This article was originally published on Linkedin PULSE on November 28, 2016.
If there’s one thing the Republican party has promised over the past six years, it has been a repeal and replacement of the Patient Protection and Affordable Care Act, or Obamacare, and with a Republican majority in congress and Trump as a President-Elect, we can expect to learn more about his proposed health care policies in the coming weeks and months.
One point that is clear in this time of uncertainty is that the role of the benefits advisor is more important than ever. I reached out to two of Maxwell Health's advisor partners, Jim Rogan, Senior Vice President of Corporate Benefits at M.E. Wilson, and Suzy Johnson, President and Owner at Employee Benefit Advisors of the Carolinasto see what questions they’re hearing from clients, and how they’re advising them going forward.
What We Know
“Repealing and replacing” the PPACA has been a cornerstone of both the GOP platform and President-Elect Trump’s campaign for some time now. Trump’s plan for health care reform, as outlined on his website, provides perhaps the most insight into the goals of his new administration, but at just over 1,000 words, there aren’t many details as to how the new administration would go about implementing such a plan, or how resulting changes would manifest. Oliver Wyman’s analysis and overview of Trump’s plan is informative if you’d like more details.
Following his first meeting with President Obama after he was named President-elect, Trump indicated that he would look to preserve popular provisions under the Affordable Care Act, including allowing children to stay on their parent’s policies until 26, and not allowing insurers to deny coverage due to a pre-existing condition. These stipulations were not included in the plan on his website.
Others in the Republican party have also put forward proposed reforms and replacements, including A Better Way for Health Care from Speaker Paul Ryan, and The Patient CARE Act from Senators Hatch (R-UT), Burr (R-NC) and Representative Upton (R-MI). There are at least two repeal bills in Congress, The Empowering Patients First Act introduced by Rep. Tom Price (R-GA) and The Health Care Choice Act introduced by Sen. Ted Cruz (R-TX). Notable think tanks American Enterprise Institute and The Foundation for Research on Equal Opportunity have also introduced plans, dubbed Improving Health and Health Care: An Agenda for Reform and Transcending Obamacare and Achieving Market-Based Universal Coverage, respectively. It will be interesting to see if and how this new administration incorporates ideas from these more robust proposals.
Repealing and replacing the PPACA would be no easy task, even with a Republican majority in Congress. A full repeal would require 60 Senate votes, but with only 52 Republican seats, this would require a significant bi-partisan effort, not only to pass a new policy, but to ensure that the work is not undone by a new administration in the future. The PPACA was implemented and refined over the course of years, and any changes under the Trump administration will surely follow similar timelines. In the short term, all current mandates, reporting requirements, and penalties remain in effect.
For more reading on what’s to come, check out Vox’s analysis of the replacement plans from Trump and the GOP. Conservative thinkers Avik Roy and Doug Holtz-Eakin also joined Politico’s Pulse Check to analyze the healthcare reform platform Trump ran on, and the changes they expect to see next.
Thoughts from Jim Rogan, Senior Vice President of Corporate Benefits at M.E. Wilson
I think what this time really requires is a deep breath, to start. First of all, people are afraid that something will be taken away from them, however, it’s important to remember that the PPACA mostly affects individual policies.
"The vast majority of Americans are insured under a group insurance policy through their employer, and of those policies, most never had a pre-existing condition exclusion to begin with. For employer groups, which is what we deal with, I don’t foresee much changing at all in terms of insurance. Most employers won’t be affected - not immediately at least - so we can take a “wait and see” approach."
The biggest area of uncertainty for employers is the 1095 reporting. I would think that at least for 2017 those requirements will remain unchanged. The burden of reporting has fallen to employers to provide evidence of participation, and if the individual mandate is repealed under the Trump administration - which is a lynchpin of his plan - that would remove the employers’ responsibility to prove and track that they participated. That is a big deal. I think if they got rid of that, you would hear a collective applause across the country. We’ll look for that, but still need to prepare as if they won’t repeal it. The next question I hear is, ‘What about the money I spent on a third party to track this stuff?’ My answer to that is to let it go. They’ve already spent the money, and won’t get it back.
The other question I’m getting is, “What about affordability testing? What if they remove not only the responsibility to track everything, but also to prove that what we did offer was affordable and met minimum value?” My answer is always that an employer still has to do the right thing. The law was designed to make sure an employer did the right thing when they offered healthcare coverage, but most employers already offered coverage, and most employers did the right thing anyway.
Whether you like the legislation or not, it’s not called Obamacare, it’s called the Patient Protection and Affordable Care Act, and most people don’t have a problem with the “Patient Protection” part. It started with the elimination of pre-existing condition clauses, allowing kids to stay on their parents’ plan until 26, no lifetime maximums, that all copays must count towards an out-of-pocket maximum, and promoting wellness screenings. I don’t think that stuff will go anywhere.
We’re also going to hear about an expansion of Health Savings Accounts, so consumerism is coming back into the picture in a big way. Again. They are a really valuable tool that we embraced from 2004 to about 2012. They can be a very helpful tool to employers and employees. Expanding those can only be a positive.
Thoughts from Suzy Johnson, President and Owner at EB-Advisors of the Carolinas
The section I am most hopeful about is Trump’s fifth point in his health care plan around transparency: “require price transparency from all healthcare providers, especially doctors and healthcare organizations like clinics and hospitals. Individuals should be able to shop to find the best prices for procedures, exams or any other medical-related procedure.”
"I have been advocating for transparency for some time now. Health insurance is expensive because healthcare is expensive, and I look forward to a time when every consumer has the benefit of knowing exactly what every MRI, test, service, procedure and overnight stay costs (both the insurance reimbursement and the portion that will be owed by employee) prior to agreeing to have the service provided."
This is what is missing in our healthcare system and I believe full transparency has the ability to reduce costs in our system more than any other single change. If we know what a car costs before we purchase it, why wouldn’t we be able to know what a $50,000 hip surgery is going to cost in advance? It is ludicrous that we don’t have access to this information from hospitals today, and I look forward to a time in the near future where they must be required to publish costs in advance.
I would also be delighted for my clients if we can relieve some of the administrative reporting requirements they face under this law. Those will go away if the individual mandate is repealed. This has taken an enormous amount of time to figure out, and some still haven’t figured it out. There will always be businesses that have never had to offer insurance that now have to put caps on employees’ hours just so they won’t have to offer insurance. For instance, one of my clients owns yoga studios: their employees don’t want, expect, or need insurance, but the ACA required that they offer it, and the economics of a yoga studio are such that they can’t really afford to offer benefits.
Going forward, for now, it’s business as usual. Everyone will need to make their elections for 2017. I don’t see the subsidies changing quickly, maybe the mandate will change, maybe the reporting will change to provide some relief, but I don’t see any dramatic changes until Trump gets a comprehensive replacement plan together. I’m telling everyone to sit tight, we’re in for a ride.
I’m also excited about the expansion of HSAs. We have been champions of high-deductible health plans at EB-Advisors for nearly 10 years. We maintain a very robust healthcare plan, and in addition, we’ve funded our employees’ HSAs $1,000 a year, and that adds up. The average employee that works here has around $6,000 in their HSA account, which is much higher than their out-of-pocket maximum. We’re really proud of that, because we know they’ve built some security for themselves in a tax-free environment. I’m a big believer in these type of platforms.