Any conversation about the impact the Republican-backed proposal to replace the Affordable Care Act would have on employers tends to start with a caveat: it’s still early.
The GOP’s American Health Care Act is being reviewed in the House of Representatives and some provisions could change. Democrats representing Westchester, U.S. Sens. Charles Schumer and Kirsten Gillibrand and Reps. Nita Lowey, Sean Maloney, Eliot Engel, have vowed to fight against what has been dubbed Trumpcare. Opponents point to a Congressional Budget Office report released March 13 that said 24 million more people could be uninsured under the new law.
While much of the early discussion on the bill’s potential impact has focused on Medicaid and the individual market, the bill is likely to affect employers as well. In New York, about half of the state’s residents receive insurance through an employer, according to numbers kept by the Kaiser Family Foundation, a nonprofit health policy foundation.
Opinions range on what the exact impact on business in Westchester will be if President Donald Trump and his fellow Republicans follow through on a pledge to replace former President Barack Obama’s signature health care legislation. The ACA was opposed by major business groups, such as the U.S. Chamber of Commerce, and taken to court by the National Federation of Independent Business. But will all employers be happy to wave goodbye to Obamacare?
“I think some of the criticisms that we heard from businesses were the mandates, the fines and some of the bureaucratic issues, such as paperwork and compliance,” said John Ravitz, executive vice president of The Business Council of Westchester. “To me, if you’re really going to replace some of the aspects of the Affordable Care Act to make it more accessible and realistic for businesses, you need to simplify some of these things.”
That gets to the question of what exactly will replace the ACA and how much it will change. The Republican proposal does keep in place some of the more popular provisions of the ACA, such as requiring insurers to cover people regardless of preexisting medical conditions and allowing people to stay on their parents’ health insurance until they are 26.
The new law would do away with the tax penalty imposed by the employer mandate in the ACA, which requires businesses with 50 or more full-time employees to offer affordable and adequate health coverage to employees working more than 30 hour per week.
Amy Allen, vice president of the Westchester County Association business group, said it’s unlikely that losing the penalty will change the equation for whether or not most employers in the county offer health care.
“I think businesses offer their employees health insurance because it’s the right thing to do and the job market is tightening, so if you want to be able to hire qualified people, you need to be able to offer them health insurance,” Allen said.
But dropping the penalty could be helpful in some industries, such as hospitality and food service, according to Rory O’Brien, president of RPO Group Inc., an employee benefits brokerage and advisory firm in White Plains.
“Many of those employers have really struggled with that for the last few years,” O’Brien said. “And now with that eliminated, that could make things substantially easier for them.”
The mandate itself isn’t going away under the Republican proposal, but the penalties associated with it will. That’s because Republicans want to pass the health care bill as a budgetary item. A policy change such as removing the mandate would leave the bill vulnerable to filibuster. Additional action would be needed to rid employers of the required reporting under the ACA, which small employers have said are cumbersome and drive up costs.
The Congressional Budget Office report predicted that fewer employers would offer insurance because incentives to do so would change. Employers would no longer have the mandate enforcement and a wider range of people might be drawn to the non-group market by health insurance tax credits, according to the report. Employers more likely to decide not to offer insurance would have younger, higher-income workers, the report said. The report added, though, that employers are likely to adapt slowly to the change in legislation.
Other provisions of the Republican proposal include a plan to delay the so-called Cadillac tax until 2025. Under the ACA, the provision would have charged a 40 percent tax on employers who provide high-cost health insurance. The Cadillac tax is opposed by both business groups and labor unions and had already been postponed by Congress once.
Provisions in the American Health Care Act also encourage the use of health savings accounts. The bill would double the amount of annual, tax-free contributions allowed in the accounts, up to $6,550 for single coverage and $13,100 for family coverage, and remove some Obamacare restrictions on use of health savings accounts to pay for over-the-counter medicines.
“I think you’ll see a big increase in health reimbursement arrangements, the employer version of health savings accounts, where an employer can pre-fund or fund noncovered medical expenses and get a tax write-off for that,” said James Newhouse, founder of Newhouse Financial and Insurance Brokers in Rye Brook.
On the national level, the bill has the support of the U.S. Chamber of Commerce, which praised its repeal of the “most harmful provisions in the Affordable Care Act,” such as taxes on medical devices, health insurance plans and prescription medicines. Two national small business interest groups, the National Small Business Association and the National Federation of Independent Business, publicly support the American Health Care Act. The National Small Business Association, however, said Congress needed to do more to rein in health care costs.
“The American Health Care Act would repeal the most punishing elements of Obamacare, including the massive tax increases and mandates that have increased costs, limited choices and smothered job creation,” Juanita Duggan, president and CEO of the National Federation of Independent Business, said in a statement.
The nation’s largest group of insurers, however, has expressed reservations. America’s Health Insurance Plans sent a letter to House of Representatives committees praising some of the bill’s proposed changes, but said the cuts to Medicaid could “result in unnecessary disruptions in the coverage and care beneficiaries depend on.”
James P. Schutzer, vice president at J.D. Moschitto & Associates Inc., a White Plains benefits consulting firm, said it’s hard to see the change in health care law “moving the needle” for businesses too far in any direction.
“The underlying issue to high health insurance rates is the high costs of delivering health care,” Schutzer said. “That’s not really being addressed. It wasn’t addressed in the Affordable Care Act really and it’s not being addressed now.”