The Implications of Repeal and Replace on Staffing

health-bill.jpgIn early March, House Republicans introduced the first of many iterations of a bill intended to replace the Affordable Care Act. The Republican-led charge would change many of the key provisions from the ACA, while retaining very little apart from allowing dependants to stay on their parents insurance until 26. Around 20 million Americans are currently covered under the ACA, and reversing a major program of social benefits that has already reached millions is a first for Congress. Repeal and replace is a multi-step, multi-bill process and it will likely take a long time before anything changes for staffing firms. However, it is important that staffing companies keep on top of possible changes and understand how it could affect their business.

UPDATE (5/4/17): The American Health Care Act (ACHA) passed in the House of Representatives on May 4th, 2017, after an earlier version failed to come to a vote in late March. The bill now goes to the Senate, where it is rumored to face significant changes.

UPDATE (7/14/17): The Senate has released and modified a new bill, the Better Care Reconciliation Act, which is similar to the House version in several aspects, but implemented at a more moderate pace. For instance, phasing out Medicaid expansion under the Senate plan would take place from 2020-2024, where the House bill would have ended coverage in 2020. The Senate bill is similar in that it would cut the employer mandate and the individual mandate, and replace subsidies with tax credits based on factors like income and community rating.

UPDATE (7/18/17): Two Republican Senators, Mike Lee of Utah and Jerry Moran of Kansas, came out in opposition to the Senate healthcare bill, bringing the total number of Republican senators opposed to bringing the bill the Senate floor four. “We should not put our stamp of approval on bad policy,” Moran said in a statement. “We must now start fresh." This is enough to collapse the current form of the bill.

What Would Change?

The new legislation would remove the current federal insurance subsidies and instead provide refundable tax credits based on income and community rating (originally, the House bill had it based on purely age but that version was dismissed). The bill also proposes to eliminate the federal match for Medicaid expansion, and overhaul Medicaid from its current state as an entitlement program to a per capita cap on funding to states. Taxes on the wealthy, insurers, and prescription drug manufacturers would also be lifted.

The proposed plan would get rid of the tax penalty for lack of health insurance and penalties on businesses with 50 or more full-time employees that don't offer minimum essential health coverage to their full-time workers. Under the current Senate bill, states would be able to redefine what "essential benefits" would be covered, and deny coverage for pre-existing conditions that do not fall under their list. 

What Would Stay the Same?

The American Health Care Act preserves one of the most popular features of the ACA: letting young people stay on their parents’ plans until 26. 

How Likely is it to Pass?

With a Republican-controlled White House and Congress, changes are likely but not guaranteed. Republicans have faced steep opposition from Democrats and within their own party. To pass in the Senate, a bill requires a 51 majority to pass in the Senate. The current bill is likely to undergo changes before it gets to that point. However, subsequent repeal portions will require more votes. To replace the ACA entirely, the Republican bill would need to have the support of 60 Senators, meaning they must pick up 8 Democratic votes in the Senate. Not all Republicans are united behind the bill, however. Four key Republican senators, all from states that opted to expand Medicaid under the ACA, said they would oppose any new plan that would leave millions of Americans uninsured. They indicated that they would not support a plan that does not include “stability for Medicaid expansion populations or flexibility for states.”

The Congressional Budget Office (CBO) estimates that enacting this legislation would reduce the cumulative federal deficit over the 2017-2026 period by $321 billion. That amount is $202 billion more than the estimated net savings for the House bill. The Senate bill would also increase the number of people who are uninsured by 22 million in 2026 relative to the number under current law, compared to the estimated 21 million for the House bill.

What Does it Mean for Staffing?

In terms of the healthcare plans you offer your own employees, at the moment no substantive changes are taking place and staffing companies should stay the course. If your staffing firm has more than 50 full-time employees, you are still required to provide health insurance or pay the tax penalty.

In terms of placing temporary workers, however, this new healthcare bill might actually negatively affect staffing companies. Under the ACA, the costs associated with reporting, disclosure and notification requirements resulted in some employers reducing the number of full-time employees in favor of more part-time roles and temporary workers. If the new law works as intended and costs are lowered, employers might recruit more employees in to full time roles rather than in part-time or contingent workers.

However, that is a big “if”, and there are many more factors in play that determine whether a temporary staffing company succeeds or not. If you’d like to talk to someone about how your staffing company can grow or outsource non-recruiting related back office functions, fill out the form below and talk to someone at Advance Partners today.