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11 Ways Congress Can Improve the ACA Right Now

Now that the 2014 elections are behind us, we thought we’d take a look at 11 actions Congress can take to improve the Affordable Care Act. Several of our suggestions have bipartisan support and, even in the 2015 session of Congress, a vote to do away with some of the less popular aspects of the ACA could attract Democratic votes.

1.  Clarify application of federal advance tax credits

Congress should clarify whether federal advance tax credits apply in states that use the federally facilitated marketplace (“FFE”).  Normally, this would be resolved when the House and Senate reconcile differences between their respective versions of a bill; however, that did not happen as a result of the ACA’s unusual, fast-track path into law.  We see this as a legislative issue, and not one for the Supreme Court.  However, we don’t hold out much hope, given the deep partisan divisions in Washington.

2.  Repeal the medical device tax

The ACA medical device tax is a 2.3% excise tax on sales of medical devices.  The stated purpose for this tax was to increase revenues in order to help offset the federal  budget deficit.  The Congressional Research Service in a November 3, 2014 report, stated, “Viewed from the perspective of traditional economic and tax theory..the tax is challenging to justify. There is broad bipartisan support for ending this tax.  The tax also imposes administrative and compliance costs that may be disproportionate to revenue.”  There is broad support bipartisan support for repeal.  In fact, the Senate and the House of Representatives passed separate bills in 2013 which included repeal of the medical device tax, though neither made it into law.

3.  Repeal the transitional reinsurance fee

The transitional reinsurance fee funds greater than expected medical claim costs for insurance policies sold through a public health insurance exchange.  In principle, this makes sense if it applied to the policies it’s designed to support.  However, what people don’t realize is that the reinsurance fee applies to on all insurance policies, including employer plans, not just exchange-sold plans.  In 2014, the reinsurance fee adds $21 per month to the health insurance premium for a family of four.  It is a redistribution of money from people who get their insurance outside the exchanges or from an employer to people who buy from an exchange.

4.  Repeal the small business deductible provision

Originally established at $2000 per employee or $4000 per family insured through small businesses, HHS set this cap aside in 2014.  We talked about this in September 2012, except to say it’s still a bad idea, and we’re pleased HHS realized it.  Since it is already replaced by regulation, we think it is ripe for removal from the ACA.

5.  Replace the federally facilitated marketplace

While it’s too late for 2014, but we believe the FFE should be replaced for the future by allowing expanded, cross-border access for private marketplaces (e.g., ehealthinsurance). The private sector designs and implements technology markedly better than government.  In addition, competition will drive private exchanges to innovate and find better ways to serve policies than government.  This approach also offers relief to states from the burdens associated with operating websites, call centers, and the administrative costs of exchanges.

6.  Require that in and out of network services be subject to the same maximum out-of-pocket limits

Unless your family has significant medical expenses, this probably isn’t on your radar.  With the advent of narrow or skinny networks, many specialty hospitals that were in-network in 2013 are now of out network for many people.  With greater out of network deductibles and out of pocket maximum limits (double the in-network limit for many policies), people whose specialty provider is outside their new, narrow network face greater financial risk than before the ACA became law.

7.  Increase CMS reimbursement levels for medical providers

Higher reimbursement levels offer doctors greater incentive to provide care for Medicare/Medicaid patients, relieving an existing strain on physician access. Further, since some insurance companies have begun using the Medicare reimbursement rate as a basis for their own coverage levels, it can serve to increase benefits for some policyholders.

8.  Eliminate the Independent Payment Advisory Board

Congress should eliminate the Independent Payment Advisory Board now.  Under the ACA, the IPAB will determine what medical services are valuable enough for payment by Medicaid and Medicare.  Beyond being an added level of bureaucracy that offers little value, we see Constitutional and legislative problems with the IPAB provision.  First, the IPAB’s authority includes a provision that allow its recommendations to become law if Congress does not act on them.  This violates the Constitutional separation of powers by creating law that was neither voted on by Congress nor signed by the President.   Second, Senate Democrats included a section in the ACA that creates a very restrictive timeline for repealing the IPAB.  In fact, after early 2017, it will be harder to eliminate the IPAB than to amend the Constitution.

9.  Revise the FTE minimum in the ACA employer mandate

Presently, the ACA considers an employer with 50 or more full-time equivalent employees a “large company” that must offer its employees health insurance or face financial penalties.  Many people believe the transitional definition of 100 employees is more appropriate and should stay in effect.

10.  Revise the number of hours before an employee is considered full-time by the ACA

The current 30 hour threshold should increase from 30 hours to 35 or 36 hours. This is more in line with many state labor  laws.  It also can increase the income of part-time employees, especially those who saw their working hours reduced to less than 30.  Some Senators have discussed using a 40 hour work week as the definition.  However, this seems impractical since only employees who regularly receive overtime pay would be eligible for health benefits.

11.  Repeal the Cadillac tax

The ACA’s excise tax on high value plans goes into effect in 2018, but employers are already taking steps limit plan benefits before having to make gigantic changes for 2018.  Analysts now report that far more health plans will be subject to the Cadillac tax than initially thought.  We also think it needs repeal, because the tax places a greater burden on policyholders out of whose pockets premium is paid.  Some analysts suggest the net impact on employee could more than double their premiums.  We agree with the analysts who see the Cadillac tax as a needless cap on total compensation.


These are just a few of our ideas, and we know there are many more. We would love to hear what you have to say.


One response to “11 Ways Congress Can Improve the ACA Right Now”

  1. Scott Clendaniel Avatar
    Scott Clendaniel

    I see a few that aren’t on this list that would have a huge impact on the success of the ACA and employers and their employees. Right now the ACA is causing huge rate increases on employers and the middle class. Here are ways to fix this now:

    1. Allow employers to pay for employees individual premiums as a business expense.

    2. Get rid of the salary cap for subsidies and have subsidies max out at the current 9.5%. That way people will gradually earn their way out of subsidies rather than being cut off at the current salary cap of roughly $46k. This is middle class income and overtime or a bonus can put people over the cap where they end up loosing more money than they earned. People end up having to choose between more income or subsidies.

    3. Get rid of the website and have carriers determine subsidies based on tax returns. They already have calculators on their websites and do it a lot cheaper than the govt can.

    These are just a few but the first two would be HUGE to employers and employees who are being crushed by this law.

What do you think?