The Big Reveal—Senate GOP Releases “Discussion Draft” of ACA “Repeal and Replace” Bill

By J.D. PIRO

Senate Republicans unveiled a discussion draft of legislation that would amend the House-passed American Health Care Act (“AHCA”) and is designed to “repeal and replace” the Patient Protection and Affordable Care Act (“ACA”). The draft, entitled the Better Care Reconciliation Act of 2017 (“BCRA”), retains the structure of the AHCA, but makes substantial changes to several of the AHCA’s provisions, including Medicaid financing, the ability of states to regulate health insurance markets, and tax credits for individuals to purchase health insurance coverage.

Among the proposed changes, the BCRA has several key implications for employer group health plans, including:

Repeal of the Employer Mandate Penalties. The BCRA would eliminate the penalties for employers that do not offer affordable, minimum value health insurance to employees. This repeal provision applies retroactively to January 1, 2016, thus leaving employers potentially liable for penalties for failing to provide affordable minimum value coverage to full-time employees in 2015. The BCRA does not address employer reporting.

Tax Law Changes. The BCRA would delay implementation of the Cadillac tax until 2026 and repeal other taxes, including the tax on over-the-counter medications, the tax on HSA distributions for non-qualified medical expenses, the medical device tax, the additional Medicare tax on high earners, the tax on indoor tanning services, the net investment tax, and the tax on certain prescription brand medications.

Increased Contribution Limits for HSAs. The BCRA would repeal the cap on health care flexible spending account contributions and increase the maximum contribution limit for HSAs to the amount of the deductible and out-of-pocket (OOP) limits. For 2018, those numbers are $6,650 for individuals and $13,300 for families. The BCRA would allow both spouses to make catch-up contributions to the same HSA and also allow certain medical expenses incurred before establishment of an HSA to be reimbursed from the HSA if the account is established within 60 days of the date coverage begins under the high deductible health plan.

CBO Releases BCRA Analysis

The Congressional Budget Office (“CBO”), which released its cost estimate for the BCRA on June 26, estimates that the Senate’s health care bill would result in 22 million more people uninsured and a $321 billion reduction of the federal deficit through 2026. Since the BCRA must match the deficit reduction estimates in the AHCA ($119 million) in order to pass with 51 votes under the reconciliation process, Senate Republican leaders have room to add to the bill to gain additional support from lawmakers.

Next Steps

The Senate Republican leadership intends to bring the BCRA to a vote after the July 4th recess. The BCRA will likely undergo changes as negotiations continue for votes in the Senate. For more information about the Better Care Reconciliation Act of 2017 (“BCRA”), click here.

You can subscribe to Aon's health reform updates here. You can also access Aon’s recent whitepaper outlining five strategies we believe will strengthen the employer-sponsored health care system, here.

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