Last week, the U.S. House of Representatives, by a narrow margin, passed the American Health Care Act (ACHA), the Republican plan to undo the Affordable Care Act, as amended. So that means Obamacare is effectively repealed and replaced, right? Wrong. Here’s where we stand on health reform.
The ACHA: So what’s in it?
The AHCA, in its original form, was released by House Republicans on March 6 and approved by committee on March 9. There have been several amendments since that time, but taken together, the original bill and its amendments would repeal the following tax provisions of Obamacare:
- individual mandate, retroactively effective 2016
- employer mandate, retroactively effective 2016
- premium tax credit, effective in 2020 (and modified pending its repeal)
- 3.8 percent net investment income tax
- 0.9 percent additional Medicare tax, effective 2023
- the higher floor for medical expense deductions
- the small employer health insurance credit, effective 2020
- the limitation on health Flexible Spending Account contributions
- the so-called "Cadillac" tax on high cost employer-sponsored health plans -- not repealed, but delayed until 2026
- the exclusion from "qualified medical expenses" of over-the-counter medications for purposes of Health Savings Accounts, Archer Medical Savings Accounts, Health Flexible Spending Arrangements, and Health Reimbursement Arrangements
- the ACA's increase to the additional tax on HSAs and Archer MSAs for distributions not used for qualified medical expenses, reducing the percentages from 20 to 10 and 15 percent, respectively
- the annual fee imposed on branded prescription drug sales
- the medical device excise tax
- the annual fee on health insurance providers
- the elimination of a deduction for expenses allocable to Medicare Part D
- The disallowance of any deduction for "applicable individual remuneration" in excess of $500,000 paid to an applicable individual by certain health insurers.
The ACHA replacement plan would provide a new refundable tax credit for health insurance, strengthening of HSAs, and a reduction in the “floor” for deductible medical expenses. The details of that can be found here.
Moving Forward
Republicans are trying to use expedited measures to pass the ACHA in the Senate with only 51 votes, but they don’t stand a chance. Republicans only hold 51 seats in the Senate, and several prominent Republican Senators are already vowing to kill the ACHA and write their own bill, with no clear timetable to act. As written, the ACHA will not receive one vote from a Democratic Senator.
Key sticking points for Republicans opposing the ACHA as written include how to cover people with pre-existing conditions, and how to address Obamacare’s Medicaid expansion plan. The White House has also indicated it’s ready for a slower, more deliberative debate in the Senate on those issues.
Passage of health care reform in the House certainly breathes new life into the Obamacare repeal effort, but we’re nowhere close to seeing true “repeal and replacement.” Our advice for health care provision in your company remains the same: Stay the (Obamacare) course.
What challenges are you and your company currently facing regarding health care? Leave your questions and comments below.
