Senate Republicans failed to pass legislation to repeal and replace the Affordable Care Act (ACA) last week. After voting to proceed with debate on the American Health Care Act (AHCA) (passed by the House in May), the Senate introduced and voted against several replacement amendments and bills, including a new version of the Better Care Reconciliation Act (BCRA), with amendments by Senators Ted Cruz (R-TX) and Rob Portman (R-OH) (repeal and replace), and the Obamacare Repeal Reconciliation Act (ORRA) (repeal only).

The Senate then decided to consider a “skinny repeal bill,” officially named the Health Care Freedom Act, which would have eliminated the ACA’s individual mandate, delayed the employer mandate until 2025, allowed states greater flexibility in implementing market reforms such as essential health benefits and out-of-pocket spending limits, and increased Health Savings Account limits for three years, among other changes. This so-called skinny repeal failed on a vote of 49 to 51, with three Republican senators joining the entire Democratic caucus against the bill. According to the Congressional Budget Office, the skinny repeal bill would have increased the number of uninsured by 16 million over the next nine years and increased health care exchange premiums by 20 percent.

Passage of the skinny repeal bill was touted as a way to further the core ideals of ACA repeal, while allowing negotiations with House Republicans on final repeal and replace legislation. The GOP is now at a crossroads with some members advocating for strategies that will fast track collapse of the ACA and others urging for actions to strengthen the individual insurance marketplace. President Trump has been quick to criticize the failure to pass repeal and replace legislation and has threatened to end the cost-sharing payments provided by the government to insurers to help cover costs for the approximately 58 percent of marketplace customers who earn up to 200 percent of the federal poverty limit. Some insurers are already reacting to the uncertainty regarding cost-sharing payments by proposing increased premiums for 2018 or withdrawing from the market in certain areas or altogether. States may also begin to increase requests for five year “innovation waivers” of certain ACA requirements pursuant to Section 1332 of the ACA. These waivers are intended to give states more flexibility to pursue innovative strategies to provide their respective populations with access to health insurance that is high quality and affordable.   

Next Steps

While we may still see executive action from President Trump, ACA remains in effect and employers must continue to comply with its requirements, such as the employer shared responsibility requirements and the IRS Forms 1094 and 1095 reporting requirements. In addition, until further notice otherwise, the 40 percent “Cadillac Tax” on high-cost employer-sponsored health plans will become effective in 2020. Employers should continue to monitor health care reform developments as they implement 2018 health plan design decisions. Plan documents and employee communications should be reviewed for ACA compliance and updated to reflect 2018 plan design changes.