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Divided We Stand

In a show of solidarity and a renewed spirit of cooperation, the Congressional Republican leadership recently was invited to meet with President Obama at the White House to announce the dawning of a new partnership to move America forward. No more divisiveness on such issues as the debt ceiling, immigration or the Keystone Excel pipeline, and certainly, no more wrangling on the legitimacy of the signature achievement of the Obama administration…..the Affordable Care Act (ACA)!! Yeah!!!! … Or, not so much …

Fast forward just a few scant days after the seating of the new Republican-dominated House and Senate last week, and low and behold, what do we find? The House has passed a Bill to amend the definition of full-time employee from the current 30 hours per week, back to the traditional definition of 40 hours per week. The Republican-controlled Senate has stated that they would easily pass similar legislation … and … not to be “outdone,” White House spokesmen have stated, categorically, that the President will veto any such action without the slightest hesitation for debate on the issue!!

Not to be outdone by their political counterparts, lobbyists are imploring lawmakers to go one step further in their efforts to derail Obamacare, by convincing the Treasury Department to extend part of the 2014 regulations that phase in rules requiring employers to extend coverage to “substantially all” (70% in 2015 and 95% in 2016) of their full-time employees.

Currently, employers with at least 100 employees must, starting in 2015, offer coverage to not less than 70% of their full-time employees—those working the aforementioned 30 hours per week—or be liable for a $2,000 per employee penalty. Then, in 2016 and succeeding years, the so-called “employer mandate” will also include employers with at least 50 employees, and in order for them to avoid the $2,000 per employee penalty, they must extend coverage to at least 95% of their full-time employees.

The lobbyists are encouraging lawmakers to take the position that to encourage employers to continue to offer coverage, the 70% coverage test requirement should be extended beyond 2015, and/or implement a glide path that gradually phases in the percentage from 70% to 85% over several years.

All of this leads us to the $64 billion (give or take a few billion) question(s): Who’s right? Who’s wrong? Are there certain “non-politically driven” amendments that make sense? And, given the control of both houses of Congress for the remainder of the Obama administration, can Republicans actually affect any change, given the “math” associated with the power of the veto?

Of course, any opposition to a change that is perceived to “soften the blow” for employer plan sponsors with respect to the imposition of penalties (such as the redefining of full-time employee or the delay in any penalty for coverage requirements), has, at its heart, the negative effect of delaying revenues to the federal government that have been slotted to pay for ACA. Consequently, each potential amendment is met with a dire prediction of a revenue shortfall that works to undermine the spirit, if not the financial foundation, of the major tenants of the law, resulting in the denial of coverage to the millions of uninsured Americans.

From a purely political viewpoint, any proffered amendments made by the Republican majority are not deemed by the Democrats to be an “improvement,” or provided in the spirit of finding “an acceptable and administratively sound middle ground,” but instead, as a “power grab” based upon majority representation in Congress.

For their part, the Republicans hold an equally contentious view of the refusal of the Democrats to consider changes to the guidelines, declaring such refusal is based purely on stubbornness, and the knowledge that they hold the ultimate trump card … the power of the Presidential veto.

If we are to make the needle move on compromised amendment to the ACA, we must remember that the ACA was the result of a political process, and politics will never be extracted from the administrative process of its implementation. Also, the best interests of the employer plan sponsors and their employees may (sadly) be secondary to the amount of credit that one party may be able to claim over the other as “political gain,” and the cache of votes that may be garnered with such a perceived victory.

With that somewhat dim “but arguably realistic” backdrop, a sensible compromise of the competing interests should have as its launch platform, an agenda that includes the following items for consideration:

  • an amendment to the definition of full-time employee that seeks to mirror the practical application of current benefit plan eligibility, such as 36 hours of active employment per week (40 hours has not been the standard for benefit eligibility for many years);
  • an amendment that would simplify the identification of variable-hour employees as full- time, without relinquishing the need for such identification;
  • adoption of a gradual phased-in approach of the requirement to offer coverage to “substantially all” full-time employees;
  • revisions to the definition of “minimum essential coverage” that more resemble the model used in private plans prior to the ACA, (rather than the coverage requirements of Medicare and Medicaid plan designs) in an effort to increase the number of plans offered in the private sector through lower cost benefit structures;
  • a revision to the “covered entity” provisions of ACA that would encourage the aggregation of employer plan sponsors into more economical buying syndicates without running afoul of regulations that would treat such entities as “health insurers,” thereby imposing additional taxes;
  • a revision of the current system of insurance exchanges, and the subsidy programs that may be used toward such purchases, to better match the need for insurance with the qualification of enrollees. This would include a review of the current system which ties the employer mandate to the use of premium subsidies to calculate employer penalties.
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