Imagine wandering into a clothing store. You pick out a leather coat and think, “This is just what I need.” You pick it up and you notice a long tear down the front and the coat unravels in your hands. You’re left holding an overpriced rag not fit for its intended use. The clerk behind the counter yells: “Hey, you broke it, you own it.”
In what alternative universe would you say, “OK, I guess you’re right.”
The answer: none. But this is exactly the kind of nonsense we’re hearing in Washington, D.C., from the loyal opposition and supporters of the Affordable Care Act.
I can barely believe my ears. Do they not realize that the ACA is, in fact, broken on the shelf and needs to be fixed? Only the most politically deluded can claim that the ACA is not broken on the shelf: insurance cooperatives closing, insurance carriers exiting markets, double-digit premium increases and shrinking provider networks are all very obvious indices of a broken system.
On the off chance that they don’t, here’s my attempt to help them understand some of the ways in which this law was broken when it hit the stores. The hope being that instead of politicizing as they always seem to do, they all might work together on a replacement that will fix some of the fundamental ACA flaws so that the replacement will have a better chance of not being broken on the shelf.
Also see: “ Unwinding ACA: Impacts & Implications .”
Here are just a few of the ways in which the ACA was born broken:
The ACA negatively impacts job growth
Supporters of Obamacare call this a myth. They respond to the many stories of small business owners reducing or scaling back hours as “anecdotal.” However, in my travels over the last seven years educating employers about the Affordable Care Act, I’ve seen firsthand that this is a consequence of the law and its instances of occurrence are significantly more than “anecdotal.”
There are two elements of the law that contribute to this problem: First, the “pay-or-play” penalties apply once an employer reaches the magical threshold of 50 full-time equivalent employees and second, the totally arbitrary and not founded in any business reality establishment of 30 hours a week defining what it means to be “full-time.” Countless are the reports from the Bureau of Labor Statistics and other sources that indicate that over the past seven years part-time employment has remained flat. This means that employers are purposely maintaining part-time positions, below the 30 hour per week mark, possibly to avoid becoming an “applicable large employer” under the act or, having already exceeded that mark, to lessen the exposure to the penalty. You can look it up.
A law that effectively penalizes employers for job growth is a law, in my view, that is inherently broken.
Any fix that the federal government develops should abolish penalties and focus more on rewards — rewards for creating good, sustainable jobs that offer good benefits. Hopefully, our elected representatives in Washington can work together to enact laws that encourage — through tax breaks and credits or otherwise — employers of all sizes to offer jobs that include employer-sponsored group health insurance.
The ACA is a jobs act for government regulators, lawyers and consultants
The ACA, as written, departed significantly from the typical forms of legislative drafting. It is well documented that most of the detailed requirements of the ACA were punted to federal (and state) regulators to create the rules. Supporters of this process would have us believe that this is the norm. It is not and it should not be the norm. No one elected the head of the Internal Revenue Service, Health and Human Services, the Department of Labor or any of the many other agencies involved in writing rules around the ACA to draft law — but that’s exactly what they are doing. And they have been doing it in a way that was never intended under the Administrative Procedure Act, the federal law which regulates how federal agencies write rules.
A fundamental tenet of the APA is that important rules should be subject to public notice with an opportunity to comment before the rules can take effect. This important concept is a foundation of the APA because it designed to address the concern that many (smart) people have about unelected political appointees and bureaucrats making law. Notice and rulemaking procedures are designed to gather input from interested stakeholders, replacing the vote with input process.
But notice and rulemaking under the ACA on important issues is tellingly missing. Want proof? Check out the 37 (and counting) separate “FAQs” and other sub-regulatory guidance released by the DOL, HHS and the IRS implementing, in some cases, truly groundbreaking changes to existing law. These changes range from mundane changes to how plans perform mental health parity testing to more controversial changes to existing tax law that provided for the use of tax-preferred vehicles like health reimbursement arrangements and cafeteria plans to be used for the legitimate purpose of purchasing individual health insurance.
Don’t get me wrong — I’m not striking a political position here on any of these (and many other) agency-created requirements. I’m simply stating what should be an obvious idea: that such groundbreaking advancements in the law that, among other things, significantly increase the cost of providing health insurance by employers, should be implemented as the result of bipartisan legislation by elected representatives, properly introduced, debated and signed into law by an elected president, and not as the result of executive action, especially when there is no opportunity for those affected to have prior notice and an opportunity to comment.
Any federal law that from its inception invites unelected political appointees and their minions to write groundbreaking law is, in my view, broken from the start in a democracy. My hope is that the Republicans and Democrats can work together to write laws that are properly debated when they replace the ACA. My further hope is that consideration will be given to the cost of providing services and the impact of those costs on the employer-provided health insurance system that is the primary way in which we deliver health insurance in this country.
The implementation rules are too complex
In a way, this failure of the ACA is related to the failure discussed above. The ACA is broken in that in its implementation the agencies have created a Rube Goldbergian system for all aspects of compliance with the law. Take the reporting requirements (please). The IRS has foisted onto employers (and individuals) a reporting system that is not simple, straightforward or efficient; in business, these three characteristics are typically the hallmark of a good reporting structure. But the instructions to Forms 1094 and 1095 couldn’t be more dense and unreadable if they were written in hieroglyphics. Yes, the information being sought from employers is complex, another attribute of a broken law, but one wonders if all of this information couldn’t have been just as easily collected through the addition of a few boxes on employees’ W-2s and a few more lines on the corporate tax return?
I note for those who would scoff at this suggestion that in Massachusetts, where we continue to be subjected to a state “individual mandate” as well as a federal “individual mandate,” we all indicate to the Commonwealth that we have coverage for purposes of state law on a single page form called the “1099-HC.” Check it out. It accomplishes in one page what the IRS thinks it needs reams of paper to collect. Rube Goldberg is alive and well and lives at 1500 Pennsylvania Avenue.
I get it that politicians want to view this from a purely political perspective and thus their ridiculous admonition: you break it, you own it. But I would encourage them all to exit from the clown car they are riding in and take a good look at this law. On so many levels it is already deeply and fundamentally broken and it needs to be fixed.
Yes, there are many good things about the ACA and I trust that reasonable people working in the best interest of the American public will know what is good and attempt to keep it. The current Congress doesn’t “own” what is already broken. They have a chance to fix it and my hope is that they can put away their political differences and work together on bipartisan legislation that will fix the problems that exist Tossing out silly bon mots that have no founding in truth or reality is not a good path to victory in the 2018 congressional elections.
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