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January 27, 2017

Sen. Paul unveils ACA replacement proposal

Daily Briefing

    Sen. Rand Paul (R-Ky.) on Tuesday introduced a bill (SB 222) to replace the Affordable Care Act (ACA).

    Congress already has approved a budget resolution that allows lawmakers to repeal parts of the ACA through the budget reconciliation process. However, the process can only be used for parts of the ACA involving taxes and spending. Paul is among a group of Republicans who has encouraged GOP lawmakers to pass ACA replacement legislation at the same time they repeal the law.

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    Bill details

    Paul's bill, called "The Obamacare Replacement Act," would repeal several ACA provisions, including the law's:

    • Community rating restrictions;
    • Essential health benefits requirement;
    • Employer mandate;
    • Individual mandate; and
    • Medical-loss ratio requirement.

    The bill would allow people with pre-existing medical conditions to obtain coverage during a two-year open enrollment period. After the two-year period, insurers could not deny coverage to individuals with pre-existing conditions based on those conditions if the individuals maintained continuous coverage, according to The Hill. According to Vox, this means there would be certain circumstances that insurers could charge those individuals higher premiums for coverage.

    Paul's bill also aims to expand the use of Health Savings Accounts (HSAs) by:

    • Allowing HSAs to be used outside of high-deductible health plans;
    • Allowing individuals to put HSA dollars toward premiums and prescription and over-the-counter drug purchases;
    • Offering a tax credit of up to $5,000 for HSA contributions; and
    • Removing restrictions that cap annual allowable HSA contributions.

    The bill would make it easier for insurers to sell plans across state lines. It would also create a universal tax deduction for health insurance by expanding the tax deduction for health insurance that currently is available to individuals with employer-sponsored coverage to those buying coverage on the individual market.

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    Further, the bill would allow for groups of people and small businesses to come together to create "independent health pools" to negotiate coverage rates. The ACA allows small businesses to group together, though not many businesses have taken advantage of the provision, according to Business Insider.

    In regards to Medicaid, the bill calls for "new flexibilities" for state Medicaid programs "through existing waiver authority in current law."

    Paul's bill also includes provisions geared toward physicians. For instance, the bill would allow physicians to:

    • Deduct from their taxes the value of charity or uncompensated care they would incur up to 10 percent of their gross incomes; and
    • Let physicians collectively bargain with insurers, a practice that federal antitrust law currently prohibits.


    Paul said, "Getting government out of the American people's way and putting them back in charge of their own health care decisions will deliver a strong, efficient system that doesn't force them to empty out their pockets to cover their medical bills." He added, "There is no excuse for waiting to craft an alternative until after we repeal [the ACA], and the Obamacare Replacement Act charts a new path forward that will insure the most people possible at the lowest price."

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    Paul also took aim at a separate GOP proposal released this week by Sens. Bill Cassidy (R-La.) and Susan Collins (R-Maine) that would include many of the ACA's taxes, Vox reports. He said, "I don't think a lot of Republicans will want to keep the Obamacare taxes. I would suspect that keeping the Obamacare taxes will divide a lot of Republicans....The vast majority of Republicans who voted for us were voting for people to repeal Obamacare, not keep it."

    Ron Pollack—executive director of Families USA, which has been a strong supporter of the ACA—criticized Paul's proposal, saying, "This is not a replacement bill, but a full scale retreat from the financial and consumer protections of the" ACA. He added that the bill "offers no upfront help to lower- and middle-income people to purchase coverage" but would provide tax breaks "that will disproportionately help people with the highest incomes" (McIntire, Morning Consult, 1/25; The Obamacare Replacement Act fact sheet, accessed 1/26; Bryan, Business Insider, 1/25; Sullivan, The Hill, 1/25; Lowes, Medscape, 1/25; Gillespie, WFPL, 1/25; Howell, Washington Times, 1/25; Kliff, Vox, 1/26).

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    On November 8, 2016, Donald Trump defeated Hillary Clinton in an unexpected upset to become the 45th president of the United States. Health care reform has since quickly risen to the top of the GOP's policy agenda—and heath care executives are grappling with a new sense of uncertainty.

    While many unknowns will remain across the next few months and potentially even years, the first 100 days of the Trump administration will provide significant insight into the direction of reform efforts. Read our briefing to learn what five key issues you should watch.

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