We didn’t take ten weeks off because there was nothing to talk about. Rather, we concluded around Labor Day that anything useful to be said about ACA compliance, pre-election, would be interpreted as political advocacy, so we decided to watch and wait. The anti-ACA candidate won, and his party carried Congress, too. That settles that, right? Probably not, at least for 2017. Here’s why.
Have you ever heard of federal legislation that repealed and waived payment of tax debts already accrued? Neither have we. Employer mandate taxes have accrued monthly since January 2015. Now that the election is over, we expect IRS to begin mailing proposed assessments, followed by assessment notices, based on data collected from Exchange subsidy certifications and insurer and employer information reports. To our knowledge, neither the President elect, nor anyone on his team promised otherwise. And if they had, that promise would be exceedingly hard to keep.
The ACA actually is two laws, once of which (Pub. L. 111-152) was passed by a bare Senate majority in a process called “budget reconciliation” that is filibuster-proof. Go ahead, click the link. What’s in there can be repealed by budget reconciliation. Here’s a hit list of headings:
Sec. 1001. Tax credits.
Sec. 1002. Individual responsibility.
Sec. 1003. Employer responsibility.
Sec. 1004. Income definitions.
Sec. 1005. Implementation funding.
Sec. 1101. Closing the medicare prescription drug ‘‘donut hole’’.
Sec. 1102. Medicare Advantage payments.
Sec. 1103. Savings from limits on MA plan administrative costs.
Sec. 1104. Disproportionate share hospital (DSH) payments.
Sec. 1105. Market basket updates.
Sec. 1106. Physician ownership-referral.
Sec. 1107. Payment for imaging services.
Sec. 1108. PE GPCI adjustment for 2010.
Sec. 1109. Payment for qualifying hospitals.
Sec. 1201. Federal funding for States.
Sec. 1202. Payments to primary care physicians.
Sec. 1203. Disproportionate share hospital payments.
Sec. 1204. Funding for the territories.
Sec. 1205. Delay in Community First Choice option.
Sec. 1206. Drug rebates for new formulations of existing drugs.
Subtitle D—Reducing Fraud, Waste, and Abuse
Sec. 1301. Community mental health centers.
Sec. 1302. Medicare prepayment medical review limitations.
Sec. 1303. Funding to fight fraud, waste, and abuse.
Sec. 1304. 90-day period of enhanced oversight for initial claims of DME suppliers.
Subtitle E—Provisions Relating to Revenue
Sec. 1401. High-cost plan excise tax.
Sec. 1402. Unearned income Medicare contribution.
Sec. 1403. Delay of limitation on health flexible spending arrangements under cafeteria
Sec. 1404. Brand name pharmaceuticals.
Sec. 1405. Excise tax on medical device manufacturers.
Sec. 1406. Health insurance providers.
Sec. 1407. Delay of elimination of deduction for expenses allocable to medicare part
Sec. 1408. Elimination of unintended application of cellulosic biofuel producer credit.
Sec. 1409. Codification of economic substance doctrine and penalties.
Sec. 1410. Time for payment of corporate estimated taxes.
If it was not passed by budget reconciliation, it probably can’t be repealed by budget reconciliation. But in any event, there must first be a budget to which taxes and spending may be reconciled. That normally takes months, and in recent years, budget passage has been the exception, rather than the rule. It would be highly ironic, it seems to us, if the new President were to take Obama-like “executive action” simply to decline to enforce the employer mandate. So, we expect employer mandate tax assessment and collection in 2017, regardless of the success or failure of ACA repeal or reform legislation.
Similarly, once employers learn the identities of employees who bought Exchange coverage with subsidies, those employees will be protected from employer retaliation under ACA § 1558 (29 U.S.C. § 218C). In June, HHS began mailing 2016 subsidy certification notices, naming those employees. Open enrollment for 2017, now underway, will produce many more notices, protecting many more employees. This anti-retaliation law (see Pub. L. 111-148) cannot be repealed by budget reconciliation; 60 Senate votes will be needed. We can’t count that high, and we don’t expect OSHA to simply ignore retaliation charges filed under the statute.
The same goes for the ACA’s big coverage cost drivers passed as amendments to ERISA, the PHS Act and the tax Code as part of Pub. L. 111-148 – e.g., limited age banding, prohibition of annual and lifetime limits, health status discrimination prohibitions, preventive health services mandates, guaranteed issue and renewal, etc. If a reform or repeal bill can’t carry those loads, they may be thrown overboard.
There may be a Senate majority for repeal of the Cadillac Plan Tax (delayed until 2020 already), and perhaps the individual and employer mandate taxes – we can’t imagine one going down to defeat without the other. But the Medicare surtax? Does the party in power want to be blamed for penury of the Medicare hospital insurance trust fund?
Congress may agree to repeal the Independent Payment Advisory Board – what some have called a “Death Panel.” It’s in § 3403 of Pub. L. 111-148 (42 U.S.C. § 1395kkk). It is widely unpopular, even though the Medicare growth rate has not yet triggered IPAB action and the agency has not been staffed.
How about reneging on the feds’ promise to pay almost all of the cost of Medicaid expansion? Or the premium and cost sharing subsidies that have driven almost all of the business being done on the Exchanges? It’s far easier to pass a new entitlement program than to repeal it. As President Reagan famously said, the closest thing to eternal life on this Earth is a federal program, and the ACA is a huge federal program.
Probably, the path to 60 Senate repeal votes leads through an array of replacement compromises that will be worked out over more than one session. The next real inflection point is the mid-term election of 2018.
We are not discounting efforts to change the content of the ACA or the course of ACA enforcement. We are predicting that our readers won’t know what will be done for many months. In the interim, you may have to confront ACA compliance issues from which the new Administration cannot provide relief, despite its best intentions and efforts on your behalf. We’re keeping a sharp watch out.