Three Republican lawmakers are proposing an alternative to the Affordable Care Act that would undo the controversial individual and employer mandates, cap medical liability damages, and offer a slimmed-down set of consumer insurance protections.
Sen. Orrin Hatch (R-Utah), chairman of the Senate Finance Committee; Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee; and Sen. Richard Burr (R-N.C.), a member of the Senate Finance Committee, proposed on Feb. 5 the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act to repeal and replace the current health law.
Sen. Orrin Hatch (R-Utah)
“Our nation’s health care system was broken before Obamacare, and the President’s health care debacle has only made things worse,” Sen. Burr said in a statement. “The Patient CARE Act repeals Obamacare and addresses the fundamental cost drivers that Obamacare failed to address. We can lower costs and expand access to quality coverage and care by empowering individuals and their families to make their own health care decisions, rather than having the federal government make those decisions for them.”
The proposal – which came in the form of a 9-page outline – was unveiled just days after the House passed a bill to repeal the ACA by a vote of 239 to 186. While the House has voted numerous times to repeal the health law, this is the first time that the bill might actually be considered in the Senate, since control of that chamber has shifted to the Republicans.
Sen. Hatch and other GOP lawmakers offered a similar replacement proposal last year.
The Patient CARE Act outlines some federal medical liability reforms, including a cap on noneconomic damages and limits on attorneys’ fees. It also seeks to encourage new models for resolving disputes on the state level, such as expert panels to evaluate injury claims and administrative health courts.
The proposal offers a more limited range of consumer insurance protections than does the ACA, including:
• Adopting an age rating ratio of 5-1 for premiums, which would limit plans from charging older individuals any more than five times what a younger person pays. Under the ACA, the age rating ratio is 3-1.
• Banning the use of lifetime dollar limits on health coverage.
• Allowing states to opt out of the ACA’s dependent coverage provision, which lets younger adults stay on their parents’ health plans up to age 26.
• Providing guaranteed renewability of health plans regardless of an individual’s health status. Health plans would be able to cancel coverage only in cases of fraud, misrepresentation by a consumer, or failure to pay premiums.
• Banning denials of coverage based on preexisting medical conditions as long as the individual has been continuously covered with at least a catastrophic plan for 18 months. The proposal includes a one-time open enrollment for people currently uninsured.
The Patient CARE Act would provide federal tax subsidies to purchase insurance to individuals with annual incomes of up to 300% of the federal poverty level. The amount of the tax credit would decrease between 200% and 300% percent of poverty and would be age-adjusted with older individuals receiving a larger subsidy.
The proposal would change the tax treatment of employer-sponsored health insurance by capping the tax exclusion for health benefits at $12,000 for individuals and $30,000 for families. That means that workers would pay federal income taxes on benefits above those thresholds.
Within the Medicaid program, the Patient CARE Act seeks to provide states with a capped amount of federal funds that would “follow the patient” based on health status, age, and life circumstances. Some Medicaid participants would also have the option of using their federal tax credits to purchase private coverage.
mschneider@frontlinemedcom.com
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