Rand Paul Releases Bill to Replace ACA, Help Physicians

January 25, 2017

The latest GOP proposal to replace the embattled Affordable Care Act (ACA) predictably hews to popular Republican approaches to healthcare reform, but also contains some surprising provisions that directly benefit physicians.

Under a bill introduced yesterday by Sen. Rand Paul, MD (R-KY), physicians could deduct the value of charity or uncompensated medical care on their taxes up to 10% of their gross income. The bill, titled the Obamacare Replacement Act, also would allow independent physicians to join together and collectively bargain with private insurers, which is now prohibited by federal antitrust laws.

The rest of the bill offers up reforms that Congressional Republicans as well as President Donald Trump have been advocating — among them, the sale of health plans across state lines, the ability of individuals to purchase coverages through associations, more state control of Medicaid, and up to $5,000 in tax credits for contributions to health savings accounts (HSAs), which could be used to buy coverage.

Dr Paul said in a news release that his "broadly supported conservative reforms" were ready for an immediate vote after Congress repealed the ACA. Trump has said that repeal and replacement of the law — two separate steps — would occur on the same day, if not the same week.

The Republican-controlled Congress already has set the stage for repealing the ACA by passing a budget resolution that would let lawmakers eliminate key spending and tax provisions such as federal funding for Medicaid expansion and premium subsidies for health plans sold on the exchanges. This would happen in a process called budget reconciliation, which cannot be blocked by a filibuster. Senate Republicans would need only a 51-vote majority to gut the law this way.

Lawmakers can't use budget reconciliation, however, to erase ACA provisions that don't boil down to taxing and spending. The Obamacare Replacement Act would finish the job by repealing the individual mandate to obtain coverage, the mandate for employers to provide coverage, required health benefits such as mental health treatment, and other "insurance mandates."

Will GOP Hold CHIP Hostage to Pass ACA Replacement?

Dr Paul's bill is the second replacement plan to surface in Congress this week. On January 23, four other Republican senators introduced a bill that would let states chart their own healthcare future. The measure gives them three options — keep the ACA and the federal funding that comes with it, create their own market-based system and continue to receive federal assistance, or design a system that foregoes federal dollars.

Trump has promised to unveil a plan to repeal and replace the ACA "with insurance for everybody" as soon as his choice to head the US Department of Health and Human Services — Rep. Tom Price, MD (R-GA) — is confirmed by the Senate. It would fall to Congressional Republicans to translate a White House plan into legislation.

Unlike repeal legislation, accomplished through budget reconciliation, replacement legislation could be filibustered by Senate Democrats, who control 48 votes (which include 2 independent senators who caucus with them). The 52 Republicans in the Senate would need eight Democratic votes for the 60 needed to overcome a filibuster and allow a floor vote on the replacement measure.

So how can Republicans make their healthcare reform bill attractive enough to at least a few Democrats? The current thinking on Capitol Hill is that the GOP ultimately will preserve some popular ACA provisions, such as the ability of young adults to stay on their parents' health plan until age 26, and extend funding for the Children's Health Insurance Program (CHIP), which is set to expire this September. Congressional Democrats traditionally have championed CHIP, which insures some 8 million children, so Congressional Republicans may hold it hostage, politically speaking, to get their ACA replacement plan passed.

HSA Funds Could Go Toward Direct Primary Care

Congressional Republicans such as Dr Price have said that they don't want to create hardships in repeal-and-replace legislation for individuals now privately insured through the ACA exchanges, especially those with pre-existing conditions who once found coverage unattainable or unaffordable. The bill introduced by Dr Paul tries to address that concern by allowing individuals with pre-existing conditions to obtain coverage during a new, 2-year open enrollment period.

People buying health plans would receive another break — the ability to deduct the cost of their insurance from their income taxes. Individuals insured through their employer currently enjoy a similar tax advantage. Their share of the premium isn't included in their taxable income. The Paul legislation would equalize the tax treatment for all concerned.

HSAs function as a prime vehicle for making insurance more accessible under the Obamacare Replacement Act. The measure expands and liberalizes the use of these accounts. Right now, HSAs are available only to people enrolled in high-deductible health plans. Dr Paul’s measure would couple HSAs with any kind of plan, including Medicare. It also allows individuals to contribute as much as they want to their HSA, in contrast to the annual limits now in place.

Two other HSA restrictions would go by the wayside. Individuals could pay insurance premiums with their HSA funds. They also could be used for monthly capitated payments to physicians in concierge or direct primary care practices.

Dr Paul said his plan "will insure the most people possible at the lowest price," but not everybody is as sanguine about its effects.

"This is not a replacement bill, but a full scale retreat from the financial and consumer protections of the Affordable Care Act," said Ron Pollack, executive director of Families USA, a consumer healthcare group. Pollack said in a news release today that the bill "offers no upfront help to lower- and middle-income people to purchase coverage." At the same time, it provides tax breaks "that will disproportionately help people with the highest incomes."

"This bill is a big step backwards," Pollack said, "and would certainly cause immense harm."

Follow Robert Lowes on Twitter @LowesRobert

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