AHCA Failure: What Now?

Edward A. Lenz, Esq.

Senior Counsel, American Staffing Association

Edward A. Lenz, Esq. is one of the nation’s leading authorities on the legal and policy aspects of staffing. He joined ASA in 1989 as the association’s first general counsel and later, as senior vice president for legal and public affairs, was the industry’s chief legal and legislative strategist.

The stunning failure of the U.S. House of Representatives to pass the American Health Care Act (AHCA) to replace the Affordable Care Act (ACA) carries political and policy implications that are difficult to forecast. In this politically-charged environment, many staffing firms are wondering what to expect next. While it is difficult to predict whether Republicans will eventually seek to “repair” the ACA, turn to the executive branch for rulemaking, or simply abandon efforts related to healthcare completely, Ed Lenz of the American Staffing Association (ASA) offers his thoughts on what lies ahead for employers.


Q: With the failure to pass the AHCA, what should employers do now?

A: Since the ACA remains the law of the land for the foreseeable future, employers have little choice but to continue making a good faith effort to comply with both the “play or pay” and reporting rules. For many employers, especially those with large numbers of part-time, seasonal, and temporary workers that face unique compliance challenges, this means they will continue to be in the position of “complying and grumbling.”

The good news is that, while the ACA consumed a huge amount of time and energy as staffing firms tried to get their arms around it, the industry’s worst fears have not materialized. Large sectors of the industry, such as IT and professional recruiting, had always offered coverage to attract talent, so the employer mandate was not, in that respect, a major change for those firms.

Of course, all staffing firms faced significant new costs and complexities related to compliance, especially regarding recordkeeping and reporting. But once firms had a grasp on those requirements and implemented the necessary systems, the “play or pay” rules turned out to be relatively manageable. And, fortunately, many firms found they could pass through most or all of their ACA-related costs to clients.

For now, firms will need to continue with business as usual, even if still operating under some uncertainty as to whether they are “doing it right.”

Q: How stringently will the employer mandate be enforced going forward?

A: Within hours of assuming office, President Trump issued an executive order directing his agency heads to do all they can within the scope of their authority to reduce the ACA’s regulatory burdens. This suggests that there will be no major initiative to enforce the employer mandate. But that wouldn’t reflect a major change from the prior administration. Since the employer rules became effective Jan. 1, 2015, we haven’t received a single report of a staffing firm having been audited, much less penalized, under the employer rules. This comports with a recent report by a respected national affairs publication that “the requirement that employers provide coverage to their workers or face a penalty…has never been enforced.” (emphasis added)

Q: Given the administration’s focus on freeing business to be more competitive through the elimination of regulations, do you see positives coming out of the failure of the AHCA?

A: There are a couple of silver linings in the failure of the repeal and replace bill, at least in the near term.

First, continuation of the ACA’s employer mandate likely will put on hold consideration by state and local governments of their own “play or pay” laws. Many states were considering such mandates before the ACA became law. Most of the proposals would have required employers to pay a specified percentage of their payroll, or a specified dollar amount, for health care coverage. Some required employers to pay employees a supplemental hourly “health care” wage in addition to their regular wages or to provide health benefits of at least equal value. With the failure of the AHCA, however, there would appear to be no incentive, at least for now, for such proposals to go forward.

Second, the AHCA’s proposed Medicaid reform would have resulted in fewer individuals being eligible for Medicaid. That would have resulted in more uncompensated care, raising the overall costs of employer premiums, including on employers. Failure to pass the AHCA should avoid, at least temporarily, upward pressure on employer premiums.

Finally, we may see a change in regulatory approach from the more employer-friendly Departments of Health and Human Services, Labor, and Treasury. For example, although the current complex employer reporting rules will remain in effect, the Treasury and IRS might find administrative ways to simplify them.

Q: Looking ahead, what is the likelihood that the ACA will ultimately be replaced?

A: The politics of repeal and replace are extraordinarily complex. One possibility is that Republicans may decide to seek Democratic support to make the current system work. But for such an effort to succeed, lawmakers will, among other things, have to resolve two fundamental philosophical issues—whether and to what extent taxpayers should be asked to fund the health care costs of low-and moderate-income individuals, and whether U.S. citizens should be required to maintain health coverage or pay a penalty. It is unclear whether consensus could actually be achieved on those issues. But whatever the outcome, employers are unlikely to play a major role in that debate since lawmakers don’t view them as major stakeholders on those issues.

Special Offer for RIX Members

Download the ASA article, New Political Landscape: What’s Ahead for the Staffing Industry, in which Lenz assesses the likely impact of the changed political landscape on the staffing industry.