By Carol Potaczek, J.D.
An ACA repeal and replacement plan was introduced January 23 by Sens. Bill Cassidy, R-La, and Susan Collins, R-Me. The “Patient Freedom Act of 2017” (S. 191) would generally allow states to continue to use the infrastructure of the ACA state or federal Marketplaces, or to create new marketplace portals. The GOP senators also proposed to create Roth Health Savings Accounts (Roth HSAs) funded by tax credits.
According to Democratic Caucus Vice Chair Loretta Sanchez, D-Calif, the Patient Freedom Act “would cover fewer Americans than the Act currently does.” Sanchez added that it “would repeal consumer protections, such as the ban of denying people coverage for pre-existing conditions.”
States given three options. The bill is being touted by Cassidy and Collins as being superior to what Sen. Collins called the ACA’s “one-size-fits-all” approach. Under the new plan, states would have three options: first, continuing the implementation of the ACA, and generally continuing the premium and cost-sharing subsidies; second, creating their own state marketplace, with a new Roth HSA-based deposit system for people who do not qualify for health coverage subsidies; and third, rejecting, to the extent permitted by the new plan, Title 1 of the ACA and replacing it with nothing. States that fail to opt for any of these three will be deemed to have chosen option two.
States that decide to keep their ACA coverage as-is, as per option one, will still have exchange policies eligible for cost-sharing subsidies and advanced premium tax credits, and those states will retain the individual and employer mandates. Individuals in states that choose option two would receive federal or state funds deposited into their Roth HSA accounts. The amount deposited would be based on whatever the government would have provided via ACA subsidies, plus whatever funding a particular state would have received if it had opted to expand its Medicaid program. The plan places a yearly limit of $5,000 (up to $6,000 for those 55 and over) on individuals’ own Roth HSA contributions.
For states that do not opt to keep ACA coverage intact through option one, the plan would repeal Title 1 of the ACA, except for some of its more popular provisions, such as the ban on lifetime and annual limits, the prohibition on exclusions for pre-existing conditions, the preservation of preventive service coverage, the ability of dependents to remain on their parents’ health plans until age 26, and the applicability of mental health parity. Mandatory coverage for other Title 1 provisions such as essential health benefits like preventive and wellness services, emergency care, certain prescription drug coverage, and maternity and newborn care, premium tax credits and cost-sharing reductions, appears to have been eliminated.
Default coverage. The plan also allows states to automatically enroll individuals by default in high-deductible health plans and establish Roth HSAs, except for people who specifically opt out. States that decide to automatically enroll individuals by default must make enrollment in the associated high-deductible plans available on a continuous basis.
Consequences of lapsed coverage. People who have been anxious to avoid the ACA’s individual mandate would, therefore, be able to opt out of coverage. However, the plan states that people who fail to maintain continuous coverage may be subject to underwriting. In situations involving breaks in coverage of 63 days or more, states will have to allow health insurance issuers to medically underwrite issuance of coverage. This could result in denial of coverage and the application of preexisting condition limitations.
The new plan has what may be an optimistic effective date of January 1, 2018. Sen. Collins conceded on January 23rd that she and Sen. Cassidy are “open to refinements” of the plan, and described it as a “good-faith effort.”
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