. These pieces provide some of the basics for understanding a complex law and how all the pieces fit (or in some cases do not fit) together. The next article, which seeks to explain health insurance Exchanges and put them in perspective is slated for publication on Tuesday, August 7, 2012