We're Going Back to the Future (of Healthcare Reform)!
On May 4, the House narrowly approved the American Health Care Act (AHCA), the long-anticipated and much-debated Republican ACA repeal and replacement legislation. While the passage of the AHCA is a major victory for Republicans and President Donald Trump, it doesn’t change anything just yet. For now, the ACA is still the law of the land, and employers will need to continue to comply with its mandates.
The next step in the process will be for the Senate to take up consideration of the AHCA. The politics of ACA repeal and replace became very tricky in the House, where the vote margin was tight. In the Senate, the vote margin is razor thin – three votes separate passage from failure for the Republicans, so the political maneuvering will be even more significant in the weeks to come.
That’s not the only obstacle the Senate will have to deal with. Because budget reconciliation is the process being used to pass this legislation – allowing Republicans to bypass a Democratic filibuster in the Senate – the AHCA must comply with a number of rules most often described as “arcane.” Suffice it to say that Mitch McConnell, the Republican leader in the Senate, will have to tread very carefully to make sure the AHCA currently qualifies for reconciliation, and any changes made to it in the Senate stay within that scope. Should the AHCA fall outside the budget reconciliation limits, the bill would have to get 60 votes in the Senate for passage, and that can’t happen without Democratic support. There are likely no Democrats who would vote in favor of the AHCA.
Presuming the AHCA has stayed within the reconciliation bounds, the Senate will be reviewing and offering amendments to it in the coming weeks. Expect to see tweaks to the tax credit system, the unwinding of the Medicaid expansion and additional funding for the high-risk-pool system for states that opt out of the AHCA’s requirements. Again, due to the restrictions of the reconciliation process, the types of changes the Senate can make will likely need to be limited to the dollar amounts in the House bill, and not major revisions as to what the bill does or how it works.
Once the Senate approves its version of the AHCA, the House will either need to approve the Senate version as is, or the House and Senate will have to go into conference to reconcile the two versions. If that occurs, another vote in both the House and Senate on the conference version would be required before the bill can go to the President to sign.
For employers, the AHCA has significant implications – effective elimination of the employer mandate (but not the reporting process), elimination of many of the taxes that came with the ACA and postponement of the Cadillac tax. Additionally, Health and Human Services Secretary Tom Price can also make changes to the rules, something he'll likely start examining now that the overall Republican plan to eliminate the ACA is back on track. Assurance will continue to update its clients on the changes, and what opportunities they will bring.
Information contained herein is not intended to constitute tax or legal advice and should not be used for purposes of evading or avoiding otherwise applicable regulatory responsibilities as issued by the federal or state government(s) and/or taxes owed under the Internal Revenue Code. You are encouraged to seek advice from your legal or tax advisor based on your circumstances.
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