Democrats seize control of the House: What this means for the ACA

As many polls forecasted leading up to the midterm elections, the Democratic Party took back the House of Representatives and is now holding a majority with at least 220 seats. While Democrats failed to secure the Senate, the party did manage to maintain at least 44 seats, leaving them a strong minority.

The results of the midterm elections have a significant impact on what happens in the future of health care and the Affordable Care Act (ACA), which was not lost on voters as health care appeared to be one of the top issues coming into the election. With Democrats in control of the House, we’re a far cry from the Republican “Repeal and Replace” attempts, which failed just over a year prior to the midterm elections. Let’s take a look at the practical implications of the election results on health care.

The legislative impact

Since the 2016 Presidential race ended with a Republican victory, there has been a cloud of uncertainty lingering over the ACA. With a Democratic president, and his power of the legislative veto, out of the White House and Republicans controlling both the House and Senate, it felt that repeal of the ACA was all but certain. However, Republicans failed in their multiple efforts to repeal the entirety of the ACA, but did succeed at repealing the individual mandate as part of their 2017 tax reform bill. 

Beyond that victory, additional legislative efforts have been put forth, some gaining more traction than others, but none coming to fruition. One such piece of legislation is H.R. 3798, the Save American Workers Act. This legislation never reached a vote in the House, although you could say it grew out of its infancy and was gaining momentum prior to the midterms. The act was aimed at amending the ACA’s employer mandate, which requires applicable large employers (ALEs) to offer coverage to their full-time employees and report that coverage (or lack of coverage) to the Internal Revenue Service (IRS) using Forms 1094-C and 1095-C. 

With Democrats now in control of the House, any legislative efforts to repeal or undercut existing ACA provisions, like the employer mandate, is now far more unlikely. A piece of legislation, such as the Save American Workers Act, would need to pass both the House and the Senate before it could ever become law, and it’s highly unlikely that Democrats would ever pass this type of legislation. This means that employers, agents, brokers, and anyone else involved in employer mandate compliance must understand that the provision is here to stay!

Democratic control essentially lifts the cloud of uncertainty lingering over these types of ACA provisions and solidifies they’re not going anywhere. In fact, it’s likely that we might begin seeing legislation that mends failing or broken elements of the ACA. The question only time will answer is this: Will bipartisan support exist for fixing current legislation? Will Republicans compromise and work on legislation that supports things like the ACA marketplaces, or reinstating the individual mandate? If bipartisan support arises, it’s possible this type of ACA-strengthening legislation will make its way to the White House.

It’s also important to note that there’s bipartisan support to axe or delay the ACA’s Cadillac tax. This unfavorable provision has been on the chopping block for both Democrats and Republicans for quite some time.

Other than rolling back the Cadillac tax, I wouldn’t expect much movement on anything that would undermine or repeal elements of the ACA. This means everyone must continue complying with the law! 

State of the ACA’s key provisions

ACA Provision

Midterm Elections Impact

Employer mandate

The election outcome all but solidifies the future of this compliance and reporting obligation as it enters its fourth reporting season. Any legislation that would amend or alter the provision has very little chance of fruition.

Individual mandate

The election outcome has little to no immediate impact on the repealed individual mandate. Look to future bipartisan legislation that would substitute the repealed mandate and sure up the individual market.

Pre-existing condition protections

The election outcome assures that the coveted pre-existing condition protections created by the ACA will not be repealed as any legislation to do so would surely not gain any traction in a Democrat-controlled House.

Cadillac tax

This is one particular ACA provision still facing uncertainty. Legislative attempts to alter or outright repeal the Cadillac tax are possible as both Democrats and Republicans find it unfavorable.

The government agency impact

The Department of Health and Human Services (HHS), the Department of Labor (DOL), and the IRS largely carry out and enforce the nation’s health care laws (i.e. the ACA, HIPAA, COBRA, and ERISA). However, the midterm elections have very little impact on what these agencies will do unless legislation is passed and signed into law.

Typically, these agencies are directed by legislative mandate or by presidential executive order. At this point in time, the agencies are carrying out the law of the land, which is still the ACA and the other health laws referenced above. They’re also being directed by executive order, which we have observed over the past two years with the expansion of association health plans, short-term health plans, and, most recently, proposed regulations related to the expansion of health reimbursement arrangements (HRAs). 

With that in mind, the IRS is moving full-steam ahead with employer mandate enforcement. In November of 2017, the agency began sending Letter 226-J Penalty letters to employers that had been flagged as noncompliant with the employer mandate. Those letters continued to be sent out over the past year for 2015, the inaugural filing season. 

Since the penalty letter process began, the IRS has invested millions of dollars to enhance their ability to identify noncompliant employers. What does this mean for employers? It means that we can expect more letters and more penalties to be sent out and enforced for the 2016 filing season, which are already in the mail. Nothing about the election suggests this will change. We can expect to see these governmental agencies stay the course with their current mandates until otherwise directed by legislation or executive order, neither of which seems likely in the near term. 

Looking toward 2019 and beyond

The midterm elections have left us with Democrats now controlling the House, which will impact how the nation’s health care discourse and the conversation will proceed. With this majority, there will likely be no immediate change to the current health care status, such as new legislation or a rolling back of the remaining provisions of the ACA.

Individuals and entities touched by these regulations, processes, and practical implications must make sure they are fulfilling their requirements and staying in compliance with the current law. From here, we can only wait and see if bipartisan support will bring about initiatives that bolster or fix elements of the health care system.