ACA Executive Order Does Not Stop Plan Sponsor Actions

Last month, President Donald Trump issued an executive order for minimizing the burden of the Patient Protection and Affordable Care Act (ACA), pending repeal.

In the order, he said, “To the maximum extent permitted by law, the Secretary of Health and Human Services [HHS] and the heads of all other executive departments and agencies with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty or regulatory burden on individuals, families, health care providers, health insurers, patients, recipients of health care services, purchasers of health insurance, or makers of medical devices, products or medications.”

In a letter to Trump, American Benefits Council President James Klein said, “The Internal Revenue Service [IRS] can provide relief to employers without negatively impacting individual taxpayers. Such relief could be applied swiftly and immediately.” The council’s letter suggests interim solutions in light of anticipated legislation to “repeal and replace” the ACA.

However, Steve Wojcik, vice president of public policy at the National Business Group on Health, in Washington, D.C., says until there is a permanent HHS secretary in place, not much can be done. He notes that it will take some time to propose rules, put out a request for comments and review them, then put out a final rule. “It could take months or half a year or longer, depending on how big the regulation was and how much needs to be changed,” he tells PLANSPONSOR.

But, he continues, it is safe to say that because of the executive order, it is unlikely there will be new regulations about the excise (or Cadillac) tax on high-cost plans. He feels it will be permanently tabled.

Wojcik adds that not much can be done through the executive order. Repealing mandates and federal subsidies for exchanges would require legislative action. Congress would have to get involved and would have to figure out what would replace exchanges and Medicaid expansion. “Right now, Republicans who control the house and senate are trying to figure out what replacement would be,” he says. “Plan sponsors should continue doing what they are doing; there is no change that will affect them now.”

Sheryl Simmons, chief human resources (HR) officer at Maestro Health, who is based in Detroit, Michigan, notes that currently the order does not apply to the rescindment of any existing regulations—it was only applicable to fiscal burdens. “At this time, the only actions that can be taken are those related to a fiscal burden on a state, individual, family, health care provider, health insurer, patient, recipient of health care services, purchasers of health insurance or makers of medical devices, products or medications,” she tells PLANSPONSOR.

Simmons says HR professionals are still recovering from the ACA mandate whiplash. Even if Trump succeeds in getting rid of exchanges and repealing the employer and individual mandates, “Under hastily devised repeal and replace orders, they may find themselves back at compliance ‘point A,’ just when they were feeling confident they had complied with ACA mandates,” she says. She notes that plan sponsors have paid vendors, consultants and carriers significant dollars for compliance and that sponsors are still required to comply with all mandates unless, or until, they are repealed. In addition, she says, regardless of whether some, or all, portions will be repealed, there will still be a period of time before the implemented requirements will actually cease. 

“On a brighter note, prior to the ACA, many employers voluntarily offered health insurance coverage to employees. Employers seeking to retain a competitive edge in the free market competition for talent will need to continue offering coverage, even if it’s no longer mandated,” Simmons says, adding that the repeal may actually offer them much-needed flexibility in designing a benefits program that fits the unique needs of their population. “For example, an employer with a high demographic of young, healthy employees may be in a position to offer both the company and employees significant savings with a high-deductible health plan [HDHP] that would have fallen outside of acceptable minimum bronze coverage under the ACA,” she adds.

Simmons also says there are many benefit changes made by the ACA that employers may not want to undo. Employers may still want to offer coverage to dependents up to age 26 or continue with no pre-existing condition rules. “Each of the 400-plus ACA components will have to be evaluated individually by plan sponsors in conjunction with their insurers or third-party administrators [TPAs] in order to determine what benefits make sense to keep,” she says. “For those plan sponsors that have utilized the services of a third party to comply with some of the requirements, they will likely still be obligated to fulfill those contracts.”

However, there are aspects of the law for which employers would welcome a repeal—one being the Cadillac tax. Wojcik says, to the extent that the administrative reporting can be reduced or simplified, this would help plan sponsors with time, complexity and cost. He also says a repeal of the employer mandate, or at least the 30-hour definition of full-time employee, would be welcomed by employers.

Simmons says, “In addition to the reporting requirements [1094 and 1095 reporting, W-2 reporting, cost-sharing disclosures, etc.], many employers would like a repeal of the many taxes implemented with the ACA, i.e. PCORI [Patient-Centered Outcomes Research Institute], reinsurance, etc. They would likely also want a reduction in the requirements for mandatory coverage of certain treatments such as clinical trials and some preventive care services related to birth control.”

Although adoption of HDHPs was increasing prior to passage of the ACA, the law has spurred a growth in their use. In addition, after the law was passed, many providers developed private health care exchanges, with which employers could supply their workers with a set amount of money for health care benefits and let them choose their plan.

Wojcik says the primary motivation for HDHPs is the unrelenting growth in health care costs. “There might have been an uptick [in adoption] due to the ACA, but health care spending will continue to increase. As long as health care costs grow faster than inflation, we will continue to see the movement to HDHPs,” he says.

Simmons agrees that most people are speculating that HDHPs will gain more popularity, along with participation in health savings accounts (HSAs). “Trump has also repeatedly stated his replacement plan would provide insurance for everyone at a lower cost. ‘Lower cost’ has been simultaneously described as lower premiums, lower deductibles and lower out-of-pocket expenses. Those descriptions are seemingly at odds. Under an ACA repeal, we will likely see employers moving to HDHPs tied tightly to robust wellness plans,” she says.

In terms of private exchanges, Wojcik says they may have been spurred by the ACA, but the National Business Group on Health is seeing a lessening of interest in private exchanges; employers are taking a wait-and-see attitude. He says the group’s latest survey, in 2016, found that only 4% of employers had adopted private exchanges, and few were planning to adopt one in 2017. In addition, only 10% were looking at adopting one prior to 2020. “For some industries it may make sense, and for small employers it may make sense,” he says.

Simmons concludes, “Consumers will continue to be driven toward the need for improved health and financial education as they struggle through the murky waters associated with taking personal ownership of their health care costs.”