Kate McGovern Tornone
Wednesday - January 25, 2017
A group of republican
senators proposed a replacement bill for the Affordable Care Act (ACA) that
would allow states to choose whether or not to keep Obamacare’s provisions in
place. Because employers’ requirements would depend on where employees work,
compliance could be a real challenge for companies with operations in multiple
states, according to the Society for Human Resource Management (SHRM).
The bill was seemingly an
attempt to gain bipartisan support but lawmakers on both sides have expressed
dissatisfaction with the provisions, said Chatrane Birbal, SHRM’s senior
advisor for government relations.
Sen. Bill Cassidy (R-LA),
the bill’s main sponsor, assured lawmakers that this is the best option while
introducing the legislation on January 23. “It has been a Republican principle
that power is best held by individuals and states, not the federal government,”
and this is the best way to achieve President Trump’s goals of affordable
access to coverage, including for those with pre-existing health conditions,
Cassidy said.
The Senate minority
leader, however, disagreed. The proposal would create chaos, not affordable
health care, Sen. Chuck Schumer (D-NY) told lawmakers.
What it Does
The Patient Freedom Act
of 2017 (S. 191) would afford states three options: (1) keep Obamacare; (2)
adopt a new option for states that is spelled out in the bill; or (3) design
their own, alternative solution.
Under “option 2” a state
would participate in a new market-based system and receive funding equal to 95%
of federal premium tax credits and cost-sharing subsidies, as well as the
federal match for Medicaid expansion, according to a fact sheet accompanying
the bill.
States could choose to
receive funds in the form of per beneficiary grants or refundable tax credits.
In either case, funds will be deposited in individuals’ “Roth health savings
accounts (HSAs),” a new form of account that differs from a traditional HSA in
that deposits are taxable.
For states that choose
option 2, individuals can be automatically enrolled in default health coverage
and Roth HSAs, with the right to opt out. That will keep premium prices down,
Cassidy said.
Under this bill,
employers’ responsibilities will be contingent on where their employees work.
If an employer only has workers in “option 2” states, it will no longer have to
offer health insurance to at least 95% of its full-time workforce or face a fine,
or comply with the ACA’s reporting requirements. However, if it has employees
in “option 1” states, the ACA requirements remain.
This could be problematic
for multistate employers, especially for those with self-insured plans
according to Birbal. Those plans are regulated by the Employee Retirement
Income Security Act (ERISA) and are not subject to state insurance regulations;
but this bill doesn’t seem to recognize ERISA preemption, she told BLR®.
ERISA has provided
employers with a workable framework for employee benefits, allowing them to
offer a uniform set of benefits to employees, Birbal said. “SHRM believes that
the flexibility and certainty of the ERISA framework has been essential to the
success of the employer-based system and should be maintained.”
The bill leaves intact
other parts of the ACA in all states, such as market reforms like the ban on
pre-existing condition exclusions and the requirement to cover dependent
children through age 26.
Also remaining in place
is employers’ responsibility to provide breaks and spaces for nursing mothers
to express breast milk. The ACA amended the Fair Labor Standards Act to require
such breaks and the proposed bill doesn’t undo that amendment.
Overall, this was a good
first attempt by lawmakers to meet in the middle ground, Birbal said, “but I
suspect … in the coming months, we’re going to see a number of bills that are
going to be introduced.”
SHRM made several
requests in a letter to Congress earlier this month, including a call to
maintain the flexibility afforded by ERISA. Birbal said that letter still
represents the organization’s priorities. (For more information on SHRM’s
requests, see Trump Takes Aim at ACA on First Day in Office.)
As for the individual
mandate, Cassidy said his bill will allow fans of Obamacare to stay with it.
“Republicans think that if you like your insurance, you should keep it,” he
said. “California and New York: you love Obamacare; you can keep it.”
But the Center for
American Progress, a liberal think tank, said his statement was disingenuous.
“If you happen to live in a state controlled by those who oppose Obamacare,
they would be able to gut your coverage,” the organization’s vice president for
health policy, Topher Spiro, said in a statement. “It’s unconscionable that
access to quality health care would depend on where you happen to live.”
Sens. Susan Collins
(R-ME), Shelley Moore Capito (R-WV), and Johnny Isakson (R-GA) also sponsored
the bill. If passed, it would take effect January 1, 2018. Cassidy said that
Rep. Pete Sessions (R-TX) is expected to introduce a companion bill in the
House.
Kate McGovern Tornone is
an editor at BLR. She has almost 10 years’ experience covering a variety of
employment law topics and currently writes for HR Daily Advisor and HR.BLR.com.
Before coming to BLR, she served as editor of Thompson Information Services’
ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and
published several special reports. She graduated from The Catholic University
of America in Washington, D.C., with a B.A. in media studies.
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