ACA individual mandate repeal further weakens healthcare law

On the Hill

The final Republican tax bill repealed the Affordable Care Act’s (ACA) individual mandate, further weakening the ACA. The mandate repeal could destabilize the individual insurance market, leading to rising premiums and millions of people losing health insurance. Repeal of the individual mandate is the latest event in a series of steps that have curbed the reach and strength of the ACA, including decreasing ACA marketing efforts, shortening the enrollment period and ending cost-sharing reduction (CSR) payments. Despite the changes to critical elements of the ACA, most of the law’s core elements remain in place, including the online marketplace, consumer protections and subsidies. The actual impact of the individual mandate repeal is unclear. While the Congressional Budget Office (CBO) estimates it will result in 13 million fewer people having insurance in 10 years, some health experts believe that the penalty was not large enough to significantly change consumer behavior in the first place. Some hope that repealing the mandate will pave the way for renewed bipartisan efforts to completely rework the healthcare law.

The Republican tax reform bill, signed into law by President Trump, preserves exemptions for the country’s 3,000 tax-exempt hospitals and does not significantly change how such hospitals are regulated. Earlier drafts of the bill included language that would have prevented hospitals from issuing tax-exempt bonds, but the provision was dropped in the final version. Rules pertaining to how hospitals qualify for tax-exempt status also remain unchanged, including the ability to self-define “community benefit.” While hospitals will still be able to issue tax-exempt bonds, they will no longer be able to use “advance refunding” of outstanding bonds, which allowed them to get lower interest rates. The repeal of the individual mandate may hurt hospital revenue by decreasing the number of insured people. Moreover, many health systems and large hospitals would be affected by the 21 percent excise tax on executive compensation exceeding $1 million. Read more about the new tax law’s effect on tax-exempt entities.

The government spending bill passed by Congress on Thursday night included $2.85 billion to fund the Children’s Health Insurance Program (CHIP) through March 31, and provided $750 million for community health and diabetes programs.

Hospitals are hoping that Congress will block the $1.6 billion in 340B cuts ordered by CMS scheduled to take place Jan. 1. Representatives Mike Thompson (D-CA) and David McKinley (R-WV) co-sponsored a bill (H.R. 4392) to block the cuts. They argue that the rule would undermine care in rural and underserved areas by reducing hospital revenue. In addition to the legislative push, U.S. District Court Judge Rudolph Contreras announced that he plans to rule on the cuts before the end of the year, potentially bypassing the preliminary injunction requested by the American Hospital Association and other hospitals. They argue that the cuts would quickly cause facilities to cut staff and reduce services.

Despite hopes that the ACA market stabilization measures would be passed before the end of the year, Senators Lamar Alexander (R-TN) and Susan Collins (R-ME) announced that the measures to fund CSR payments and reinsurance would be included in the January omnibus package. They also confirmed that the Senate will wait until January to further fund CHIP, Community Health Centers and other healthcare extenders. In exchange for her support on the tax bill, Collins also asked Senate Majority Leader Mitch McConnell (R-KY) to delay the vote on the Alexander-Murray CSR bill and the Collins-Nelson reinsurance measure. House Speaker Paul Ryan (R-WI) has indicated that the House is committed to passing reinsurance measures to provide for high-risk pools. Some House Republicans oppose funding CSR payments but may be open to considering reinsurance legislation.

From the administration

President Donald Trump signed the tax bill on Dec. 22, 2017. Congress cleared the way for the president’s signing before January by including language in Thursday’s continuing resolution that waived the sequestration requirements that would have triggered automatic cuts to Medicare.

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