Two major proposals emerged last week to replace the Affordable Care Act that differ significantly in both content and potential impact.
The first is the Patient Freedom Act (PFA) of 2017 from Republican senators Bill Cassidy of Louisiana, Susan Collins of Maine and Johnny Isakson of Georgia. It would give each state the three options to:
- Keep the ACA intact
- Reject the ACA altogether
- Adopt a different methodology based upon subsidized Roth Health Savings Accounts (HSAs), subject to taxation for all deposits and then free of taxation for healthcare expenditures and investment income. This is the favored and default option if states fail to act. There is a complex formula of federal subsidies based upon income with more affluent individuals receiving greater benefits up to a pre-defined amount ($90,000/year for individuals and $150,000/year for families)
For those states that agree to reject or modify the ACA, the PFA proposes to:
- Repeal all Title I insurance reforms, premium tax credits, cost-sharing reduction payments, the exchanges, and both the individual and employer mandate
- Retain the coverage of dependents until age 26, ban denying coverage to those with preexisting conditions (unless continuous coverage is not maintained), require preventive services, ban lifetime and annual limits
- Add default health insurance coverage for the uninsured with high deductible policies, which would work against those with low incomes
- Add open enrollment periods and restrictions to coverage for those who do not maintain their healthcare coverage more than 63 days
The second is the Obamacare Replacement Act from Rand Paul, the former presidential candidate, physician and Republican junior senator from Kentucky. It includes the following proposed changes:
- Elimination of the individual mandate requirement to purchase healthcare insurance
- Elimination of coverage minimum standards
- No mention of coverage of dependents until age 26
- Two-year window for individuals with preexisting conditions to sign up for healthcare coverage in lieu of prohibition of preexisting conditions
- Addition of a $5,000 tax credit to be used for an HSA or other healthcare expenditure
- Enabling insurance companies to sell insurance across state lines to encourage competition
- Enabling HSAs to be used without high-deductible policies
- Enabling individuals and small businesses to pool their resources to purchase healthcare insurance through membership in trade or professional association
The intent of both of these proposed bills is to create a more market-based healthcare delivery model with greater flexibility afforded states to craft their own unique approaches.
Unanswered questions for both of these proposals include:
- What are the budgetary implications for both the federal and state governments?
- How do they affect the ability to optimize access to healthcare services, particularly for those with the greatest economic and healthcare need?
- Would states be willing to expand coverage to both dilute the risk pools and reduce cost shifting onto those with insurance coverage?
Clearly, both of these proposals represent initial offerings that will be modified or even replaced by others as Republican lawmakers tackle the difficult task of fixing a flawed and controversial law. The ACA offers important protections yet requires modification into a sustainable model that supports both insurance providers and those most in need of healthcare services.
Clearly the work on replacing the ACA has just begun.
Jonathan H. Burroughs, M.D., MBA, FACHE, FAAPL is a certified physician executive and a fellow of the American College of Healthcare Executives and the American Association for Physician Leadership. He is president and CEO of The Burroughs Healthcare Consulting Network and works with some of the nation's top healthcare consulting organizations to provide "best practice" solutions and training to healthcare organizations.