This week, congressional Republicans attended a two-day policy retreat in Philadelphia to work out their agenda for the coming year, including details and timelines for the repeal and replacement of the Affordable Care Act. House Speaker Paul Ryan (R-WI) announced that they would use a three-pronged process for health reform: first to repeal the law through a fast-track process by the end of March, second to pass a replacement plan, and third to use the administration’s regulatory authority to stabilize the health insurance market. The House is expected to begin marking up the reconciliation package and intends to have it ready for a floor vote by late February or the first week of March. However, that timeline is questionable as they missed their deadline of today for committees to report out their reconciliation reports. Ahead of their retreat, two new plans emerged as possible replacements: one by Senator Rand Paul (R-KY) and another by Senators Bill Cassidy (R-LA) and Susan Collins (R-ME).

On Monday, Senators Cassidy and Collins introduced S. 191, the Patient Freedom Act, a bill that is targeted at garnering Democratic support by effectively allowing states to choose whether to continue using the ACA, switch to a different insurance expansion by 2020, or implement a state-based alternative without any federal assistance. They claim that their plan would cover more Americans than the ACA at no additional cost and would not disrupt coverage for those currently enrolled in marketplace coverage. Their plan would repeal the ACA’s federal mandates, including the individual and employers mandates, age band requirements, essential health benefits, and actuarial value requirements. It would retain many of the ACA’s taxes, its guaranteed issue and renewability provisions, mental health coverage requirements, prohibitions on pre-existing condition exclusions and annual and lifetime limits, and would continue to allow young adults to stay on their parents’ plan until age 26.

The Patient Freedom Act’s ACA alternative program for states would automatically enroll eligible individuals in a high-deductible healthcare plan linked to a health savings account (HSA). NAHU has opposed auto-enrollment in the past, and was a leading advocate for the successful repeal of the auto-enrollment provision that was originally included in the ACA and would have required employers with more than 200 employees to automatically enroll their employees in their health benefit plans. Some of our major concerns of auto-enrollment include: employees who would otherwise prefer to opt-out of insurance for various reasons, including coverage through a spouse, public program, etc., and automatically opting into insurance could lead to confusion, duplication of coverage, and a loss of earnings as the premium costs of the unwanted plan are automatically deducted from the employee’s paycheck. Both Cassidy and Collins are members of the Senate Health, Education, Labor and Pensions (HELP) Committee, a key committee for drafting any ACA replacement legislation.

On Tuesday, Senator Paul introduced S. 222, the Obamacare Replacement Act, which would scrap the ACA’s taxes and the individual and employer mandates, along with the essential health benefits and much of the law’s mandates. The plan would effectively equalize the tax treatment of health insurance by replacing the employer exclusion with a universal deduction on both income and payroll taxes, thereby encouraging Americans to obtain health insurance independently of their employers. NAHU strongly opposes any efforts that would eliminate or cap the employer-tax exclusion for health insurance. The plan would encourage consumers to obtain policies with health savings accounts (HSAs) by providing a tax credit of up to $5,000 per taxpayer for HSA contributions and making HSA contributions above $5,000 tax preferred. To encourage consumers with pre-existing conditions to enroll in coverage, the plan calls for a one-time open enrollment period lasting two-years after the law is enacted. Paul’s plan would also permit the sale of insurance across state lines. Paul is also a member of the HELP Committee.

Democrats blasted these proposals for being thin on details and not adequately addressing those currently enrolled in coverage. Senate Minority Leader Chuck Schumer (D-NY) responded to the Cassidy/Collins plan, calling it “a far cry from the full replacement plan they have promised for years,” and asserting that “millions of Americans would be kicked off their plans, out-of-pocket costs and deductibles for consumers would skyrocket, employer-based coverage for working families would be disrupted, and protections for people with pre-existing conditions, such as cancer, would be gutted.” Senator Collins acknowledged their plan’s shortcomings, saying it “is still a work in progress,” but defended its introduction by saying, “If we do not start putting specific legislation on the table that can be debated, refined, amended and enacted then we will fail the American people.”

Republicans used the retreat to work out some of these policy differences and how to implement an ACA replacement without disrupting coverage for Americans enrolled in marketplace coverage, those on expanded Medicaid coverage, or the upwards of 175 million Americans whose employer sponsored insurance could be affected by repealing provisions of the healthcare law. One of the biggest issues separating Republicans is what to do with the ACA’s taxes, as some plans, including the Cassidy/Collins plan, call for initially retaining the ACA’s taxes until a replacement plan can be transitioned. This would help offset some of the expected costs of a replacement until new financing mechanisms can kick in, as Senator Cassidy called the revenue essential to offering a credible alternative to the current system. Meanwhile, Senator Paul said, “I don't think that a lot of Republicans are going to want to keep the Obamacare taxes. Some Republicans may, but I don't think it will end up being a consensus.”

The lack of consensus among proposals is partially due to disagreement over the process, as while comprehensive plans are proposed, leading voices in the Republican Party have increasingly been calling for a more piecemeal approach to replacement plans. This includes Representative Michael Burgess (R-TX), chairman of the House Energy and Commerce Health Subcommittee and a major player in moving replacement legislation, who said he prefers a piecemeal approach over an all-encompassing bill. There are also unresolved issues over when to pass replacement legislation as many congressional Republicans have stated that they don’t want to move forward on repeal until the party has coalesced around a replacement strategy and how to transition from the ACA. At the Republican retreat this week, Representative Chris Collins (R-NY) called for the Republican repeal to have a two-year delay on any coverage changes, but the larger issue remains of garnering the Democratic support necessary to reach the 60-vote threshold in the Senate to pass replacement legislation.

There is also ongoing ambiguity over who is taking the lead in devising the healthcare replacement plan. President Trump and Vice President Mike Pence have sent conflicting messages on whether they are working on their own plan, possibly in concert with the nominee to lead Health and Human Services (HHS), Representative Tom Price (R-GA), and have suggested that the White House will deliver its own healthcare plan to Congress after the secretary of HHS is confirmed, including in an interview on Wednesday, when Trump declared that his plan “will be better healthcare for more people at less cost.” Many congressional Republicans are waiting until this plan is unveiled before moving forward, as Senate HELP Committee Chairman Lamar Alexander (R-TN) said, “the process doesn't work very well unless the executive proposes and the legislature disposes.” Senate Republican Conference Chairman John Thune (SD) noted that, “There's no way that...whatever he sends up here just passes—we have a lot of members who are going to have input in it, and it will be shaped by members of Congress in the end.”

While Congress works out replacement plans, the Trump Administration has indicated it will move ahead to dismantle the ACA through the regulatory process. Representative Chris Collins (R-NY), the congressional liaison for the Trump transition, stated at the retreat that the administration plans to use its regulatory authority to overhaul provisions of the law that were implemented under the Obama Administration’s authority over the past several years. Collins explained that, “Many of the more onerous pieces of Obamacare were not done through legislation, therefore they don’t have to be undone [legislatively]. So one piece is repeal and replace what we can. The second is administrative actions on quite a wide variety of items.” Trump’s executive order issued hours after taking office paves the way for federal agencies to begin unwinding the law through the regulatory process.

NAHU is continuing to work with the Trump Administration and congressional leadership to determine the best approach and timing for change in our healthcare system. As Congress continues to hash out the details over the future of health reform, we encourage NAHU members to meet with your federal legislators when they are back in district. With the reconciliation repeal already moving forward, we urge you to focus your discussions on what would be most useful budget-relevant policies to be repealed through the reconciliation process. We have prepared some talking points to assist members in this effort. If you plan to meet with your member of Congress in the coming weeks, please let us know by emailing grassroots@nahu.org so that we may provide additional talking points as needed.

Finally, as a reminder, if you have suggestions regarding our work with the Trump Administration and members of Congress on the future plans to reform the ACA that you would like to share with NAHU, you can send your thoughts and ideas to ACAreform@nahu.org.