One common question I have been getting since the day Donald Trump was elected to be President is “When will the Affordable Care Act (ACA) be repealed and will I lose my insurance.” The short answer to this is you will not lose your insurance, even if you are one of those 20 million people that the gained coverage when the ACA went into place, that the media loves talking about. Also, don’t expect any changes to occur until 2019 at the earliest or even 2020. To understand why I’ll take you through a very brief civics lesson and then explain some changes you should expect to see.
To fully repeal the ACA Republicans in the Senate would need to have 60 votes. This is because to block a filibuster, a procedure that Democrat senators could use to prevent any bill from reaching a vote, Republicans would need a supermajority or 60 votes. Based off that information alone the full ACA will not be able to be repealed officially. So how are Republicans going to actually to repeal the ACA? They can use what is called Budget Reconciliation. Congress has already passed one such budget bill on January 20th that started to defund portions of the ACA. That is exactly the goal of Budget Reconciliation; it is used to either fund a program or in this case defund a program so it can no longer exist. The ironic thing is that this procedure was used to pass many portions of the ACA bill in 2010.
Now that we have a basic understanding of how Republicans will repeal the ACA, let’s go over what changes to expect and when they will take effect. Insurance carriers plan out their years about 10-12 months in advance. This means many of the insurance carriers are already wrapping up what they are planning to offer for 2018. Speaker Paul Ryan said that he expects to have a full plan to repeal and replace the ACA by early March; however, that is still too late for Insurance carriers to make any changes for 2018. By those to facts alone, this already pushes any significant changes back until 2019. Last Sunday, President Trump was interviewed before the Super Bowl and was asked on a timeframe for the ACA repeal. He told Fox News that he could see it taking until the end of the year or even into next year for a full repeal and replacement to be completed and ready to be voted on. If this were to leak into next year, this could potentially push any significant changes back to 2020.
You could write an entire book about the changes we are most likely going to see in any replacement of the ACA. For that reason, I selected three changes that come up most often in all of the proposed plans by Republicans. First expect to see the individual mandate and the employer mandate gone. With the information floating around currently, the individual mandate is a sure bet to be thrown out. The employer mandate, which states large employers most offer health insurance to employees, has been a hot topic of debate. Many Republicans have been in favor of seeing this mandate go away however it may be tough to gather enough votes to pass this portion. That being said, if a vote were to happen today, I would expect the employer mandate to go away.
Next, the overall goal of any replacement would be to make healthcare more affordable and end the skyrocketing premiums. This is why when you hear me talk about any alternative I often refer to it as the ACA 2.0 because that’s truly what the intentions are, create something that lessens the burden of purchasing health insurance r receiving healthcare. With that being said, many ideas are being discussed on how to help people in any situation deal with buying insurance many of which revolve around tax credits or using pretax earnings.
One essential change needed to stabilize the individual market is the creation of state high-risk pools. Currently, everyone with individual insurance is lumped into the same pool, which is why many people saw a 50% increase in their insurance this year. If carriers were allowed to put them in their own pool, carriers would have more control of the exposure they have on the high-risk population. This will greatly help the rest of the population from seeing more drastic increases. A quick side note, if this were to happen high risks and people with pre-existing conditions would still be covered and there would be a cap as to what insurance carriers could charge. Republicans are also looking at a clause that would let these people see a significant premium deduction after two consecutive years of coverage. Another change we are almost sure we will see is the marketplace subsidies going away and see them replaced with a tax credit instead for low-income households. Another almost guarantee will be an increase in HSA limits, again being able to use pre-taxed dollars to pay for healthcare.
Lastly, expect reporting to get scaled back. Reporting in itself will never be gone completely from health insurance for group plans. The way it is done surely will change. The changes that would come to reporting would stem from other portions of a replacement of the ACA. For example, one suggestion is to end 5500, 1094 and 1095 reporting. Instead of doing that employers would be responsible for indicating on an employee’s W2 what benefits they have or if they do not receive benefits. Either way expect to see a major change to reporting, it is hard to say exactly what the changes will be, but like I discussed it would have to do with showing which employees have benefits.
Again, I would just like to stress that this is only the tip of the iceberg. We will not know the state of health care until there is an actual proposal being voted on. Until then I will do the best I can to keep you updated. As always, feel free to reach out if you have any questions.
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