5 things employers would change about the ACA
Six years after its passage, the Affordable Care Act remains a hot-button issue. Congress has voted more than 60 times to undo, defund or revamp it. On the campaign trail, presidential candidates’ positions on the law range from vowing to repeal and replace it to promising to build on and improve it.
Meanwhile, most employers have come to terms with it. Since 2010, they have made many plan changes and implemented processes needed to comply with the law, and have factored it into their long-term health plan strategies.
In addition, despite worries that the law might cause employers to discontinue offering health benefits altogether, a 2015 Willis Towers Watson survey of 487 large U.S. employers found they are more committed to providing some form of healthcare coverage to employees over the next 10 years than they have been in recent years. Employer confidence in offering healthcare coverage 10 years from now has nearly doubled to 44% today, from 25% in 2014.
After six years of uncertainty and disruption, many employers don’t want to start over with a big new piece of healthcare legislation and endure another multi-year transition — especially with no guarantee that the final result will be better or less burdensome. Instead, employers want dramatic improvements to the ACA.
History suggests that what employers want is typical of what happens with most complex pieces of legislation. Often from the moment a bill is signed into law — sometimes even before the ink is dry — the legislative process of refining and improving it through additions and amendments begins.
Consider Medicare. Since Medicare was signed into law in 1965, there have been 116 bills passed that have added to or amended Medicare. Some of the bills have been narrow in scope; some have been sweeping.
The broadest law changing Medicare was the Medicare Modernization Act of 2003, which added 27 new sections and amended 55 others. Ironically, given the topic of this article, the second broadest was the ACA, which created 12 new sections and amended 48.
Even though there have been a handful of legislative changes to the ACA, the law has not followed a similar path to that of Medicare; for the most part, the Obama administration has implemented the law without a “technical corrections” bill that often follows passage of major legislation.
If Congress were to take the long view on the ACA as it has done with Medicare, here are five things employers tell me they would want to see changed about the law right now.
1. Eliminate the Cadillac tax. Based on the high cost of healthcare coverage, most employers believe that far from taxing Cadillac health plans the tax targets Camry plans. If the provision can't be eliminated, employers would like to see it revised to actually target overly generous plans.
2. Approve the Small Business Healthcare Relief Act. This Act lets small employers offer defined contribution health benefits, which would give small businesses more flexibility around funding plans and the individual plan market a much-needed boost. Large employers also would appreciate such flexibility.
3. Keep pushing delivery system reforms … and enforcing anti-trust rules. Employers appreciate that providers are transforming the way they deliver care to emphasize value over volume. But they are wary of providers banding together to do it, which they feel could hamper future negotiations in the private sector.
4. End the employer mandate. Employers offered coverage before the mandate, and they would likely continue to offer it without a mandate. Plus, the mandate’s administrative complexities and reporting burden are onerous.
5. Adopt provisions that better address the root causes of the high cost of healthcare. Curbing healthcare costs was a stated goal of the ACA. But as the law was being debated in Congress, no clear consensus emerged on how to achieve this. So while the law includes a number of provisions aimed at lowering costs, there remains disagreement about whether they have been effective or will be in the future.
Most employers were not thrilled when the ACA was passed and still have concerns about its impact on employer-sponsored healthcare, as this wish list suggests. But six years into the transition, they have accepted it and adopted the attitude that it’s better to deal with the known that take a risk on the unknown.