Two Provisions of Health Care Reform Recently Repealed

Over the last couple of weeks two separate provisions of the Health Care Reform Act (PPACA) have been repealed. 

On April 14, 2011, the first provision of the PPACA to be repealed was the onerous expansion of 1099 reporting. This provision would have made it mandatory for businesses to significantly expand their reporting of 1099s to any vendor they pay $600 or more for goods and services. As we reported in an earlier blog, this would have increased administrative costs for all businesses immensely.  The repeal of this provision was expected from the inception of the PPACA.

The second repealed provision, which came as a pleasant surprise, is the “free choice voucher” program. The repeal was finalized on April 15, 2011 as part of the Fiscal Year 2011 Spending Plan. The voucher provision would have required employers to offer “free choice vouchers” to employees who chose not to enroll in the employer’s health plan, and would be used to purchase health coverage through one of the state “Exchanges” created by the PPACA.

Employer groups argued that vouchers would contribute to “adverse selection” to their group health plans. They explained that vouchers could encourage healthy employees to waive coverage under the group plan in favor of purchasing cheaper coverage through an Exchange. The remaining employees in the group plan would be less healthy or be in a classification, such as age, that would cause the premium cost of the group plan to increase. Additional concerns were voiced by employers over the increased burden and cost to administer the free choice vouchers. The vouchers were to be given only to employees with household income below 400% of the federal poverty level and whose required contribution for the group coverage would have been between 8% and 9.8% of their total household income.