Where are we going with "Repeal and Replace"?
By Stephen P. Bond & Stephen P. Bond on November 14, 2016
Throughout his election campaign, a consistent “promise” made by Donald Trump was that his Administration would “repeal and replace Obamacare.”
People probably assumed they knew what he meant by “repeal,” but there was not a lot of publicity about what he intended to replace it with.
Now that he will be in a position to make good on his promises, what should employers anticipate may be the result when the smoke clears and “Trumpcare” is successfully enacted?
The short answer is that we cannot know; but we can make an educated guess of what to anticipate. Here are some suggestions to keep in mind (based on prior pronouncements of the Trump campaign, the Republican Party, and prior efforts in Congress to repeal the Act) as to how Obamacare might end up being changed in the months/years ahead, in ways that are germane to you and your business:
• Timing. The political reality is that, even with Republican majorities in Congress, a direct assault, full-on repeal of the entire Act is not likely to be successful due to the ongoing threat of Senate filibuster. More likely, a combination of Presidential Orders, amendments to regulations, and defunding of programs will be the tactic – and, given that millions of individuals are enrolled in Obamacare currently, a massive scrapping of all coverage is unlikely – more likely changes would be rolled in over a year or two to afford those individuals the chance to find replacement coverage.
• Pre-Existing Conditions. The current ban on excluding people from insurance coverage has been extremely popular – it is not likely to be deleted in the future.
• Children on Parents’ Coverage. Also quite popular, and also not likely to be dropped from any future program.
• The Individual Mandate. This requirement, and the penalty that goes with it, are likely to be dropped.
• Employer Mandate. This requirement may also be dropped. A fallback position could be to switch back to the more generally accepted notion that a “full time employee” is one who works 40 hours per week (not the current 30). This could eliminate the mental gymnastics some employers have been doing counting the hours for each employee to avoid going over 30.
• Insurance Exchanges. Also likely to be discontinued. The emphasis would be on using open competition to lead to lower prices, given a boost by allowing insurers to sell across State lines.
• Tax Credit to Support Insurance Purchases by Individuals. Likely alternative to the tax subsidies in the current plan.
• Tax deduction for individuals who buy insurance/expanded use of HSA accounts. Both could be changes that would encourage individuals without employer-provided insurance to buy their own coverage.
• Cadillac Tax. This existing tax on high-end insurance plans has been delayed under Obamacare and would likely be discontinued entirely.
• Wellness Programs. It’s likely that a revised plan will expand on employers’ ability to implement wellness programs which can potentially reduce plan costs while minimizing EEOC authority to interfere.
It’s all speculation until the new Administration announces their plans; but, Brouse McDowell will provide further insights as the details become available.