- ACA Brief: Path to Repeal - No Waiting Period for the New Administration
- January 24, 2017 | Authors: Brenna M. Clark; Adam B. Cohen; Brittany Edwards-Franklin; Michael A. Hepburn; Cristopher D. Jones; Paul R. Lang; Carol T. McClarnon; Alice Murtos; Meredith L. O'Leary; Vanessa A. Scott; Ryan M. Session; W. Mark Smith; William J. Walderman; Allison E. Wielobob
- Law Firms: Sutherland Asbill & Brennan LLP - Atlanta Office; Sutherland Asbill & Brennan LLP - Washington Office; Sutherland Asbill & Brennan LLP - Atlanta Office; Sutherland Asbill & Brennan LLP - Washington Office; Sutherland Asbill & Brennan LLP - Atlanta Office; Sutherland Asbill & Brennan LLP - Washington Office
This ACA Brief is the second in a series of installments that will closely track congressional and administrative actions relating to ACA provisions that impact large employer-sponsored plans.
On January 20, President Donald Trump issued the first executive order of his presidency, directing federal agencies to minimize the economic burden of the Patient Protection and Affordable Care Act (ACA) in anticipation of its repeal. Since a president cannot, by unilateral action, repeal final (or interim final) regulations, the executive order does not repeal existing ACA rules that impact large employer plans. Instead, the executive order directs the executive branch to operate within the boundaries of the existing law to:
- Alleviate "unwarranted economic and regulatory burdens of the [ACA];"
- Prepare to "afford States more flexibility and control to create a more free and open healthcare market,"
- Encourage a "free and open market in interstate commerce" for healthcare services and health insurance;
- Grant waivers, deferrals, or exemptions from ACA provisions that impose fiscal burdens on certain individuals, plans, and entities; and,
- Revise ACA regulations as necessary to achieve these goals through the normal regulatory process outlined in the ACA.
- The new Administration is clearly signaling its intention to replace the ACA with a state-driven solution. Although it is unclear what that solution will be, given more than 50% of individuals under age 65 receive their health coverage through an employer-sponsored health plan, any state-driven solution is likely to impact large employer plans. The executive order’s specific references to a "free and open healthcare market" and an “open market in interstate commerce” for health insurance also raise questions regarding the status of ERISA preemption for large self-insured health plans, including multiple employer welfare arrangements, going forward.
- The executive order may represent an opportunity to make changes to the ACA that could benefit employer-sponsored health plans. The executive order seems to invite: (a) dialogue with the Administration as to which ACA provisions create economic burdens for employers who purchase health insurance for their employees in the group market; and (b) requests for some form of relief from those provisions.
- However, it is unclear whether such relief extends to self-insured plans. Based on the text of the executive order, the executive branch is specifically ordered to provide relief to “individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products or medications.” As direct purchasers of healthcare services, self-insured health plans are not, technically, “purchasers of health insurance” and would not fit into any other enumerated category. While it is unlikely that the Administration intends to exclude self-insured plans from seeking relief under the executive order, the language is not entirely clear.
- Any action under the executive order may be delayed by the confirmation process. The order provides specific direction to the Secretary of Health and Human Services and the “heads of all other (agencies)” to carry out the president’s directives. However, since none of the secretaries of the tri-agency task force invested with enforcement authority under the ACA have been confirmed, implementing the executive order immediately may prove difficult. President Trump’s Department of the Treasury Nominee, Steven Mnuchin, received a Senate hearing on January 19, but has not yet been confirmed; his nominee for the Department of Labor, Andrew Puzder, has not yet received a Senate hearing; and his nominee for Secretary of Health and Human Services, Tom Price, received a Senate hearing on January 18, but also has not been confirmed. Seema Verma, who has been nominated as Administrator for the Centers for Medicare and Medicaid Services (CMS) and is likely to head up federal efforts to implement a state-based health insurance solution, is still awaiting referral to the Senate Finance Committee for consideration.
- The executive order will probably operate in conjunction with the repeal efforts taking place in Congress. As noted in our January 17 ACA Brief, Congressional Republicans are currently using the reconciliation process to effect the repeal of certain provisions of the ACA. The repeal legislation is expected to be reported out of the respective committees on January 27. Because repeal through the reconciliation process is limited, certain other key provisions of the ACA are expected to survive this round of repeal. Those ACA provisions that are repealed through reconciliation may be delayed for budgetary reasons. The executive order is likely to “stand in the gap” between what Congress is able to achieve through reconciliation, and what ACA stakeholders see as the executive action necessary to keep insurance markets stable in the short term.