Employers not sold on GOP health reform packageReprints
House Republican leaders' health reform law replacement proposal scraps a key ACA provision — the so-called Cadillac tax — fiercely opposed by employers, but the GOP package has a different but equally objectionable provision, employer groups say.
Under the Affordable Care Act, health insurance premiums, starting in 2020, that exceed $10,200 for single coverage and $27,500 for family coverage, would be hit with a 40% excise tax on the portion that exceeds those thresholds. In the case of insured plans, the tax would be paid by insurers, while third-party administrators would pay the tax for self-insured employers.
The GOP package unveiled last week by House Speaker Paul Ryan, R-Wis., sharply criticizes the tax. The ACA “mandates a vast array of benefits and insurance regulations that drive up the cost of coverage. Then it turns around and taxes people for these high-cost plans,” the proposal notes.
Under the GOP plan, premiums that exceed certain so far undisclosed amounts would be added to employees' taxable incomes. While the tax trigger point is unknown, the trigger would vary — unlike current law — based on where employees lives, with a higher trigger amount for individuals living in areas of the country with the highest health costs.
Under the GOP approach “only the most generous plans would see a difference, and most Americans would not be affected,” the package says.
'Same flaws as the Cadillac tax'
But employer groups say the GOP tax on health care coverage is just as objectionable as the current law's excise tax.
“The proposal has the same flaws as the Cadillac tax,” said James Klein, president of the American Benefits Council in Washington. “It does not recognize that health care coverage is expensive for many reasons out of the control of employers and employees,” he said.
“A plan may be expensive because of high utilization or where a significant percentage of employees are older” and whose health care costs are higher, Mr. Klein added.
“Employers would categorically oppose this,” said James Gelfand, senior vice president of health policy at the ERISA Industry Committee in Washington.
Also problematic, others say, is the lack of detail in the tax cap proposal. “The devil is in the details,” said Geoff Manville, a principal with Mercer L.L.C. in Washington.
Still, employers welcome other provisions, including one that would boost the maximum contribution employees could make to health savings accounts to nearly double the current $3,400 limit for employees with single coverage and $6,750 for those with family coverage.
“There are good things in the package, such as the higher HSA contribution limit,” Mr. Gelfand said.
Other provisions in the package include eliminating penalties on employers that don't offer coverage, on individuals who don't enroll in a health plan, and repealing federal premium subsidies for lower-income individuals who obtain coverage in public exchanges. Instead, the GOP package would offer individuals — except employees enrolled in group plans — tax credits which they could use to offset premiums in plans they obtained from insurers.
For now, the GOP package is only talking points, observers say. Indeed, GOP leaders, like Speaker Ryan, say there will be no push to seek congressional approval during the current legislative session.
And even in the future, “repealing the ACA is a long shot,” Mercer's Mr. Manville said,
The only chance for repeal, observers say, would be the co-Republican control of Congress, along with the election of Donald Trump, the presumptive GOP presidential candidate. Mr. Trump has said he backs repeal of the ACA.