Obamacare Replacement Act – Senate Bill 222 by Senator Rand Paul – KY

Sen. Rand Paul, R-Ky., speaks during an event at the University of Chicago's Ida Noyes Hall in Chicago on Tuesday, April 22, 2014. (AP Photo/Andrew A. Nelles) ORG XMIT: ILAN114Lots to like and consider here.  We need more details about how tax equalization in the group market vs the individual market will be handled.  The expansion of uses and benefits of HSAs is robust and will go along way to establishing more ways to self-insure and less reliance on networks and government programs; both are a good thing.  The flexible, market-friendly Interstate Market for Health Insurance Cooperative Governing of Individual Health Insurance Coverage will be a welcome change.  Again, devil is always in the details.  Stay tuned for more details and insightful analysis here on the Sovereign Patient; we will post them as available. 

Some highlights:

Effective as of the date of enactment of this bill, the following provisions of Obamacare are repealed:

  • Individual and employer mandates, community rating restrictions, rate review, essential health benefits requirement, medical loss ratio, and other insurance mandates.

Protecting Individuals with Pre-Existing Conditions:

  • Provides a two-year open-enrollment period under which individuals with pre-existing conditions can obtain coverage.
  • Restores HIPAA pre-existing conditions protections. Prior to Obamacare, HIPAA guaranteed those within the group market could obtain continuous health coverage regardless of preexisting conditions.

Equalize the Tax Treatment of Health Insurance:

  • Individuals who receive health insurance through an employer are able to exclude the premium amount from their taxable income. However, this subsidy is unavailable for those that do not receive their insurance through an employer but instead shop for insurance on the individual market.
  • Equalizes the tax treatment of the purchase of health insurance for individuals and employers. By providing a universal deduction on both income and payroll taxes regardless of how an individual obtains their health insurance, Americans will be empowered to purchase insurance independent of employment. Furthermore, this provision does not interfere with employer-provided coverage for Americans who prefer those plans.

Expansion of Health Savings Accounts:

  • Tax Credit for HSA Contributions
    • Provides individuals the option of a tax credit of up to $5,000 per taxpayer for contributions to an HSA. If an individual chooses not to accept the tax credit or contributes in excess of $5,000, those contributions are still tax-preferred.
  • Maximum Contribution Limit to HSA. Removes the maximum allowable annual contribution, so that individuals may make unlimited contributions to an HSA.
  • Eliminates the requirement that a participant in an HSA be enrolled in a high deductible health care plan. This section removes the HSA plan type requirement to allow individuals with all types of insurance to establish and use an HSA.
  • This would also enable individuals who are eligible for Medicare, VA benefits, TRICARE, IHS, and members of health care sharing ministries to be eligible to establish an HSA.
  • Allowance of Distributions for Prescription and OTC Drugs o Allows prescription and OTC drug costs to be treated as allowable expenses of HSAs.
  • Purchase of Health Insurance from HSA Account o Currently, HSA funds may not be used to purchase insurance or cover the cost of premiums. Allowing the use of HSA funds for insurance premiums will help make health coverage more affordable for American families.
  • Medical Expenses Incurred Prior to Account Establishment o Allows qualified expenses incurred prior to HSA establishment to be reimbursed from an HSA as long as the account is established prior to tax filing.
  • Administrative Error Correction Before Due Date of Return o Amends current law by allowing for administrative or clerical error corrections on filings.
  • Allowing HSA Rollover to Child or Parent of Account Holder o Allows an account holder’s HSA to rollover to a child, parent, or grandparent, in addition to a spouse.
  • Equivalent Bankruptcy Protections for HSAs as Retirement Funds o Most tax-exempt retirement accounts are also fully exempt from bankruptcy by federal law. While some states have passed laws that exempt HSA funds from being seized in bankruptcy, there is no federal protection for HSA funds in bankruptcy.
  • Certain Exercise Equipment and Physical Fitness Programs to be Treated as Medical Care. Expands allowable HSA expenses to include equipment for physical exercise or health coaching, including weight loss programs.
  • Nutritional and Dietary Supplements to be Treated as Medical Care o Amends the definition of “medical care” to include dietary and nutritional supplements for the purposes of HSA expenditures.
  • Certain Providers Fees to be Treated as Medical Care o Allows HSA funds to be used for periodic fees paid to medical practitioners for access to medical care.
  • Capitated Primary Care Payments o HSAs can be used for pre-paid physician fees, which includes payments associated with “concierge” or “direct practice” medicine.
  • Provisions Relating to Medicare o Allows Medicare enrollees to contribute their own money to the Medicare Medical Savings Accounts (MSAs).

Interstate Market for Health Insurance Cooperative Governing of Individual Health Insurance Coverage:

  • Increases access to individual health coverage by allowing insurers licensed to sell policies in one state to offer them to residents of any other state.
  • Exempts issuers from secondary state laws that would prohibit or regulate their operation in the secondary state. However, states may impose requirements such as consumer protections and applicable taxes, among others.
  • Prohibits an issuer from offering, selling, or issuing individual health insurance coverage in a secondary state: If the state insurance commissioner does not use a risk-based capital formula for the determination of capital and surplus requirements for all issuers. Unless both the secondary and primary states have legislation or regulations in place establishing an independent review process for individuals who have individual health insurance coverage; or The issuer provides an acceptable mechanism under which the review is conducted by an independent medical reviewer or panel.
  • Gives sole jurisdiction to the primary state to enforce the primary state’s covered laws in the primary state and any secondary state.
  • Allows the secondary state to notify the primary state if the coverage offered in the secondary state fails to comply with the covered laws in the primary state.

Source: Microsoft Word – Obamacare Replacement Act SBS.docx

What Republicans Should Be Doing: Holding Hearings On Obamacare – Forbes

John C. Goodman

John C. Goodman

Now that Paul Ryan is the presumptive new leader of the House of Representatives, what happens next? The single biggest domestic policy issue the country faces is Obamacare. So far, Republicans in Congress haven’t done anything very useful in addressing it. The House has voted 54 times to repeal some or […]

Source: What Republicans Should Be Doing: Holding Hearings On Obamacare – Forbes

Health Plan: Rubio Gets It Right – Forbes

John C. Goodman

John C. Goodman

So far it’s just an editorial. But it is an editorial that proposes two bold ideas that no other Republican presidential candidate has been willing to endorse: (1) tax relief for the purchase of health insurance should be the same for everyone – whether insurance is acquired at work, in the marketplace or in an exchange, and (2) the best form of tax relief is a fixed sum tax credit.

Although Rubio is a self-described conservative, these are not right wing ideas. In fact, I believe that most health policy experts on the left and the right agree with him. (More on that below.)

For most of the post-World War II period we have had two parallel tax systems with regard to health care and health insurance. Employer sponsored health plans have been treated one way. Individually purchased health insurance has been treated a different way. Under Obamacare, we have created a third parallel system (Medicaid expansion) – all treating people at the same income level very differently.

via Health Plan: Rubio Gets It Right – Forbes.

Defending Public Policy: What’s in a Name? | Robert Nelson, MD | LinkedIn

Robert Nelson, MD

Robert Nelson Publisher & Editor, The Sovereign Patient

Let’s pretend a non-partisan, unelected committee had drafted a health reform plan to be reviewed and debated by the people of each state and then voted on with a simple up or down vote. If a minimum of 38 states passed it, then it would become the law of the land. Let’s assume this health reform plan contained the following characteristics:

Read the entire article via Defending Public Policy: What’s in a Name? | Robert Nelson, MD | LinkedIn.

Components of Optimal Health Insurance: # 3 – Uninterrupted Ownership | Robert Nelson, MD | LinkedIn

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Robert Nelson, MD

Installment #3 of Components of Optimal Health Insurance will discuss how regulatory and tax policy has contributed to the health care insurance crisis by promoting “job-lock”.  Tax laws and insurance regulatory policy need to change in order to affect real health insurance reform. 

via Components of Optimal Health Insurance: # 3 – Uninterrupted Ownership | Robert Nelson, MD | LinkedIn.

Mandates or Markets: What’s Driving Down the Uninsured Numbers? | Robert Nelson, MD | LinkedIn

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Robert Nelson, MD

Here are some facts and some data from a Rand study published May 6, 2015:

  • ACA was signed into law in March of 2010.
  • The ACA insurance exchanges (referred to as ObamaCare) were launched in 2013 with first open enrollment starting in October of 2013 .
  • 22.8 million people gained coverage between September 2013 and February 2015 and 5.9 million lost their coverage for variety of reasons, for a net increase of 16.9 million new insured out of 42.7 million deemed uninsured.

There you have it!  ObamaCare is responsible for adding 16.9 million more people to the rolls of the insured. No debate needed.   

But what about the 4.4 million jobs that the market created between September 2013 and October 2015?  Those new jobs, combined with more workers returning to full-time work, led to a net of 8 million more people receiving employer-sponsored health benefits according to the Rand Study published in Heath Affairs.

John Graham of the National Center for Policy Analysis believes, as do many others, that if not for ObamaCare these job numbers and indeed the entire economy would be better off, including more covered by employer-sponsored benefits.

ObamaCare was not the only thing going on at the time of this study.  Excluding the 1st quarter of 2014, all of 2013 and 2014 recorded steady increases in GDP of about 3% each quarter.  Even though occurring at a slow pace compared to other recoveries, there was some degree of economic growth for the three years preceding the study; which does translate into job growth along with increasing benefits such as health coverage.  The beginning of persistently positive job growth started in December of 2010.

Here is a legitimate question everyone should be asking: What if the recession of 2008 had never happened, would we still have seen the same gains in insured status on net, regardless of the starting point?  We need to think through this in order to know the real effect of ObamaCare on increasing the number of insured.

Read more via Mandates or Markets: What’s Driving Down the Uninsured Numbers? | Robert Nelson, MD | LinkedIn.

Cassidy health plan: The third way | TheHill

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Sen. Bill Cassidy (R – LA)

If the court rules against the Obama administration, three things will happen: (1) in order to continue with health insurance acquired in an exchange, people will have to pay the full premium out of their own pockets, but (2) the individual mandate will no longer apply unless people can find a plan that costs no more than 8.5 percent of their income and (3) the employer mandate in affected states will no longer apply. 

We now have competing estimates on the left and the right about what all this will mean. 

An Urban Institute study maintains that if the court decides for King, 9.8 million currently insured people will lose their health insurance – assuming states that have not expanded Medicaid continue not to do so. On the other hand, an American Action Forum (AAF) study estimates that more than 11 million people will be liberated from the employer and individual mandates.  That means they will avoid a $1,200 fine – the average penalty this year for those who didn’t comply. They will be able to pay lower premiums for more affordable insurance. The study also finds that affected workers will earn nearly $1,000 more and 1.2 million more people will join the workforce.   

So what should be done if the court rules for King?

Read More via Cassidy health plan: The third way | TheHill.

Too Many Squirrels, Not Enough Attention to Their Food Source | Robert Nelson, MD | LinkedIn

1413711984830_wps_35_dmvidpics_2014_10_19_at_0Locating the food source for this second group of squirrels is pretty easy. All they have to do is show up and collect their sustenance, like fat squirrels would by taking the path of least resistance for nuts put out for them by a well-meaning homeowner.

And just who is responsible for this obesity epidemic among squirrels? For starters, we can thank a systemically perverse tax code. Since the 1940’s, tax laws favor employer-sponsored benefits while suppressing and punishing the individual/small business market into submission; and recently straight into the waiting arms of either the ACA or MCO’s of Medicaid.

It took 50+ years of crony deals between special interests and state & federal legislators to hitch and load the cars of this health-care gravy train. It won’t uncouple easily.

Relocating the squirrels or giving them more nut-gathering rules will not fix this. This cartel of fat squirrels will only disband by removing the food source provided by this government sanctioned and partially financed oligopoly.

But back to the first group of combative squirrels, i.e. the mouth pieces of the status quo. Why do they continue to lobby for more of the same – even to their own detriment as patients and citizens?

They beat the drum for more regulations, legislative relief, price controls and mandates (that includes the ACA) in various forms, such as Value Based protocols, Single payer (i.e. streamlined,efficient rationing), higher taxes and various other re-distributive schemes.

Sure, when viewed in isolation any of the models listed above can be found to have some laudable benefits in and of themselves. But just as pushing on one end of a balloon causes it to bulge on the other, it is the unforeseen moral hazard and downstream unintended consequences that doom many of these Utopian ideas.

None of which are necessary, by the way, if we focused on the root causes of our current dilemma: Costs! Rather than how to “cover” people within the current dysfunctional system, which amounts to just applying pressure to one end of the balloon and expecting nothing to happen on the other.

There are common-sense market-based incentives that would reset the current system and solve the majority of the cost challenges we face. It will burst the balloon which will scare the squirrels, though.

Here is an abbreviated list of reasons why I believe these ineffectual models are often championed by well-intentioned individuals and groups, even when they have no direct financial stake.

Read entire article via Too Many Squirrels, Not Enough Attention to Their Food Source | Robert Nelson, MD | LinkedIn.