Do they act before or after the 2018 midterm elections? Either choice carries political risks
The Wall Street Journal
By Stephanie Armour and Kristina Peterson
Dec. 9, 2016 7:00 a.m. ET
WASHINGTON—Republicans united in their desire to overturn the Affordable Care Act are divided over whether to replace it before or after the 2018 elections, a choice that holds political peril either way.
Waiting until after the midterms could pose a political risk to the most conservative Republicans who campaigned on the repeal and whose constituents want the law to be gone as quickly as possible.
But passing a hastily-written replacement for the complex law could create chaos in markets and leave millions without health insurance. Some Senate Republicans believe putting a new system in place could take until 2019 or longer.
Along with likely legislative action by Republicans in January to dismantle parts of the ACA, President-elect Donald Trump is expected to take executive action that would weaken parts of the law. House Republicans also are likely to seek to cut off federal funding for Planned Parenthood Federation of America.
Midterm elections tend to disfavor the party that controls the White House, and Republicans are aware of the drubbing Democrats took in 2010, after they enacted the law with almost no Republican support.
“One of the lessons we learned from Obamacare is that partisan legislation is not sustainable and what we need to do is go back to the old-fashioned way” of reaching bipartisan consensus, Senate Majority Whip John Cornyn (R., Texas) said this week.
A transition period would be aimed at preserving health insurance for the roughly nine million consumers who get tax credits to offset premiums. “There needs to be a reasonable transition period,” House Speaker Paul Ryan (R., Wis.) said Thursday. “It’s just premature to suggest that we know exactly how long this transition will last.”
Some House Republicans insist a replacement can be done in two years or less. Their calculus is that getting rid of the law early in 2017 with a short or no transition period would force action on its replacement. “The only way this gets done is if our backs are against the wall,” said Rep. Mark Meadows (R., N.C.), chairman of the conservative Freedom Caucus.
Senate Republicans have indicated they want Democratic buy-in for their health-care overhaul. Finance Committee Chairman Orrin Hatch (R., Utah) said “three years would be better” for a transition, but acknowledged there is pressure from the House to move faster.
If House Republicans who want a speedier replacement defect, the House could lack enough votes to push through a three-year replacement plan. The clash also reflects the difficult path ahead for Mr. Ryan, who wants to keep the GOP united in its repeal and replacement plan.
“This election showed that people want things done now,” said Rep. Roger Williams (R., Texas). “People in America deal in real time and they want real-time solutions.”
Democratic leaders have signaled they are unlikely to cooperate, at least in the initial repeal phase, while some in the party up for re-election in 2018 in conservative-leaning states may feel pressure to fill the void if the law has been repealed.
“They have nothing to put in its place, and believe me, just repealing Obamacare even though they have nothing to put in its place and saying they’ll do it sometime down the road will cause huge calamity from one end of American to the other,” said Sen. Charles Schumer of New York, the next Democratic leader.
Each party will face political headwinds going into the 2018 midterms. Senate Democrats will be defending 25 of 33 seats in play, putting them at a disadvantage.
But Republicans will have political ownership of the health-care law at a time it is likely to still be in flux—and possibly in turmoil. And because they will control Congress and the White House, any voter angst could favor the Democrats in a sort of reverse dynamic of 2010
THE NEW YORK TIMES
By ROBERT PEAR
DEC. 6, 2016
WASHINGTON — Senate Republican leaders, after meeting with Vice President-elect Mike Pence, said on Tuesday that they would move immediately next month to start repealing the Affordable Care Act, despite qualms among some of their members.
“The Obamacare repeal resolution will be the first item up in the new year,” said Senator Mitch McConnell, Republican of Kentucky and majority leader.
Republicans have not fleshed out a plan to replace the 2010 health care law, President Obama’s signature legislative achievement. But on Tuesday they laid out their principles for a replacement plan and said they would try to minimize disruption for the 20 million people who have gained coverage under the law.
Senate Republican leaders appeared to agree with House Republican leaders on a “repeal and delay” strategy, which could keep parts of the health law in place for several years, as Congress works with the administration of Donald J. Trump to devise a replacement.
The Senate Republican strategy would start the repeal process in early January and could defer the effective date for several years, but not all party members were on board.
“They have to be done together,” said Senator John McCain, Republican of Arizona, referring to efforts to repeal and replace the health law. “We don’t want to have people left out.”
Democrats vowed to fight for preservation of the health law, on which public opinion has been deeply divided for six years.
“Bring it on!” Senator Chuck Schumer of New York, the next Democratic leader, said to Republicans. “Just repealing Obamacare, even though they have nothing to put in its place, and saying they’ll do it sometime down the road will cause huge calamity from one end of America to the other.”
Many health policy experts say the law has been beneficial. But Senator John Thune of South Dakota, the No. 3 Senate Republican, said: “It’s well documented, everybody agrees, both Republicans and Democrats, that Obamacare has serious problems. I would say it’s been a failure, and I think the American people agree.”
After repealing the law, Mr. Thune said, Republicans will proceed step by step to develop a replacement, built around four principles: States, not the federal government, should have the primary responsibility for health policy. Patients and doctors should be “in control.” There should be more competition among health plans, so consumers would have more choices. And small businesses should have more discretion and flexibility to configure health benefits for their employees.
After their lunch on Tuesday with Mr. Pence, many Senate Republicans were energized. After the inauguration of Mr. Trump, the schedule will be “very aggressive,” said Senator Michael Rounds, Republican of South Dakota.
But other Republican senators were still mulling their strategy.
Senator Bob Corker, Republican of Tennessee, suggested that it might make sense to repeal and replace the heath law at the same time, and that there could be pitfalls in deferring a replacement for several years.
“People are trying to figure out the best route,” Mr. Corker said. “It’s not really repeal if it’s still in place for three years.”
Senator John Barrasso of Wyoming, a member of the Senate Republican leadership, said Congress would need time to develop a replacement.
“Health care has been driven into the ditch by President Obama and this health care law,” Mr. Barrasso said. “It will take time to get the cart out of the ditch.”
Senator Susan Collins, Republican of Maine, said she supported efforts to repeal and replace the health law, but not Republican efforts to cut off federal funds for Planned Parenthood clinics. Last December, she voted against a budget bill that would have repealed major provisions of the health law because it would also have terminated funds for Planned Parenthood.
“Under the incoming administration, Republicans and Democrats will have a new opportunity to fix Obamacare, and there is a lot to fix,” Ms. Collins said on Tuesday, noting that premiums for health plans on the exchange in her state were increasing an average of 22 percent next year.
Nov 16, 2016 | By Dan Cook BenefitsPro
As the nation holds its breath in anticipation of the Republican Party’s reform of health care reform, insurers have already moved into the hyperventilation stage.
The health insurance industry is one that, historically, has evolved by increments.
Yet since the passage of the Patient Protection and Affordable Care Act, it has been asked to change by leaps and bounds. But now, with an incoming president and Congress that have vowed to undo the ACA with no replacement plan to offer, the industry doesn’t know what to brace for next.
Outgoing President Obama neatly summed up the dilemma facing the nation in an interview with the media the other day. “If they can come up with something better that actually works, a year or two after they’ve replaced the ACA with their own plan, and 25 million people have health insurance and it’s cheaper and better and running smoothly, I’ll be the first one to say that’s great,” he said.
While there’s been no shortage of criticism of the ACA’s structure, most insurance authorities say its basic components were, in theory, solid. The ACA offered truly affordable health insurance to those with pre-existing conditions and others who, due to their age and other factors, were previously facing budget-busting insurance premiums—if they could get coverage at all.
The poor were finally able to “buy” basic coverage, and insurers’ profits were somewhat protected by the “buy-or-pay-a-fine” law included to extract money from those who might not want coverage so that the subsidy pool could be filled.
Republicans say they intend to continue to offer affordable coverage to those with pre-existing conditions. (The poor will apparently be on their own again, at least based on current GOP statements.) But they do want to eliminate the “mandate.”
But insurers fear that, without the stick of the mandate, the carrot of pre-existing coverage just won’t work. And they will face the choice of either plummeting profits or escalating premiums—or both.
President-elect Trump and others in his party have floated various “solutions” to creating a mandate-less national health system. But insurers who spoke to The Hill poked large holes in all of them.
In a tweet reported by The Hill, the Kaiser Family Foundation’s Larry Levitt laid out the challenge facing the GOP: “There is a bipartisan desire to guarantee insurance for pre-existing conditions. Sadly, there’s no magic pixie dust that makes it easy.”
Focus turns to goal of replacing the Affordable Care Act
THE WALL STREET JOURNAL
By Stephanie Armour and
Congressional Republicans and President-elect Donald Trump are in agreement: The Affordable Care Act as it now stands is over.
On the day after the election, the focus turned quickly to the long-sought GOP goal of gutting the law and installing a replacement. Discussions are under way about what aspects to keep, what programs to kill, and how to create some sort of transitional plan to cushion the blow to consumers who now get coverage under the health law.
Both House Speaker Paul Ryan (R., Wis.) and Senate Majority Leader Mitch McConnell (R., Ky.) in postelection news conferences on Wednesday said addressing the law is a priority.
The immediate repeal Mr. Trump vowed is unlikely, however. One top Senate staffer said some time will be needed to build party consensus. And then there is the potential for a public backlash if millions of people suddenly lose health coverage. To that end, Mr. Trump has acknowledged the need for some sort of transition process.
Mr. Trump could topple parts of the law before Congress becomes involved, smoothing a legislative path for deeper repeal work. Rep. Michael Burgess (R., Texas), a physician and an influential GOP lawmaker on health policy, said he is eager to see Mr. Trump use executive action on this first day to weaken the law’s requirement that individuals buy health coverage or pay a penalty.
That change could be possible under a provision of the law that gives the federal government flexibility in creating exemptions from the penalty for people who want to forgo insurance, he said. Striking that down could spur insurers to re-evaluate their participation and encourage them to engage in negotiations about the future of the law.
Without 60 votes in the Senate to get around procedural hurdles, Republicans couldn’t repeal the whole law in one shot but could take out pillars of it using a budget maneuver that requires only a simple majority.
One target would be subsidies that blunt the cost of premiums for people who get coverage on the health law’s exchanges, said Timothy Jost, a professor at Washington and Lee University School of Law. Without a transition plan, 85% of exchange consumers who get subsidies would face the full cost of their premiums, prompting a major drop-off in participation.
The employer mandate that requires many companies with 50 or more full-time workers to provide health insurance also would likely go.
The transition time Republicans are discussing may help stave off a backlash if subsidies are immediately cut off and millions lose coverage, and it could give the GOP time to negotiate with hospitals and insurers that have supported and benefited from the ACA and now are concerned about major new financial burdens.
“I think they know you can’t yank the rug out from people,” said Molina Healthcare Inc. Chief Executive J. Mario Molina.
And during the months before the inauguration, the current Obama administration may try to push through regulations that would make dismantling the law more difficult. Those could include more changes to how providers are paid on patient outcome versus volume, for example.
Mr. Trump also could end parts of the health law without turning to Congress. He could drop the government’s appeal on a House lawsuit that challenges funding for cost-sharing subsidies to exchange consumers. Without those payments to help offset deductibles and out-of-pocket costs, more insurers likely would drop their participation on the marketplaces. The exchanges, a centerpiece of the health law, would further wither.
Mr. Trump also has pledged to shift Medicaid to a block grant program with capped funding, with greater flexibility for states in administering it. That would allow states to enact conservative changes to the program, often in the form of tougher rules for beneficiaries and for the 31 states that have extended eligibility to most low-income residents.
Republicans and Mr. Trump will have to work together on fashioning the law’s replacement, and some have said they hope to work with Democrats to find common ground.
Republican Senate Finance Committee Chairman Orrin Hatch of Utah said that they will “continue to work towards replacing Obamacare with common-sense reforms that will lower cost and increase choice.”
Future proposals will aim to tackle rising health-insurance premiums and increase patient choice, GOP officials said. Mr. Trump’s plan is scant on details but includes selling insurance across state lines and repealing Medicaid expansion. An ACA replacement plan backed by Mr. Ryan holds on to key aspects of the current law such as providing coverage for people with pre-existing conditions.
The hard work of hammering out a replacement will now begin but analysts say the plans to eviscerate most of the law will create a period of unprecedented chaos that will ripple throughout the health-care industry, said many executives.
“The result of Tuesday’s election will shape national policies for years to come,” said Rick Pollack, president and chief executive of the American Hospital Association, which supported the ACA. “With the election now behind us, we must pivot from politics to governance.”
On May 23, 2016, the U.S. Department of Labor issued updated regulations governing the white collar exemptions. The updated regulations go into effect on December 1, 2016.
The Fair Labor Standards Act (FLSA) requires that most covered employees be paid at least the federal minimum wage for all hours worked, and receive overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a workweek. However, § 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for bona fide executive, administrative, professional, and outside sales employees. Section 13(a)(1) and § 13(a)(17) also exempt certain computer employees. These exemptions are generally referred to collectively as the “white collar” exemptions and include the following:
• Executive exemption.
• Administrative exemption.
• Professional exemption (learned and creative).
• Computer employee exemption.
• Outside sales exemption.
• Highly compensated employee (HCE) exemption.
Highlights of the Updated Regulations
Under current FLSA regulations, an employee must generally satisfy three tests to qualify for one of the white collar exemptions:
• The Salary Basis Test. The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
• The Salary Level Test. The amount of salary paid must meet a minimum specified amount.
• The Duties Test. The employee’s job duties must primarily involve those associated with exempt executive, administrative, professional, outside sales, or computer employees.
The updated regulations focus primarily on updating the salary and compensation levels in the salary level test that employees must meet to qualify for the executive, administrative, or professional employee exemption. Specifically, the updated regulations:
• Set the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South, which is $913 per week or $47,476 annually for a full-year worker. The current salary level is $455 per week ($23,660 per year).
• Set the total annual compensation requirement for highly compensated employees (HCEs) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally, which is $134,004. The current compensation requirement is $100,000.
• Establish a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles.
The updated regulations also amend the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level. Note that the regulations make no changes to the duties tests.
Steps to Take Now
If you haven’t started planning for the changes, don’t panic; but it’s time to get started. Here are some steps you can take to prepare for the changes.
Analyze the salaries of employees who may be affected by the final rule and start forecasting for increased salaries and overtime costs. Suggestions include:
1. Determine which employees are exempt at an annual pay rate of less than $47,476, including up to 10 percent of nondiscretionary bonuses.
2. Consider whether to raise these employees’ pay to meet the new threshold of $47,476 to maintain exempt status or budget for potential additional overtime expenses with the reclassification to nonexempt status.
3. Review with your managers or exempt staff the average hours that each employee in the above group works beyond 40 hours per week, or other state hours worked requirement triggering overtime eligibility. Don’t forget to include meal and rest periods, travel time, training time, and other hidden overtime in that analysis.
4. Calculate the average number of overtime hours of your current nonexempt workers on an annual basis.
5. Based on these two numbers (from steps 3 and 4 above), determine the average number of hours that would be considered as overtime (over 40 hours in a workweek, or eight hours in a day for some states) for the exempt workers; the aggregate of both is an estimated average of overtime hours that the exempt worker may work if reclassified as nonexempt.
6. To calculate the overtime budget, take the average hourly rate of all exempt workers at the annual rate of less than $47,476, multiply the hourly rate by 1.5, and multiply that number by the estimated average overtime hours calculated in the last step to determine the proposed overtime budget for the current exempt workers that may be reclassified as nonexempt.
Consider requiring exempt employees earning less than $47,476 per year to start tracking their weekly hours worked. Since exempt employees do not typically record their work hours, it may be difficult for them to accurately estimate the overtime hours they have worked and anticipate working in the future. Having them track their work hours will provide the employer with valuable information when it comes to budgeting.
Review your group benefits plans and your paid time off and leave policies (for example, sick and vacation) and assess how each may be impacted as they pertain to eligibility and accrual differences for exempt and nonexempt workers and how the company will best manage the transition from one accrual method to another.
Plan your communications strategy carefully. This is a great opportunity to talk with your employees about your pay strategy and what your organization values, and you can reinforce that the regulatory definitions of overtime exemption status are not important to your evaluation of each employee’s worth to your organization.
How the changes in classification status and rates of pay are communicated to employees will have a lot to do with your company culture, pay philosophy, and style of communication. Face-to-face communication is generally the ideal method when discussing compensation. Follow up with written documentation confirming your discussion with each impacted employee that shows the new classification status, rate of pay, and the overtime rate of pay that will apply. Some states already require employers to notify nonexempt employees in writing any time a change in rate of pay occurs, including California, District of Columbia, New York, and Pennsylvania.
Keep Managers in the Know
Train your management team about the changes you are making, including not just the “what,” “how,” and “when,” but also the “why” so that the company’s intentions are communicated in a way that demonstrates thoughtful consideration of the alternatives, respect for your employees, and alignment with your company’s culture and strategic objectives.