How Elections Could Affect Employer Health Plans
Republican presidential candidate Donald Trump has vowed to repeal the Affordable Care Act if elected. Democratic candidate Hillary Clinton would only make slight changes. As the presidential elections get closer, how could these scenarios play out?
What Repeal Would Mean
In January, Congress passed a bill for the first time that would repeal the Patient Protection and Affordable Care Act (the ACA or “Obamacare”) without a replacement. President Obama vetoed the bill.
Although the ACA has many faults, repealing it would have consequences. A new report by the Washington-based Urban Institute found the number of uninsured people would rise by 24 million by 2021, an increase of 81 percent. Overall, 53 million Americans would be uninsured, compared to 30 million if the law was left intact.
The Committee for a Responsible Federal Budget found Trump’s plan to repeal Obamacare would cost nearly $550 billion over the next decade and would nearly double the number of uninsured, causing nearly 21 million people to lose health insurance coverage.
The Urban Institute found repeal of the ACA would reduce federal government spending on healthcare for the nonelderly by $927 billion between 2017 and 2026. However, those savings would come at a steep cost. The authors found 81 percent of those losing coverage would be working families. About 66 percent would have a high school education or less and 40 percent would be young adults.
By 2021, there would be 15 million fewer people with Medicaid coverage. About 9 million people who would have received tax credits for private health coverage would no longer receive assistance.
What No Repeal Means
Critics of Obamacare say the ACA has caused health insurance premiums to skyrocket and resulted in millions of Americans losing their health plans.
“In short, Obamacare is wrecking the private health insurance market,” wrote Jeffrey H. Anderson, a senior fellow at the Hudson Institute, in The Weekly Standard. “…. Obamacare’s proponents say the overhaul has greatly increased the number of people with health insurance coverage…. What they tend to omit is the fact that most of the ‘newly insured’—about 60 percent—have merely been dumped into Medicaid. According to the Congressional Budget Office, Obamacare has added only 8 million people—just 2.5 percent of the U.S. population—to the private insurance rolls.”
The U.S. Chamber of Commerce weighed in last year in an article titled, “How Obamacare Will Deliver Another Blow to Small Businesses in 2016,” arguing thousands of small businesses face higher premiums and fewer choices under the ACA and will be “hit hard unless federal agencies or Congress step into the ring.”
Republicans in the House of Representatives have formed a task force to do just that. In June, the House Republican Task Force on Health Care Reform released a 37-page proposal. This template for a future law will give consumers more choices at lower costs, pave the way for more cutting-edge cures and treatments, and strengthen Medicare, according to proponents. It retains some of the most popular features of Obamacare, but eliminates others:
- Allows children to stay on their parents’ coverage until age 26.
- Prohibits insurers from denying coverage to people with pre-existing conditions.
- Expands consumers’ ability to contribute to and use Health Savings Accounts (HSA).
- Limits premiums for older individuals to no more than five times those of a younger person. The ACA mandates a three-to-one ratio (older adults charged only three times more than younger adults). Republicans believe this drives away younger Americans, since it makes their premiums proportionately higher as compared to their claim costs.
- Allows consumers to buy health insurance across state lines.
- Allows employers to offer wellness programs tied to a financial reward or surcharge.
- Creates universal access programs funded by innovation grants to give financial support for those who cannot afford coverage.
- Gives states block grants to run Medicaid programs.
- Gradually increases the Medicare eligibility age from 65 to 67.
- Ensures taxpayer dollars are not used to for abortion services.
- Establishes a refundable tax credit for people who lack job-based coverage. Obamacare provides subsidies for people who do not qualify for Medicaid to buy insurance.
- Eliminates the “Cadillac Tax” but caps the tax deductibility of employer-based plans based on the value of the benefits. The Cadillac Tax is an excise tax designed to reduce excessive healthcare spending by discouraging employers from offering overly rich health plans. Beginning in 2018, plans that cost more than $10,200 for an individual or $27,500 for a family plan will be subject to the tax, which is 40 percent of the amount that exceeds those thresholds.
- Allows states that have already expanded Medicaid eligibility under the law to maintain the additional coverage, although it would prevent other from doing so.
- Protects employers’ rights to self-funding their health coverage – a right they have now, although there has been some movement by the administration to impose more federal regulation.
We will keep you informed of political and legal developments that affect your employee health coverage. To discuss your organization’s coverage needs or concerns, please contact us.
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In this issue:
This Just In...
How Elections Could Affect Employer Health Plans
COBRA and the Affordable Care Act
Most Workers Don’t Plan to Retire at 65—or at Any Age
What’s Hot in Insurance? Short-Term Care Policies