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By Sara Hansard
If all Obamacare taxes are repealed initially, the law’s replacement will be “substantially less than what we have now,” Sen. Bill Cassidy (R-La.) said Feb. 14.
If all money used to pay for the ACA is repealed in the first budget reconciliation bill, “There will be no money left” for a replacement, Cassidy told a conference of health insurance brokers. Penalties on individuals and employers that don’t meet Affordable Care Act requirements are likely to be repealed in the first reconciliation bill Congress considers, said Cassidy, who co-sponsored the Patient Freedom Act to replace the ACA. But other ACA taxes, such as the health insurance fee or the tax on medical devices, could be addressed as part of a second reconciliation bill or as part of tax reform legislation Republican leaders are planning to act on later in the year, Cassidy said.
Speakers at the National Association of Health Underwriters annual Capitol Conference underscored the difficulties Republicans will have in repealing and replacing the ACA while meeting President Donald Trump’s pledge to cover everyone at lower cost, including people with medical problems. Congress is likely to begin movement on Republicans’ plans to repeal and replace the ACA in the coming weeks.
“Repeal and replace is inextricably linked to tax reform,” Cassidy said.
With their 52-48 majority in the Senate, Republicans have a better chance of passing budget reconciliation bills, which affect federal revenues or spending, while policy bills require 60 votes to pass. Changes in the ACA’s age band premium differential between older and younger enrollees, which insurers have called for, or changes in essential health benefit requirements, will need 60 votes to pass, Cassidy said.
There is talk in Congress of keeping the ACA’s 10-year $700 billion Medicare savings, achieved by reducing inflation increases hospitals and other Medicare providers receive, Cassidy said. But the ACA is estimated to cost $1.7 trillion over 10 years, so a $1 trillion shortfall would still be left if all ACA taxes were repealed immediately, he said.
Some of the ACA taxes could be addressed as part of comprehensive tax reform, and then more funding would be available for a health-care replacement bill, Cassidy said.
Penalties on individuals and employers yield about $200 million over 10 years, and those are likely to be repealed in the first reconciliation bill, Cassidy said. The medical device tax will “eventually” be repealed, he said.
But the pharmaceutical industry, hospitals and insurers “volunteered” to pay taxes under the ACA, Cassidy said. “It works for their business model that everybody is insured,” so it makes sense to wait until those taxes can be addressed in a second reconciliation bill and comprehensive tax reform, he said.
The process “is occurring over the next one to six weeks,” Cassidy said.
Steps need to be taken to stabilize the individual market within the next 30 days, Marilyn Tavenner, chief executive officer of America’s Health Insurance Plans (AHIP), told the conference, which attracted about 1,000 health insurance brokers. Health plans must begin submitting 2018 premiums for regulatory approval as early as April, she said. Tavenner was administrator of the Centers for Medicare & Medicaid Services from 2013 to 2015.
Subsidies, such as the advance premium tax credit and cost-sharing reductions, should be continued in their entirety, Tavenner said. Full reinsurance payments to cover high-cost claims should be covered for 2016 along with transitional risk pool funding in 2017, she said. Congressional Republicans accused the Obama administration of illegally paying insurers some of the money collected under the reinsurance program that the ACA stipulated was supposed to go to the general treasury.
The Department of Health and Human Services is expected to release a proposed rule this week addressing individual market stabilization problems. Under the proposal, people enrolling after normal sign-up periods are likely to be required to provide verification of life changes such as births or marriages, and grace periods for not paying premiums are likely to be reduced. In addition, people familiar with the proposal say it may change the age rating bands so that older people can be charged 3.49 times the amount younger people are charged, instead of the 3 to 1 ratio required under the ACA. That would raise premiums, before subsidies, for older enrollees, while reducing premiums for younger enrollees.
More effective permanent risk management techniques, such as a reinsurance program implemented in Alaska, as well as a plan in Minnesota to provide subsidies to people who earn too much to qualify for ACA assistance, should be considered nationally, Tavenner said. The ACA exchanges attracted an older, sicker population than was expected, and many small, new plans ended up making big payments under the law’s risk adjustment program.
“It will be important for us as we talk to members of Congress and this administration, that we don’t destabilize the employer market as we’re talking about repairing the individual market,” Tavenner said to applause. “This is particularly true as we enter the conversation around the Cadillac tax or the employer deductibility of health-care costs,” which shouldn’t be pulled into the debate about changes to the individual market, she said.
Many Democrats as well as Republicans have called for repealing the ACA’s Cadillac tax on high-cost employer plans, and some Republicans have called for considering capping the tax exclusion on employer-provided health insurance. Many economists say the tax exclusion on employer-sponsored health plans has contributed to runaway underlying costs.
AHIP would support extending transitional plans that don’t comply with the ACA after 2017, when they currently are supposed to terminate, Tavenner said. But those plans should not be open to new members, because that would tend to destabilize the individual market, she said.
Tavenner also called for not including payments to brokers as administrative expenses under the ACA’s medical loss ratio requirements, which limit how much insurers can spend on administrative expenses. Brokers have said the limitation has led to cutbacks in funding for brokers, who are needed to explain health insurance to individuals and small businesses.
To contact the reporter on this story: Sara Hansard in Washington at email@example.com
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Information on the Patient Freedom Act of 2017 (S. 191) is at http://src.bna.com/mdE. Information on the National Association of Health Underwriter's Capitol Conference is at https://nahucapitolconference.wordpress.com/capitol-conference-2017/.
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
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