Now that President Obama has been re-elected to a second term, his signature health care reform law known as the Affordable Care Act (ACA) is on track to be fully implemented beginning January 2014. Affected employers must be prepared to provide government-approved health benefits to employees or pay fines for failing to do so. However, whether the law will be successful in achieving its goals of controlling health care costs and expanding coverage to the uninsured remains to be seen.
If the ACA is not viewed as successful within the first few years, it will be vulnerable to political attack from opponents who wish to repeal or significantly modify it. The law's opponents recognize repeal will not be possible while the president remains in office, but they will keep fighting against what they view as a government takeover of the health insurance system.
Congressional Republicans, who have majority control of the House, maintain their long-term goal continues to be full repeal of the health care law.
House Republicans are expected to focus their short-term strategy on three areas during the next two years. They first will attempt to advance legislation to repeal individual components of the law where it may be possible to pick up substantial Democratic support, such as the medical device tax and the Independent Payment Advisory Board. They then will conduct extensive oversight investigations of the law's implementation, which they already have begun doing through committee hearings. Finally, they will take legislative action in response to problems that may arise as the law is implemented.
A number of obstacles
The most important potential obstacle to successful implementation of the law is strong opposition from many Republican governors. This is important because state governments play a key role in the law's implementation through their traditional role of regulating health insurance markets. Lack of cooperation from governors could make successful implementation of the law much more difficult.
State governments play a key role in creating and operating new insurance exchanges the ACA establishes. Exchanges are online marketplaces intended to make it easier for individuals and small businesses to shop for, purchase and enroll in health care plans. The ACA allows each state the option of setting up and operating an exchange within the state under basic parameters. Alternatively, it also allows each state to have the federal government operate the exchange or establish a hybrid federal-state exchange in partnership with the Department of Health and Human Services (HHS).
To date, more than 30 states with Republican governors have indicated they will allow HHS to establish and operate the exchange in their states rather than doing so themselves. However, some observers question whether the federal government has the capability to operate numerous exchanges in different states. The exchanges are scheduled to begin operating in October for coverage that begins in January 2014, and properly handling exchanges' marketing and enrollment functions will be critical to the law's initial success.
Additionally, the ACA mandates employers with 50 or more "full-time equivalent" employees provide government-approved insurance or pay a penalty to the Internal Revenue Service (IRS) for failing to do so. Employers also may be required to pay a penalty if they provide qualifying coverage but their employees qualify for new subsidies created by the law. NRCA and other business groups worry mandating minimum benefits employers must provide to employees may increase costs for small businesses that already have difficulty affording health coverage for employees.
Many employers soon will be confronted with the decision of whether it makes more economic sense to pay the IRS penalty rather than provide employee coverage. If many employers choose to forego providing coverage, their employees will need to purchase subsidized coverage on their own through the exchanges. If this happens on a widespread basis, it may drive up the ACA's cost to tax-payers and add to already unsustainable federal budget deficits.
These are just a few of the issues that will determine whether the ACA is implemented successfully during the next few years. NRCA supports repeal of the law because of its effect on employers; however, the association also has worked to provide constructive input to federal agencies in an effort to make the law as practical as possible for businesses. NRCA will continue working to improve and/or modify specific aspects of the ACA for employers as they are implemented.
Duane L. Musser is NRCA's vice president of government relations.