Election 2012: Health Care Act's Unfinished Business

With market reforms in place, devil is in details of exchanges, subsidies; fourth in a series

Samantha Oller, Senior Editor/Fuels, CSP

WASHINGTON -- Among most convenience store retailers, the Patient Protection & Affordable Care Act (ACA) is very unpopular--in fact, according to preliminary results from CSP's 2012 Outlook Survey, the law ranks among the top three business challenges faced by retailers today.

The upcoming presidential election has offered a glimmer of hope for these retailers, as Republican nominee, Governor Mitt Romney, has campaigned on a pledge to repeal what many are calling "Obamacare" on his first day in office. He has since clarified that he will keep the more popular parts of the law--and according to one legal analyst for the c-store industry, he may have no choice.

"I think it will be very difficult to repeal," Scott Sinder, a partner with Steptoe & Johnson LLP, chair of the firm's government affairs and public policy practice group and outside council for NACS, told CSP Daily News. "Even for Republicans that have been flirting with some sort of repeal agenda, the private-market reforms are wildly popular, they're in place and insurers have imported their policies and practices into the new requirements."

And despite the fact that some states--Alabama, Florida, Montana and Wyoming--have amendments on next week's ballot that would void the law's health-insurance requirement, Sinder described these as "political theater" in light of the Supreme Court's decision to uphold the constitutionality of the mandate in the ACA. "We have a federal statute, it's the law of the land and it overrides any conflicting state requirements or laws."

However, while the market reforms are largely in place, Sinder noted there is room for tweaking the setup of the law's insurance exchanges, subsidies and penalties; even if President Barack Obama is re-elected, he and Congress will have to address some problematic areas that have emerged since the act was made law.

They include:

  • The Medicaid gap. While the Supreme Court upheld the constitutionality of the health-care mandate in the ACA this past June, it also ruled that states can keep their current Medicaid programs but opt out of the planned expansion of eligibility for the program. So far, a half dozen states--Texas, Louisiana, Mississippi, Georgia, South Carolina and Florida--have said they will not expand eligibility, while several others are leaning against it or undecided. The Congressional Budget Office (CBO) recently estimated that up to 30 million Americans will not have any coverage in 2022. "It's a huge hole in the coverage spectrum that needs to be filled," said Sinder.
  • Aliens vs. citizens. As the federal statute is currently written, illegal aliens are eligible for insurance subsidies regardless of their income level, because they are not eligible for Medicaid. However, the American working poor--or those at 80% the poverty rate--do not get to participate in an insurance exchange if their state opts out of the Medicaid expansion, a "politically untenable" state of affairs that needs to be resolved, said Sinder.
  • Exchange issues. The ACA originally envisioned two models for exchanges where participants can receive a subsidy to pay for insurance: a state-created exchange or, if the state declines to create one, an exchange set up by the federal government. In response to the resistance of some states to set up an exchange, a third type was recently established--a partnership exchange--in which the federal government sets it up and is then invited by the state to run it. "That's consistent with the legislation because states can contract with a third party to do it, and if they're inviting the federal government in, it would be a state-created exchange and you can get the subsidies," Sinder explained. But some states--including Texas, Florida and Louisiana--have refused to partner with the federal government. "In those states, you may have a scenario where none of the citizens of that state are eligible for the subsidies," he said. "Again, it's a problem." These issues as well as the overall cost of the subsidies "means no matter who is president, he will see issues on the table as part of the overall budgetary discussion during the first quarter of next year," said Sinder.

Closer to home, the consultant does expect to see companies work to classify more of their employees as part time. This is in response to the ACA's requirement that companies with more than 50 full-time employees that do not offer health-insurance coverage pay a fine if their employees receive premium tax credits to buy their own insurance, or $2,000 per full-time employee beyond the first 30 workers, according to the U.S. Department of Health & Human Services.

For these retailers, Sinder advised that time is of the essence. "Get those things in place before the end of the year," he said. "There's a new safe harbor to classify employees that involves a look-back. [Retailers] will be in the best position if you've taken all the steps to institutionalize whatever you're going to do on that before the end of 2012, so you have all of 2013 to use as your evaluation period."

See Related Content below for previous installments in this series.