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Is The ACA Dead? Not So Fast

November 14, 2016

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With last week’s election decided in President-elect Donald Trump's favor, the Patient Protection and Affordable Care Act (“ACA”) is at risk. Republican officials have sought the ACA's repeal beginning almost immediately after its enactment. With Republican Congressional majorities in both houses next year, and a Republican President, changes to the ACA, if not repeal, seem imminent. Republicans, including current Speaker of the House Paul Ryan, have openly stated that “repealing Obamacare” is a high priority, and, based on a recent poll, doing so is also the Republican voters' highest priority. Health insurers are already publishing guidance aimed at consumers, including plan enrollees, who are certain to have questions about the future of the ACA and how changes to it will affect their health coverage.

A complete repeal of the ACA is unlikely in part because Republicans do not have a supermajority in the Senate, and Democrats could filibuster a bill intended to completely repeal the ACA. Instead, Republicans may seek to alter the ACA by eliminating the funding required to implement key provisions of the law.  In 2015, Republican politicians passed a budget reconciliation bill that would have eliminated the ACA’s employer shared responsibility penalties. (President Obama vetoed this bill.) Budget reconciliation bills only require a simple majority to pass and cannot be filibustered. However, a budget reconciliation bill may only include provisions that affect spending and revenue-related matters, which means this type of bill cannot be used to repeal or revise provisions of the ACA that are not spending or revenue-related.

If we look to actions taken by past Presidents, there are several other ways President-elect Trump could try to quickly transform the ACA once he takes office. First, he could order government agencies to immediately stop or limit ACA enforcement, but he may face political and legal obstacles in doing so. Second, he could try to halt or delay regulations that are still proposed or pending. Third, he could order agencies to alter or rescind the substantial amount of sub-regulatory guidance that currently interprets the ACA. Based on past Presidents, the more recent the guidance, the more likely it is to be targeted.

At this point in time, the ACA is still controlling law. Although its future is precarious, nothing is expected to change until President-elect Trump takes office on January 20, and, even then, there are no certainties regarding what will change and when. In fact, Press Secretary Josh Earnest told reporters at a press briefing on November 9, 2016, that implementing the ACA is a top priority for President Obama until he leaves office.

Further, President-elect Trump and Congressional Republicans have offered few specific details about what will replace the ACA, and in particular how it will affect employers. Proposals to replace the ACA published by Congressional Republicans in June 2016, include capping the employer-provided health benefit tax exclusion, expanding the use of Health Savings Accounts ("HSAs") by increasing contribution limits and other means, and encouraging the use of health reimbursement arrangements ("HRAs"). Although these broad proposals offer some clues, it is too early to know what to expect.

This means that continued compliance with the ACA is the only way to avoid risking penalties for the time being. That being said, we realize that some employers considering or implementing significant changes to their health benefit programs to comply with the ACA, or negotiating these changes with unions, may want to re-think their strategies now in light of the imminent change in the ACA statutory and regulatory mindset in Washington.

For more information, please contact:

Edward Bernard

415-995-5807 Direct Phone
415-995-3527 Fax

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Anne Hydorn

415-995-5893 Direct Phone
415-995-3404 Fax

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Elizabeth Masson

415-995-5106 Direct Phone
415-995-3593 Fax

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