As Congress wrestles with the monumental task of repealing and replacing the Affordable Care Act (ACA), one thing is clear: the process is not as cut and dried as it was made out to be during last year's campaign. Congressional leaders are hoping to be putting the finishing touches on their plan before the summer recess. If they are unsuccessful, we may be looking at next spring before we really know what the future of health insurance looks like.
Based on current proposals and what we know the White House is hoping for, we can see a number of possible outcomes once the final legislative package is put together. We have listed those outcomes below. Bear in mind that none of this is set in stone. Congress and the White House could go through this entire process and still end up changing nothing. Only time will tell.
Mandates Never Go Away
One of the key sticking points of the ACA are the individual and employer mandates. In a perfect world, a repeal bill would get rid of everything – mandates included. This is not a perfect world. Furthermore, the GOP does not have enough votes in the Senate to avoid a filibuster which, they know, is likely no matter what they send to the floor. So they must use budget reconciliation to pass any reform package they hope to see become law.
Budget reconciliation would not allow them to repeal either mandate. The best they can do is reduce mandate penalties to zero. This is good in that doing so would effectively eliminate any threat associated with noncompliance, but the mandates would still not completely go away.
Reduced Medicaid Funding
Current GOP proposals call for rolling back Medicaid funding that was expanded under the ACA. Right now, states wishing to expand Medicaid coverage in order to enroll more consumers get quite a bit of federal money to do so. In fact, 31 states are receiving more money under Medicaid expansion. If the current proposal becomes law, that funding will be cut considerably.
This doesn't necessarily mean a reduction in Medicare payroll taxes. But it does mean that Medicare growth will be limited, at least temporarily, because states will not be able to expand their programs in order to enroll more consumers.
Tax Credits and Savings Accounts
Early estimates suggest that repealing the most important parts of the ACA could lead to upwards of 18 million people losing health insurance coverage. Current proposals call for creating tax credits and health savings account incentives that encourage people to purchase their own insurance.
Tax credits are always tricky to implement, and health savings accounts already exist to some degree. It's not clear what the GOP would do to improve on either one. But let's say they pull it off. Implementing both would likely mean payroll adjustments in order to provide immediate relief rather than having to wait until taxpayers file their annual returns. This could create somewhat of a messy situation trying to figure out what to withhold and where to send the money.
One thing we know for sure is that ACA compliance remains in place right now. It will continue in place for the foreseeable future, even if the original legislation is repealed and replaced. The fact remains that the political will does not exist in Congress to fully repeal the ACA and go back to what we had before. So no matter what they come up with, employers will be required to comply at some level. We will do our best to stay ahead of the game.