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NAW News

Health Care Reform

- January 2014

Throughout the four-year “life” of the Affordable Care Act (ACA), Congressional Republicans have waged an unrelenting battle – a battle that continues to rage today – to repeal/de-fund/delay/alter the President’s signature first-term legislation achievement known as Obamacare. Most recently, that battle featured an unsuccessful effort, played out against the backdrop of a continuing funding measure needed to keep the federal government open, to defund the still-new health care law. (See separate Staff Report on Congress, Continuing Resolutions and Continuing Crises.)

This effort led to a partial shut-down of the federal government, and was followed by the seriously flawed roll-out of the new health care marketplaces. Then add the numerous administrative delays affecting several parts of the ACA – not the least of which is the one-year delay in the “employer mandate” – to ensure that this highly-pitched partisan battle will continue on both a policy and political plane through the 2014 mid-term Congressional elections and, in all likelihood, beyond. 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.

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 delay and, ultimately, 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; to change the definition of “applicable large employer” to one who employs 100 or more full-time equivalent employees; to repeal the funding mechanism for the transitional reinsurance program in the individual market; and to protect self-funded health plans by excluding stop-loss insurance coverage from the definition of health insurance coverage. All face a steep uphill climb given Democratic control of the White House and the U.S. 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 U.S. Senate.) A proposed rule to implement the employer mandate had been promulgated by the IRS on January 2, 2013, 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.

On November 13, 2013, the Departments of Health & Human Services (HHS) and Treasury issued a final rule implementing mental health parity requirements to ensure that health plan features such as copayments, deductibles and office visits aren’t more restrictive for patients with mental health or substance abuse disorders than they are for patients with physical disorders. The next day, the President announced that the federal government would use its “enforcement discretion” and permit pre-ACA health plans to continue for one year, and one month later HHS issued a bulletin significantly relaxing the application of the ACA’s individual mandate on consumers whose policies have been cancelled, by permitting a more liberal application of the ACA’s hardship exemption.

A few items of note from the judiciary:

On June 28, 2013, the U.S. 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. On July 15th, Stissell appealed this case to the U.S. Circuit Court of Appeals for the District of Columbia Circuit.

The U.S. 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 U.S. Constitution. On December 2, 2013, the U.S. Supreme Court declined to take up this case.

The issue in Hobby Lobby and Conestoga Wood Specialties Corp. v. Sebelius is whether a for-profit company can refuse to comply with a federal law on First Amendment religious freedom grounds In late November, Hobby Lobby, in which the U.S. Court of Appeals for the 10th Circuit ruled for the company, and Conestoga Wood Specialties, in which the U.S. Court of Appeals for the Third Circuit ruled for the government (as have three other federal circuit courts of appeals) were consolidated for review by the U.S. Supreme Court.

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 U.S. District Court for the Eastern District of Oklahoma. A similar case (Halbig v. Sebelius is before the U.S. District Court for the District of Columbia.