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NAW News

Health Care Reform

- January 2015

Throughout the nearly five years that have elapsed since enactment of the Affordable Care Act (ACA), Congressional Republicans have waged an unrelenting battle – a battle that will continue to rage in the new GOP-controlled 114th Congress – to repeal/de-fund/delay/alter the President’s signature first-term legislative achievement known as Obamacare. Most recently, that battle featured House passage of HR 2575, “Save American Workers Act,” a bill to replace Obamacare’s 30 hours per week definition of “full time employee” with a 40 hours per week standard. This bill, with implications for the scope of Obama Care’s employer mandate, won the votes of 18 (of 199) Democratic House Members despite the White House’s veto threat. Although “Save American Workers Act” did not advance in the US Senate, this legislation is expected to be re-introduced on the first day of the 114th Congress and taken up by the full House in the first days of its First Session.

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. Among the issues 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 change the definition of “applicable large employer” to one who employs 100 or more full-time equivalent employees; and to protect self-funded health plans by excluding stop-loss insurance coverage from the definition of health insurance coverage. All face the challenges of sufficient Democratic strength in the Senate to sustain legislative filibusters, and President Obama’s presence for another two years in the White House.

Obamacare reform that gained a measure of visible support among Democratic Senators in the 113th Congress included: the offer of an additional, lower cost health plan (called the “Copper Plan”) to give consumers more affordable options; facilitation of the sale of health insurance across state lines; and liberalization of Obamacare’s small business health care tax credits. The prospect for the advancement of any of these proposals in the new Congress remains to be seen.

In the regulatory space:

In February 2014, the Treasury Department issued final rules for implementation of the ACA’s employer mandate. Rules include transition relief delaying until January 1, 2016 enforcement for employers with 50 – 99 full-time employees. Employers with 100 or more full-time employees must offer affordable minimum essential coverage to 70% of full-time employees on January 1, 2015; the ACA-mandated 95% threshold begins on January 1, 2016.

In May 2014 the Internal Revenue Service (IRS), in an authoritative question-and-answer document, ruled that employers may not provide employees with a lump sum of money with which to purchase health insurance on an exchange because such “employer payment plans” do not satisfy the requirements of the ACA. The IRS may penalize a large employer (to which the employer mandate applies) that proceeds in this way $100 per day for each employee that goes into the individual market.

In November 2014, the Department of Health and Human Services (HHS) issued its “Notice of Benefit and Payment Parameters for 2016.” The proposed rule allows states to choose new benchmark plans for 2017. The Affordable Health Benefits Coalition (AHBC) submitted comments in connection with this rulemaking (NAW is member of the AHBC Steering Committee) in support of the benchmark approach for essential health benefits (EHB) and for clarifying that newly-selected benchmark plans may not include state benefit mandates enacted after December 31, 2011, and may only contain mandates that states can demonstrate have a strong evidence base. AHBC further endorsed the proposal’s approach to drug coverage under the benchmark approach; and cautioned the Center for Medicare and Medicaid Services (CMS) against an approach to out-of-pocket maximums/cost sharing that impedes the availability of HSA (Health Savings Accounts) – compatible High Deductible Health Plans (HDHP), and against a broader habilitative services mandate that results in benefits not typically covered under a small employer plan and which will increase premium costs.

From the judiciary:

On June 30, 2014 the US Supreme Court held in Burwell v. Hobby Lobby Stores and Conestoga Wood Specialties v. Burwell (the cases were joined at the Supreme Court) that family-owned corporations are “persons” under the Religious Freedom Restoration Act and can’t be required to pay for female employees’ contraceptives that conflict with business owners’ religious beliefs. Legislation to overturn the Court’s decision (S. 2578, Protect Women’s Health from Corporate Interference Act) failed cloture in the Senate two weeks later.

On July 21, 2014, a three-judge panel of the US Court of Appeals for the Fourth Circuit and a three-judge panel of the US Court of Appeals for the District of Columbia Circuit issued contradictory rulings in cases (King v. Burwell and Halbig v. Burwell respectively) challenging the payment of premium subsidies under the ACA to qualifying persons who purchase insurance in exchanges run by the federal government. The Fourth Circuit’s panel unanimously upheld the validity of those subsidies while the panel of DC Circuit judges voted 2 – 1 against them. On September 4, 2014 the DC Circuit threw out the decision of its three-judge panel and agreed to rehear the case en banc. On September 30, 2014, the US District Court for the Eastern District of Oklahoma ruled in Pruitt v. Burwell that the premium subsidies are only payable in states that set up their own exchanges. Although a disagreement among the circuits technically doesn’t yet exist, the US Supreme Court agreed on November 7, 2014 to review the Fourth Circuit’s decision in King. At issue is whether the ACA limits premium tax credits only to qualifying insurance buyers living in one of the 16 states that have set up their own exchanges. Arguments are expected to be heard during the first week of March 2015 with a decision in late June.