Proposed Senate Bill a Potential Component in Replacing Obamacare

Senators Bill Cassidy (R-LA) and Susan Collins (R-ME) have proposed the Patient Freedom Act of 2017, legislation intended to be a component in the replacement of the Affordable Care Act (ACA), also known as Obamacare. Under one of three options contained in this proposal, health savings accounts (HSAs) paired with a high deductible health plan (HDHP) and what is described as a ”basic pharmacy plan” would be combined with refundable tax credits or subsidy payments deposited on a taxpayer’s behalf into a “Roth HSA.” Under current law there is no “Roth HSA,” only HSAs to which tax-deductible contributions can be made by employers and taxpayers, and the distributions from which are tax free—including earnings—if used for qualified medical expenses. Cassidy further describes the HSA/HDHP/basic pharmacy plan as providing catastrophic coverage.

 

Under the Cassidy-Collins proposal, each state could either 1) retain the provisions of ACA, with some limitations on subsidies, 2) implement the above-described HSA/HDHP program with federal grants to states or refundable tax credits—in either case to fund taxpayer HSAs, or 3) design an alternative program without federal assistance. ACA provisions described as being retained include its prohibitions on excluding persons for pre-existing conditions or having annual and lifetime payment limits, its guaranteed insurability requirement, and the ability to insure young adults up to age 26. Several ACA mandates would be repealed, however, including those for individual coverage and employer coverage.

 

Additional details on this newly-described plan are anticipated. As of yet, no comparable plan has been proposed or is under consideration in the House of Representatives. While it is unclear how ACA repeal advocates will respond to the Cassidy-Collins proposal, it has been widely expected that some form of HSA expansion or enhancement would accompany ACA repeal efforts.