President Trump campaigned heavily on the premise of repealing and replacing the Affordable Care Act. Now in office, there is no clear outline of his official plans for moving forward into a replacement of the ACA, which was signed into law in 2010. In June of 2016, “A Better Way”, the original ACA replacement was introduced, however, there is a new GOP proposal which has made its way to Congress.
Replacement Examples from the GOP’s Proposal
“A Better Way”
- Returning regulatory control over health insurance mostly to the states, rather than the federal government. Non-ACA regulations (HIPAA) would still be in place.
- Expand access to HSAs, increase contribution limits to equal the maximum out-of-pocket on the associated HDHP, and expand the guidelines in terms of costs that can be reimbursed under the HAS, including costs that were incurred just prior to the establishment of the account.
- Refundable, advanceable tax credits to help people purchase health insurance if employer-sponsored insurance is unavailable. The GOP proposal calls for everyone to have access regardless of income.
- An upper-limit on the total employer-sponsored health insurance premiums can be pre-tax.
- Medical liability reform.
- An emphasis on purchasing health insurance across state lines.
- Continuous coverage protection, which would guarantee that people could switch from one plan to another without medical underwriting, assuming they maintained continuous coverage.
- 5:1 ratio for premiums based on age, instead of the current 3:1, incentivizing younger individuals enrolling based on lower premium costs.
- Federal funding for high-risk pools. High-risk pools existed in most states prior to 2014, but have been dissolved since coverage became guarantee issue under ACA.
- A one-time open enrollment period, rather than an annual enrollment period. People who don’t enroll during that time would still be able to get coverage later on if they remain healthy. Applications submitted after the one-time enrollment window has closed would not have continuous coverage protections.
- A per-capita allotment or block-grand funding for Medicaid, with states allowed to choose which approach to take.
The Patient Freedom Act
The most recent replacement plan has made it’s way to Congress and was proposed by Senators Bill Cassidy (R-LA) and Susan Collins (R-ME). Known as the “Patient Freedom Act”, this replacement plan contains less drastic changes than the previous “A Better Way” proposal.
Under the PFA, state legislatures would have complete control on whether to keep the ACA operating in its current state, complete with subsidies, mandates and protections for people with pre-existing conditions. However, states also have the option of choosing an alternative plan which would provide a uniform tax credit linked to a health savings account in order to assist individuals to afford a more basic, less comprehensive health insurance plan.
The PFA goes on to outline additional benefits of enacting this plan:
- Repeals the individual mandate, employer mandate, the actuarial value requirements, the age band requirements and benefit mandates (including the essential health benefits)
- Keeps consumer protections including prohibitions on annual and lifetime limits, prohibition of pre-existing conditions exclusions, and prohibitions on discrimination.
- Preserves guarantee issue and guaranteed renewability and allows young adults to stay on their parents’ plan until age 26, as well as preserving coverage for mental health and substance abuse disorders.
Within this bill, the repeal of Title I of the ACA (while retaining important consumer protections) and will now allow the states to choose one of the following three options:
- Reimplementation of the ACA – This option allows State to keep Title I mandates and other requirements. The State can continue to receive federal premium tax credits, cost-sharing subsidies for those under 250% of the FPL and Medicaid dollars, to the extent subsidies do not exceed the contributions that could/would have been made under Option 2.
- Choose a New State Alternative – This option allows the State to enact a new market-based system empowering patients and continuing to protect those with pre-existing conditions. The State would continue receiving funding equal to 95% of federal premium tax credits and cost-sharing subsidies, as well as the federal match for a Medicaid expansion. States can choose to receive funds in the form of per beneficiary grants or advance, refundable tax credits. In both cases, funds will be deposited into a Roth Health Savings Account (HSA), therefore; the money will go directly to the patient.
- Design an Alternative Without Federal Assistance – The final option for States outlined in Patient Freedom Act is to design an alternative solution without federal assistance. This would return complete power to the States to design and regulate insurance markets that work for their specific populations, without any federal assistance.
We will continue to monitor all updates regarding ACA and the Future Reform on Healthcare. For more information, you may contact our experts at 800-962-4693.
