Lundy Insurance Services, Inc.

Will Congress Repeal Health Care Reform?

On March 23, 2010, President Obama signed historic health care reform legislation – the Patient Protection and Affordable Care Act (PPACA) – into law. Even before its enactment, controversy surrounded the health care reform law. The law continues to be at the center of partisan debate, especially following the changes made in Washington D.C. as the result of the November 2010 election.

In January 2011, when the 112th Congress convened, Republicans took control of the House of Representatives. As promised, efforts to fully repeal the health care reform law followed soon after. So far, these efforts have not been successful, facing the challenge of a Democrat-controlled Senate and the promise of a veto by President Obama. However, two smaller pieces of the health care reform law, which were unpopular with Republicans and Democrats alike, have been repealed.

Lundy Insurance Services, Inc is monitoring the health care reform debate and will alert you to any significant changes in the law.

ATTEMPTS TO FULLY REPEAL HEALTH CARE REFORM

In January 2011, the House passed repeal legislation by a vote of 245 to 189, with three Democrats crossing the aisle to vote with their Republican colleagues. The Senate also voted on repeal in February. However, that attempt was defeated, with Senators voting along party lines. Sixty votes were required for repeal; the measure failed 47 to 51.

It is possible that further attempts to fully repeal the health care reform law will be introduced in Congress. If any of these attempts are successful, Lundy Insurance Services, Inc will provide you with information on the status of the law.

REPEALED HEALTH CARE REFORM PROVISIONS

The House and Senate voted to repeal two unpopular provisions of the health care reform law in March and April 2011. The provisions repealed were:

• The requirement for businesses to report annual payments in excess of $600 on a Form 1099 starting in 2012; and

• The requirement for certain employers to provide free choice vouchers to lower-income employees to allow them to purchase health coverage on a state-run insurance exchange starting in 2014.

These provisions, if implemented, were expected to impose administrative burdens and increase costs for employers.

OTHER STRATEGIES

Republicans have been using other strategies to prevent the law from being fully implemented in its current form. These strategies include replacing, rather than repealing, parts of the law, or repealing the law “piece by piece,” using approaches like blocking funding or regulations. For example, on May 3, 2011, the House passed a bill that would block mandatory funding for the state-run insurance exchanges required to be operational by 2014 under health care reform. As with the full repeal attempt, it appears unlikely this bill will become law due to opposition in the Senate and from President Obama.

Additionally, in August 2011, the House Republican leaders announced that several House committees may draft legislation to repeal the health care reform law’s grandfathered plan rules. These rules exempt qualifying health care plans from complying with several provisions of the health care reform law, such as providing full coverage for preventive care services. If passed, Republican House leaders say that any new legislation would eliminate some of the requirements that health care plans must comply with in order to retain grandfathered plan status.

Other provisions of the health care reform law that Republicans may attempt to revise or repeal in the future include:

• The employer responsibility provisions, which provide that employers can face penalties for not providing a certain level of health coverage to employees;

• The individual responsibility requirement, which imposes penalties on individuals who do not obtain coverage;

• The Cadillac Plan tax on high-cost, employer-sponsored health plans;

• The tax on manufacturers of medical devices; and

• Cuts to Medicare.

Members of the GOP have said that they may want to keep some of the law’s provisions that are popular with consumers. Some experts have warned that keeping some parts of the law while repealing others may not be practical. Democrats are standing behind the health care package. However, as shown by the repeal of the 1099 and free choice voucher provisions, Democrats may be willing to revise some portions of the law, especially if changes will bring faster and more effective reform to the health care system.

WHAT’S NEXT?

Despite the various attempts to repeal the law, the potential future changes, and the small changes that have been made, the health care reform law as we know it is the law. Employers and health plan sponsors should make sure they are implementing the requirements as they become effective. If any changes are made to parts of the law that have already taken effect, there will likely be time for employers and plan sponsors to put changes into place.

Lundy Insurance Services, Inc will continue to update you on developments related to the health care reform legislation.