Insights

The State of Health Care Reform in the Senate


Politics never stops, and neither do we. As we were preparing for publication, the state of health care continued to be a fluid issue. Developments are released almost hourly. Most recently, late in the afternoon on July 25, 2017, the Senate, by a vote of 51-50 (with Vice President Pence casting the tie-breaking vote) advanced debate on the Senate’s health care plan to repeal and replace the ACA. The next step is debate on the Senate floor as to the bills and amendments put forth for this purpose, including the Senate’s proposal (the Better Care Reconciliation Act, or BCRA), the House’s proposal (the American Health Care Act or AHCA), and the 2015 Senate bill that repealed the ACA without any type of replacement. Although the advancement means the Senate has cleared a big hurdle in moving the ACA repeal-and-replace effort forward, it remains unclear whether Senate Republicans can come to an agreement and pass a formal bill to repeal or replace the ACA.

Looking at how we got here, on Monday, July 17, 2017, the GOP’s efforts to repeal and replace the ACA came to an abrupt halt when two additional senators, Jerry Moran (R-KS) and Mike Lee (R-UT), announced their lack of support for the current bill. The GOP had already lost the votes of two Republican senators, Rand Paul (KY) and Susan Collins (ME), so the GOP wouldn’t have enough support to advance the BCRA to a procedural vote. Senate Majority Leader Mitch McConnell subsequently admitted that the BCRA would fail and claimed he would instead seek a vote on straight repeal of the ACA with a two-year delay (to allow time to debate and enact some type of replacement).

The idea of straight repeal was embraced by President Trump earlier in 2017 and was embraced by the House and GOP senators in 2015 when they voted “yes” on HR 3762, Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, which was a bill intended to repeal the ACA. The vote in 2015 didn’t carry as much weight as it would today because the GOP knew at that time that President Obama would veto it.

Then, on July 19, 2017, the Congressional Budget Office (CBO) released a report analyzing an updated version of HR 3762 entitled “Obamacare Repeal Reconciliation Act of 2017.” Its provisions are more focused on straight repeal and do not include replacement provisions. The report states that under this design, 32 million more individuals would be uninsured by 2026 as compared to the ACA. Additionally, the repeal-only bill would reduce the deficit by $473 billion.

Three GOP senators – Shelley Moore Capito (WV), Susan Collins and now Lisa Murkowski (AK) – have indicated they’ll vote "no" on a repeal-only bill. Even if the repeal-only approach gains traction, it comes with risks. Not only does it assume that Democrats would join the efforts to fix the ACA (as a replacement bill outside of the reconciliation process would require 60 votes); it also places U.S. insurance markets in potential chaos due to the uncertainty during the interim.

On July 20, 2017, the CBO released a revised report reflecting recent amendments to the BCRA, including a $45 million appropriation to fight opioid addiction, and allowing individuals to use tax credits to purchase catastrophic coverage. Importantly, the report did not include an analysis of Senator Cruz’s provision to permit insurers to offer policies that do not cover essential health benefits and that may be health underwritten. The report stated that under this proposal, 22 million additional individuals would be uninsured by 2026, which is similar to the previous version of the BCRA. However, the deficit would be reduced by $420 billion, which is significantly more than the previous version.

On July 21, Senate Parliamentarian Elizabeth MacDonough stated that several key provisions of the BCRA may not pass a Byrd Rule challenge. As a reminder, the Byrd Rule is one that governs the reconciliation process in the Senate. A bill may pass the Senate with only a simple majority as long as the provisions included in the bill are related to the federal budget. If a provision does not impact the budget, it may be challenged. A successful challenge would mean that the provision would need to be removed, revised or pass a supermajority vote (60+ votes) to proceed.

The provisions of concern are the cut to federal funds for Planned Parenthood, the prohibition of federal subsidies toward the purchase of insurance that covers abortion and a six-month waiting period for enrollees who have a gap in coverage. The waiting provision is a key one in that it serves as an incentive for healthy individuals to carry continuous coverage. An incentive is seen by many as necessary because the BCRA repeals the individual and employer mandate penalties. If healthy individuals drop insurance, the premium cost for the remaining insureds may increase.

What's Next
The Senate will move forward in debating and potentially amending the proposals to repeal and replace the ACA. The Senate is limited to 20 hours of formal debate, but there will be more private discussions and debate as the next steps unfold. There’s no specific timeframe for the Senate, but most anticipate the Senate will move forward quickly as they still have other agenda items (including tax reform) on the table and are restricted by reconciliation deadlines. It’s unclear whether Republican senators will come to any consensus during the next few days of debate, or whether they would reach across the aisle and work with Democrats on a bipartisan approach.

If no legislation is passed, what does this mean for employers? Again, the ACA remains the law of the land and employers will need to continue with ACA compliance until further notice. Primarily, this means that large employers will need to continue to offer affordable minimum value coverage to all full-time employees and comply with employer reporting requirements to avoid potential penalties — that is, unless the Trump administration determines there’s a lawful way to avoid enforcing the ACA and communicates non-enforcement sufficiently for employers to rely upon.

As always, we will continue to update you on any developments.