In an effort to appease their Democratic counterparts — and woo at least eight of them across the aisle — a pair of Senate Republicans have proposed an Affordable Care Act replacement that would give states the option of keeping the ACA intact. States also could opt to cover their uninsured population with a federally funded health savings account (HSA) combined with a high-deductible health plan (HDHP). But industry observers say there are flaws within the proposal. Moreover, some key elements already are allowed under the ACA through 1332 waivers or 1115 Medicaid waivers.
On Jan. 23, the first working day for the new president, Sens. Bill Cassidy, M.D. (R-La.) and Susan Collins (R-Maine) held a press conference at the U.S. Capitol Building to tout the Patient Freedom Act (PFA) of 2017. On the Senate floor later that day, they urged their colleagues to support it.
In a Jan. 24 Health Affairs blog post, Timothy Jost, Ph.D., emeritus professor at the Washington and Lee University School of Law, said he was struck by the 73-page bill’s complexity. The proposal would maintain popular elements of the ACA such as the ban on lifetime and annual coverage limits, the ability for a parent to cover an adult child to age 26 and guaranteed coverage for people with pre-existing conditions. It also would create risk pools and allow people to buy coverage across state lines. Collins suggested the proposal would drive significant cost savings from mandated price transparency. Reducing coverage costs through comparison shopping was touted by the George W. Bush administration, but consumers generally don’t like shopping for medical services and have limited tools to do it efficiently.
William Pewen, Ph.D., who served as senior health policy advisor to former Sen. Olympia Snowe (R-Maine) during the crafting of the ACA, was critical of the bill. “It’s striking that the sponsors propose spending at ACA levels without assuring meaningful outcomes. Under the PFA, there’s no accountability to meet individual needs nor provide quality coverage. States could even shift some Medicaid beneficiaries to plans lacking current core benefits,” he tells AIS Health.
The advocacy group Families USA warned the bill would cause deductibles to skyrocket, erode protections for people with pre-existing conditions and shred the Medicaid safety net. The Center for American Progress cautioned that such legislation would make the access and quality of health care dependent on the state in which one lives.
HSAs for Everyone
President Trump and Republican lawmakers have made it clear that they want to expand the use of HSAs and make them a central part of any Obamacare replacement (HPW 1/23/17, p. 1). That’s at the heart of the Cassidy-Collins bill. Uninsured people would be automatically enrolled in a catastrophic HDHP, which would be paired with a taxable Roth HSA. The deposits, which would be based on earnings, would begin phasing out for people with incomes of $90,000 ($150,000 for families). Jost said the accounts would provide more help for higher-income individuals and less for lower-income individuals, as compared to the ACA. Pewen agrees and says “most Americans would be unlikely to obtain needed coverage which is affordable, while a few would realize a fiscal windfall.”
The accounts would be funded with federal dollars, which are currently used for advance premium tax credits and cost-sharing subsidies. Cassidy noted that high deductibles for many ACA plans make medical services unaffordable. The HSA dollars could be used to cover premiums as well as some medical expenses. But chronically ill people and those hit by unexpected medical costs would likely run through their HSAs quickly.
If You Like Your Obamacare, Keep It
Unlike other replacement bills that have been floating around Congress for years, this proposal would let states to continue with Obamacare if they choose. A state such as California could continue to operate an exchange to distribute subsidies, and maintain an individual mandate and expanded Medicaid program.
“Republicans think if you like your insurance, you should keep it,” Cassidy quipped at the briefing. He said a health insurer that modeled the proposal estimated the expanded risk pool created by automatically enrolling all qualified residents would reduce premiums by 20%.
If such a bill were approved, Congress could repeal the ACA and replace it with this legislation in January 2018. States could implement the ACA-replacement plan of their choice in 2019 “and by the time 2020 rolls around, it’s all done,” Collins told reporters.
Jost suggested such a timeline was overly ambitious. Pewen says the legislation goes in the wrong direction. “It is reducing the value of taxpayer spending by unwinding some critical health reforms, and creating an even more expensive and convoluted health care system,” he says.
But lawmakers are just getting started in their ACA-replacement building, and several other bills have been introduced.
“I would expect to see many lawmakers over the coming weeks and months put forth their vision for the future of the ACA, and those proposals will serve as a basis for ongoing debate,” says Elizabeth Carpenter, senior vice president at Avalere Health. “No one proposal will be the final answer, but the proposals that come out will help to further the dialog.”