ACA Replacement Bill Withdrawn

Overview

On March 24, 2017, Republican leadership in the U.S. House of Representatives withdrew the American Health Care Act—their proposed legislation to repeal and replace the Affordable Care Act (ACA). A House vote was scheduled to take place on that day, but House Republicans could not secure enough votes to approve the legislation and, instead, canceled the vote. As a result, the ACA will remain in place at this time.

Impact on Employers

Because the House was unable to pass the American Health Care Act, the ACA remains current law, and employers must continue to comply with all applicable ACA provisions. President Donald Trump has indicated that he would not continue to pursue an ACA repeal if the American Health Care Act could not be passed. Both President Trump and House leadership have stated that they now intend to focus on other issues. Despite this, Congress may choose to pursue their own ACA repeal and replacement in the future.

Legislative Process

Two separate bills that make up the American Health Care Act were released in response to a budget resolution passed by Congress on Jan. 13, 2017. The budget resolution is a nonbinding spending blueprint that directs House and Senate Committees to create federal budget “reconciliation” legislation. To become law, budget reconciliation bills must go through the legislative process. However, a budget reconciliation bill is generally filibuster-proof and can be passed by both houses with a simple majority vote. A full repeal of the ACA cannot be accomplished through the budget reconciliation process. A budget reconciliation bill can only address ACA provisions that directly relate to budgetary issues—specifically, federal spending and taxation. A full repeal of the ACA must be introduced as a separate bill that would require 60 votes in the Senate to pass. Debate on the American Health Care Act began on March 8, 2017. To address concerns raised by both Democrats and fellow Republicans, the House Republican leadership released amendments to the legislation on March 20, 2017, followed by a second set of amendments on March 23, 2017. The House vote was originally expected to take place on March 23, 2017, but was delayed for one day, until March 24, 2017. Following the announcement that the House vote would be delayed, President Trump stated that he would not continue to pursue an ACA repeal if the House could not pass this legislation. As a result, the ACA will remain in place at this time. However, Congress may choose to pursue their own ACA repeal and replacement in the future.

ACA Provisions Not Impacted

The majority of the ACA would not have been affected by the new legislation. For example, the following key ACA provisions would remain in place:
  • Cost-sharing limits on essential health benefits (EHBs) for non-grandfathered plans (currently $7,150 for self-only coverage and $14,300 for family coverage)
  • Prohibition on lifetime and annual limits for EHBs
  • Requirements to cover pre-existing conditions
  • Coverage for adult children up to age 26
  • Guaranteed availability and renewability of coverage
  • Nondiscrimination rules (on the basis of race, nationality, disability, age or sex)
  • Prohibition on health status underwriting
Age rating restrictions would also continue to apply, with the age ratio limit being revised to 5:1 (instead of 3:1), and states would be allowed to set their own limits.

Repealing the Employer and Individual Mandates

The ACA imposes both an employer and individual mandate. The American Health Care Act would have reduced the penalties imposed under these provisions to zero beginning in 2016, effectively repealing both mandates (although they would technically still exist). However, beginning with open enrollment for 2019, the American Health Care Act would have allowed issuers to add a 30 percent late-enrollment surcharge to the premium cost for any applicants that had a lapse in coverage for greater than 63 days during the previous 12 months. The late enrollment surcharge would then be discontinued after 12 months.

What Happens Next?

Because the House was unable to pass the American Health Care Act, the ACA remains current law, and employers must continue to comply with all applicable ACA provisions. Both President Trump and House Republican leadership have stated that they now intend to focus on other issues. Despite this, Congress may choose to pursue their own ACA repeal and replacement in the future.
 
This ACA Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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