With the latest Senate effort to replace the Affordable Care Act derailed, employer groups are refocusing their strategy around the passage of more targeted reforms to the healthcare law in coming months.

Senate Republicans have been in talks in recent weeks over whether to take up legislation, authored by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., designed to roll back central elements of the ACA in favor of block grants delivered to the states. But the proposal hit a roadblock in recent days when several GOP lawmakers came out against the effort, leaving supporters with too few votes. Lawmakers had been racing to approve the legislation by the end of the month, when authority to use a process known as budget reconciliation, which requires just 51 votes, is set to expire.

With the legislation now sidelined, employer groups are instead seeking to get support for narrower changes, such as a repeal or delay of a controversial tax, that might be able to win support on both sides of the aisle. The effort follows months of broader talks in Congress over whether to repeal major portions of the ACA, all of which ultimately failed to get the necessary support.

[Image credit: Bloomberg]
[Image credit: Bloomberg]

“With reconciliation kind of off the table, the notion now needs to be that there’s nothing that’s going to pass unless it has 60 votes,” says James Gelfand, senior vice president for health policy at the ERISA Industry Committee, referring to the Senate threshold for avoiding a filibuster.

He added that any such measures will have to be selected carefully, given how politically divisive the discussion around healthcare reform has become.

“If you get at all controversial, if you talk at all about dismantling parts of the ACA — you’re done, you’re gone,” he adds. “The only chance for success in this environment is going to be low-hanging fruit, things that are bipartisan and bicameral, that can get enough support — and not much opposition — to squeak through.”

Repealing or delaying the Cadillac tax, a 40% excise tax on high-cost plans set to go into effect in 2020, remains the top legislative priority for many employers. The Graham-Cassidy bill did not make any changes to the tax, a move that frustrated employer groups.

“There’s strong bipartisan support to eliminate this tax and we hope that there’s a way to do that in Congress soon, before the planning year for 2020 starts,” says Steve Wojcik, vice president of public policy at the National Business Group on Health.

See also: How employers are preparing for the Cadillac tax

He notes that measures that focus on changes to the tax could have a better shot when not attached to broader efforts to repeal the ACA. Bills to repeal the tax have been reintroduced this year in both the House and the Senate, garnering support from both Republicans and Democrats.

Gelfand says that employers feel strongly about achieving at least a delay of the tax before the year is out.

“It’d be great to get rid of it, but it’s one of those things where, if we’re not going to have the opportunity to get rid of it completely this year, let’s at least find a way to push it back so that it’s not an impending threat,” he says.

Observers say other bills that could come up for consideration include a measure to streamline the process for employers reporting information about the health coverage they offer employees. Lawmakers are expected to reintroduce legislation that would reduce the reporting burden on employers by requiring reporting statements solely for employees who have signed up for a state exchange or received a subsidy, as opposed to the entire workforce.

Another provision that could be considered would raise the threshold for what constitutes full-time work under the law from 30 hours to 40 hours per week, potentially providing cost-savings to employers by offering more flexibility around staffing and reducing the number of workers they would need to cover. Lawmakers reintroduced such a bill in the Senate earlier this month.

The proposals could possibly be passed as standalone bills, or they could be swept up as part of a larger package of must-pass legislation. Congress is poised for a year-end battle over the debt ceiling and government funding, and it’s likely that interest groups of all stripes will seek to have their favored measures attached to any deal that is reached. Lawmakers also are likely to soon reauthorize the Children’s Health Insurance Program, a government-funded health insurance program for children in lower income families, which could potentially provide another vehicle for added proposals. Funding for the program formally expires on Sept. 30.

While lawmakers are set to begin discussing tax reform, experts said it’s not looking very likely that any ACA taxes, including the Cadillac tax, will be addressed as part of that effort because the healthcare debate has become so heated. A tax reform framework released by the White House and congressional leaders on Wednesday did not reference any changes to ACA taxes, including the Cadillac tax, a health insurance tax on insurers or the medical device tax.

Still, others observers are skeptical that anything can get done in the few remaining months of the year, especially as Congress turns to reforming the tax code, funding the government and other priorities.

“The ACA is there, we’re dealing with it, it’s kind of business as usual,” says Seth Safra, a partner at law firm Proskauer Rose, who specializes in employee benefits issues. “If something happens in Congress, great, but I don't think that we’re really relying on anything happening.”

While he says he’s hopeful that the Cadillac tax will be taken up by Congress before 2020, Safra adds that he doesn’t think lawmakers will address the issue this year.

“I think there’s a pretty good likelihood that the Cadillac tax will change or be delayed before it goes into effect in 2020, but that action will not occur until very close to 2020,” he says.

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