Obama forced to veto law dismantling ACA after Congress approves

The Republican-led U.S. Congress has passed an act repealing portions of Affordable Care Act, though it will be vetoed by President Obama.

Congressional Republicans are leading a push to repeal the Affordable Care Act, and while it's unlikely such legislation will pass the president's desk, the move may provide a symbolic rallying call for ACA opponents.

The legislation would repeal significant sections of the ACA, including the requirement that individuals and large employers purchase insurance or face fines. The bill would also eliminate federal Medicaid expansions as well as subsidies for qualifying low-income policyholders who purchase insurance through federal or state exchanges. Additionally, the law would remove all federal funding for Planned Parenthood.

"The legislation would repeal significant sections of the ACA."

However, as Insurance Journal noted, some aspects of the ACA would be preserved by the proposed legislation. Conservative lawmakers have not found fault with ACA restrictions that require insurers set premiums and offer coverage without regard to the policyholder's pre-existing conditions.

Symbolic significance
While President Barack Obama has already announced his intent to veto the legislation, the bill may still speak to the growing unpopularity of the ACA. Speaking with The New York Times, Bill Hoagland, senior vice president of the Bipartisan Policy Center and a former Republican member of the Senate Budget Committee, said the law represents American frustration with high health care costs and limited provider options under the ACA.

"This will only be the eight veto of Obama's tenure as president."

"This is a big deal," Hoagland told the Times. "This vote sends the signal to the president and the American people there are changes that need to be made in this law."

As the Times reported, this will only be the eighth veto of Obama's tenure as president. The publication also noted the White House has expressed frustration that resistance to the ACA continues even as coverage has grown to cover more than 17 million uninsured Americans and many aspects of the law, including the ability to extend coverage to the policyholder's children, have been popular.

Health insurers still experiencing losses
As Business Insurance noted, so far the ACA has not been profitable for health insurance providers. Many insurers have reported losses, including UnitedHeath Group Inc., which announced it may leave the exchange in 2017. Nearly half of the marketplace's co-ops have also failed due to high losses.

However, some of that may change as the exchange matures and insurers have access to more data that allows them to adjust prices accordingly. According to Business Insurance, many policyholders who purchased insurance from the marketplace were higher-risk and more frequent users of medical care, which led to higher losses for providers. It's likely insurers will also implement measures to reduce losses, including raising premiums, reducing provider networks and no longer offering gold and platinum plans.

Speaking with Business Insurance, Neal Freedman, an analyst with Standard & Poor's, said the marketplace will likely experience several changes in the next few years, but losses should begin to stabilize for insurers soon after. According to Freedman's analysis, more stability and long term sustainability is expected to develop between the end of year three and the beginning of year five of open enrollment. 


Congress delays ACA’s Cadillac Tax for two years

Many policy holders are already seeing higher deductibles on their company-sponsored health plans.

As part of its recently improved budget deal, Congress passed legislation that delays implementation of the Affordable Care Act's Cadillac Tax for two years.

The spending bill, which passed the House in a 316-113 vote and the Senate with a 65-33 vote, would delay implementing the Cadillac Tax until 2020. Originally scheduled to go into effect in 2018, the Cadillac Tax was designed to restrict employers from offering high-cost employer-sponsored health plans by placing a 40 percent excise tax on plans exceeding $10,200 for individual coverage or $27,500 for family coverage annually.

"Opponents of the Cadillac Tax see its delayed implementation as a sign of its eventual repeal."

Some opponents of the Cadillac Tax see its delayed implementation as a sign of its eventual repeal. In a statement, James A. Klein, president of the American Benefits Council, said support for repealing the tax is diverse and includes patient advocates, unions and private and public sector employers.

"We applaud Congress for passing a two-year delay of the 'Cadillac Tax' and thank the Congressional champions who made this possible," Klein said. "The delay provides a much-needed down payment toward the ultimate goal of full repeal."

However, Forbes contributor Brian Blase argued the Cadillac Tax would actually remedy a major problem with the Affordable Care Act: the tax exclusion for employer-sponsored health insurance leads to employers offering overly expensive insurance. This leads to lower wages for workers who see more of their pre-tax income going to pay for their employer-sponsored insurance plans.

Controlling health care cost
According to a report from the Mercatus Center at George Mason University, this tax loophole also creates market distortions and leads to $300 billion in untaxed revenue each year.

"Many of the United States' current health-care-related problems – from lack of choice and competition to rising costs – stem in part from the tax exemption for employer-provided health insurance," the Mercatus report concluded.

"Proponents of the Cadillac Tax argued it would help to slow U.S. health care spending."

As reported by Business Insurance, group health care plan costs are increasing each year, and proponents of the Cadillac Tax argued it would help to slow U.S. health care spending. Even though the tax is delayed for now, many insurance providers had already begun restructuring their offerings in order to lower their rates and avoid the 40 percent levy. According to a report from the Kaiser Family Foundation, 53 percent of large employers with 200 employees or more have already analyzed their plans to see if they would be hit with a high-cost plan tax and many have made changes to lower plan expense. The Kaiser report also found 8 percent of large employers had already switched to lower-cost plans.

However, as CNN noted, many employer-sponsored plans have also begun passing on the cost of the Cadillac Tax to employees by increasing deductibles and other out-of-pocket expenses. Wellness programs, on-site clinics and other costly programs may also be eliminated as employers look for ways to control the health care costs they are absorbing.