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If you like your reform law, you won't be able to keep it
The Affordable Care Act (ACA) has been beaten up in the political process and in the court of public opinion. A series of delays and eliminations have, to varying degrees, changed the complexion of ACA.
Just last month, President Obama encouraged insurers to offer an additional year of coverage for beneficiaries whose plans had been discontinued for failing to meet the standards of the new law. Although the administration will not require insurers and state commissioners to extend existing plans, they are encouraged to do so. The president made the announcement in response to criticism from lawmakers and the American public.
The decision to delay the employer mandate until 2015 was also a response to complaints, at least in part, even though the administration’s cited reason was logistical.
However, healthcare experts say such delays-whether in the employer penalty tax or the employee choice program through the marketplace-don’t necessarily signal a weakening of the law.
“This is a large and complicated healthcare reform, and I think with any large and complicated project, it’s reasonable to anticipate delayed implementation of things,” says Kaitlyn Kenney Walsh, director of policy and research for the Blue Cross Blue Shield of Massachusetts Foundation.
Walsh says the values and overall philosophy of the law remain intact and still signal a significant shift for the American healthcare system.
“Collectively it makes sense to do due diligence and implement slowly and correctly rather than to rush forward and perhaps create opportunities for error along the way,” she says.
Chris Condeluci, an attorney with Venable LLP law firm in Washington D.C., and formerly the Tax and Benefits Counsel for the United States Senate Finance Committee, says he doesn’t envision many of the provisions that are being delayed will be long-term issues.
“I suspect that this administration will iron out the majority of the issues that they are currently facing within a year,” he says. “It might take a full year, but they’ll do it within a year.”
The delays and eliminations, however, do provide healthcare stakeholders an opportunity to be part of the public dialogue about future implementation and, in some cases, may benefit or hinder payers and providers as they transition into healthcare reform.
In addition to the president’s decision to give insurance companies the option to maintain canceled policies for an additional year, other significant delays or eliminations to the ACA are listed below:
Healthcare experts agree that the most significant delay is to the enforcement of the employer mandate, which requires employers with at least 50 full-time equivalent employees to provide health coverage for their full-time workers or risk a penalty. This provision of the law has been delayed by the administration until 2015.
The reasoning for the delay was linked to the delay of another provision in the law, which required insurers to report certain information to the Internal Revenue Service (IRS). Condeluci says the administration did not issue regulations indicating how an employer or insurer should report the information and what information they need to report.
“Those reporting requirements were put into the law in order to help the IRS enforce the employer mandate,” he says. “The administration said well, since we are not getting the reporting requirement guidance out, we need to delay that requirement. And by the way, because we are delaying the reporting requirement, the IRS can’t enforce the employer mandate so now we have to delay the employer mandate.’”
The Congressional Budget Office issued a report estimating that as a result of the delay, about 1 million fewer people will get insurance from their employer in 2014. It also estimated the delay will cost the federal government $12 billion in lost tax revenue and additional costs.
But other estimates are more conservative. A report by Rand analysts estimated that as a result of the delay, only 300,000 fewer people would have access to affordable insurance in 2014.
Regardless of the actual impact, Neil Krugman, attorney and healthcare partner at Waller in Nashville, says the delay will be a hindrance to providers and hospitals. “Whether the push back of the employer mandate has resulted in a million fewer insured people or some lesser number, any reduction in the ranks of the insured is a negative to the provider community and the hospital community,” he says.
One aspect of ACA that won’t see implementation is the Community Living Assistance Services and Support Program or CLASS Act. The act, which was designed to create a federally administered voluntary insurance program that would provide adults with disabilities a way to pay for long-term services and support, was repealed as part of the American Taxpayer Relief Act of 2012.
According to a National Health Policy Forum brief, the long-term services and support program would have been unlike any other federally supported program because it would have been financed solely by participants’ age-adjusted premiums. However, during testimony before the House Committee on Energy and Commerce, representatives from the Department of Health and Human Services (HHS) testified that they had not identified a way to make the act sustainable, legal or attractive to buyers.
The ACA calls for the establishment of the Small Business Health Options Program, or SHOP exchange, in each state. These SHOP exchanges would help small employers provide health insurance options for their employees. According to a report from the Urban Institute, the SHOP exchanges were intended to provide small businesses with administrative relief and more affordable coverage options for their employees. However, it looks as though many employees working for small businesses may not get more choice in health plans as a result of the provision after all-at least not initially.
In June, HHS announced that it had proposed a transition policy to allow the delay of the employee choice requirements until 2015. States do not have to delay the employee choice requirements if they decide not to; however, in the 33 states where the federal government is running health insurance marketplaces, it will be delayed until January 1, 2015 or later.
The reason behind the decision, says HHS, was a concern that insurers may not be able to meet deadlines and complete enrollment and accounting system changes necessary to implement employee choice.
ACA has set out provisions which limit the maximum amount a consumer can pay in out-of-pocket expenses, including copayments and deductibles, for plans that weren’t grandfathered into healthcare reform. According to the plan, for 2014, the out-of-pocket maximum for a single consumer will typically be $6,350.
Condeluci says the law was intended to apply to health plans in a single manner, however, the administration has issued a transition rule that doesn’t require health plans with more than one benefits manager to combine a consumer’s out-of-pocket spending until 2015.
It’s a delay Condeluci believes plans are likely pleased with. “There were some administrative burdens associated with tracking what spending went to what and that’s why the transition rule was put into place, to allow insurance companies and pharmacy benefit managers to put new systems in place that would be able to administer this rule,” he says.
Under the Fair Labor Standards Act (FLSA) large employers with more than 200 full-time employees are instructed to automatically enroll new full-time employees in one of the employer’s health benefits plans, as long as adequate notice is given to the employee to allow them to opt out of any automatically enrolled coverage.
However, the Department of Labor is still developing the regulations that will guide the automatic enrollment. They stated in a technical release issued in February of 2012 that employers are not required to comply with automatic enrollment until final regulations have been issued.
“In instances where you are delaying a provision related to employers, and in this instance of automatically enrolling people, there was a desire to make sure that the changes that are supposed to be forthcoming,-with respect to allowable waiting periods and the employer responsibility provisions-are cohesive and consistent with whatever your policy is here,” Kenney Walsh says. Further federal guidance is needed before it’s known when this provision will go into effect.
Jill Sederstrom is a freelance writer based in Kansas City.