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NAW News

Health Care Reform

- October 2013

Three and one-half years following the highly partisan enactment of the Affordable Care Act (ACA), President Obama’s signature first-term legislative achievement also known as Obama Care, the battle being waged by Congressional Republicans to repeal/de-fund/delay/alter the still-new health care reform law rages. At the same time, regulatory efforts to complete the implementation of this lengthy, complicated and still little-understood statute continue, as do more modest legislative reform efforts.

As Staff Reports goes to press, a divided Congress and the White House are at a stalemate over a short-term (through November 15, 2013) funding resolution (known as the “Continuing Resolution” or “CR”) needed to keep the Federal government running into the new fiscal year that began at midnight on October 1, 2013. The stumbling block: what, if anything, to do about Obama Care. Republicans in control of the House of Representatives have passed, largely along party line votes, CRs that have proposed to de-fund Obama Care, delay its implementation for one-year, repeal its medical device tax, and delay implementation of the individual mandate. The United States Senate, controlled by the Democrats, has voted along strict party lines to reject any Obama Care “poison pill” and the President has vowed to veto any bill that seeks to alter the ACA.

Assuming the short-term CR is resolved soon, this drama is expected to play out again in a matter of weeks. The Federal government reached its borrowing limit last spring and the Treasury is expected to run out of money available to pay the Nation’s bills sometime between mid-October and early November necessitating an increase in the Federal government’s debt ceiling. Many Congressional Republicans consider the debt ceiling a superior legislative vehicle for advancing their Obama Care goals. At approximately the same time, a new CR will be needed to fund those Federal departments and agencies that are not by then covered by their “regular” appropriations bill (at this point, none of the regular appropriations bills for the fiscal year that began on October 1 have been enacted), so this storm with Obama Care at the eye seems likely to continue for the foreseeable future.

Meanwhile, NAW and our allies in the employer community are working in various issue or subject matter-specific coalitions (principally Affordable Coverage Project, Affordable Health Benefits Coalition, Small Business Coalition for Affordable Health Care, StartOver!, and Stop the HIT Coalition) in the health care space to fix some of the Affordable Care Act’s most serious flaws. Included in the legislative mix are bills to repeal the annual fee on health insurance providers (a/k/a the hidden health insurance tax or “HIT”); to repeal the employer mandate; to repeal the statutory cap on deductibles for health plans in the small group market; to bring the ACA definition of “full time employee” in line with the traditional 40-hour work week; and to change the definition of “applicable large employer” to one who employs 100 or more full-time equivalent employees. All face a steep uphill climb given Democratic control of the White House and the US Senate.

In the regulatory space:

In February 2013, the Administration issued guidance delaying for one year implementation of the ACA’s limitation on out-of-pocket expenses for non-grandfathered group health plans that use more than one provider to administer major medical and pharmacy benefits. Thus, group health plans with more than one benefits administrator don’t have to combine their tallies of members’ out-of-pocket spending into one total until 2015.

Guidance issued by the Internal Revenue Service (IRS) delays for one year (through January 1, 2015) the ACA’s employer mandate (IRC §4980H) and the information reporting requirements that go with it (IRC §§6055 and 6056). (Legislation to codify the delay was passed by the House of Representatives in mid-July and merged with a House-passed bill to similarly delay implementation of the individual mandate. That legislation has not been considered by the US Senate.) A proposed rule to implement the employer mandate had been promulgated by the IRS on January 2, 2103, and proposed regulations regarding the reporting requirements are now pending. Final rules are anticipated by year’s end.

In September 2013, the Administration announced a one-month delay (to November 1, 2013) in the date that the Small Business Health Options Program Marketplaces (a/k/a SHOP Exchanges) operated by the Federal Department of Health & Human Services (HHS) will be open for small employer enrollment.

On October 1, 2013 (the same day the new ACA “marketplaces” or “exchanges” opened for business), the once-delayed (from March 1, 2013) requirement under the new §18B of the Fair Labor Standards Act (FLSA) that employers notify their employees about their coverage options in the exchanges went into effect. However, just weeks prior to the October 1 deadline, the Employee Benefits Security Administration (EBSA) released guidance indicating that no penalties would accompany failures to comply.

Three items of note from the judiciary:

In June 2013, the US District Court for the District of Columbia, in Stissell v. Department of Health & Human Services, granted HHS’s motion for dismissal, rejecting Stissell’s Origination Clause and Commerce Clause challenges to the ACA’s individual mandate.

The US Court of Appeals for the Fourth Circuit, in Liberty University v. Lew, 4th Cir., No. 10-2347, 7/11/13, upheld the ACA’s employer mandate as a valid exercise of Congress’ power to regulate commerce under the commerce and taxing and spending clauses of the US Constitution. The appeals court further rejected Liberty’s challenges based on the First (free exercise and establishment of religion clause) and Fifth (equal protection clause) Amendments and the Religious Freedom Restoration Act (RFRA). The appeals court declined to consider Liberty’s challenge to the ACA’s preventative services for women mandate.

Finally, Pruitt v. Sebelius, in which the State of Oklahoma (Pruitt is Oklahoma’s Attorney General) is challenging the legality of ACA premium subsidies in Federally-run exchanges, remains pending in the US District Court for the Eastern District of Oklahoma.