House Creates Escape Hatch from Obamacare

By Grace-Marie Turner

The House of Representatives successfully included a valuable escape hatch from Obamacare in the recent “doc fix” legislation, but members are getting blow-back from critics who say the provision fixes and even expands Obamacare.

That is nonsense. The provision eliminated the cap on deductibles for small group plans, giving small businesses the freedom to offer high-deductible plans that may be paired with a Health Savings Account. This is a very good thing that gives them an option to offer more affordable insurance to employees.

Rory Cooper, a spokesman for House majority leader Eric Cantor, said, “This is another in a series of changes to Obamacare that the House has supported to help save Americans from being harmed by the law, and we’re glad to see the president signed it into law.”

But the let-it-burn coalition wants the American people to feel all of the pain of Obamacare to increase pressure for full repeal. As Drew M writes on Ace of Spades: “The whole idea behind not ‘fixing’ ObamaCare is that in order to do the heavy lifting of repealing it you need as many people angry about it as possible. If you start pealing (sic) off repeal supporters, you’re helping eliminate pressure to actually repeal the damn thing.”

That is bad politics and bad policy.

Not creating this escape hatch for small business would send a message that Republicans want to use Obamacare to punish 100 percent of the people, even the great majority of Americans who do not and never did support the law.

That burn-it-down philosophy also would have meant that Congress should have left the onerous 1099-reporting provision in place — a revenue-raising provision in Obamacare that would have required businesses to report to the IRS all of their transactions with vendors totaling $600 or more in a year. That was wisely repealed on April 14, 2011, with broad bipartisan support. It is one of 16 changes Congress has made to the law that have been signed into law by the president, eleven of which were under the Republican-led House.

The “doc fix” legislation including the small-business escape hatch was approved by a surprise voice vote earlier this month, a procedure that annoyed many members. But that is not a reason to throw rocks at a provision that could provide a way for small businesses to offer HSAs to their employees.

Sec. 213 of H.R. 4302 — the “doc fix” amends the ACA to repeal the limitation on deductibles for employer-sponsored health plans. Here is how the New York Timesexplained the provision:

The Republican victory is largely symbolic, however. The Obama administration had effectively nullified this provision of the Affordable Care Act more than a year ago through regulation.

The Affordable Care Act provision at issue limited the deductibles in small-group health plans to $2,000 for individual coverage and $4,000 for family coverage. Separately, the law also required that small-group plans meet minimum standards for how health care expenses are split between the policyholder and the plan — what is known as actuarial value. The least-generous plans allowed by the law, known as bronze plans, must cover 60 percent of the expenses incurred by a typical group of enrollees.

But it turns out to be very difficult to design a bronze individual plan with a deductible of $2,000 (or, for that matter, a family plan with a deductible under $4,000). As a result, in February 2013, the Health and Human Services Department released final regulations that allowed a plan to have a higher deductible “if that plan may not reasonably reach the actuarial value of a given level of coverage” without it.

This is no time for a circular firing squad. Helping small businesses hit by the Obama-administration mandates, taxes, and regulations is the right thing to do.

Posted on National Review Online: The Corner, April 14, 2014

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