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How Tom Price's Obamacare Replacement Plan Might Look


How Tom Price's Obamacare Replacement Plan Might Look

President-elect Donald Trump’s reported selection of U.S. Representative Tom Price (R- Ga.) for Health and Human Services Secretary may indicate how the president-elect plans to fulfill his campaign promise of dismantling the Affordable Care Act. A leading critic of “Obamacare,” Rep. Price has introduced legislation during every Congress since 2009 to repeal the President Obama’s sweeping healthcare reform law.

The following are some key provisions of Rep. Price’s Empowering Patients First Act, the latest of his Obamacare replacement plans:

1)  Coverage Mandates. By its express terms, Empowering Patients does not “provide a mandate for guaranteed issue or community rating in the private insurance market.” Therefore, two of the ACA’s strongest controls on insurers’ actuarial behaviors would revert to their pre-ACA state of deregulation.

However, Empowering Patients would maintain a form of prohibition on preexisting condition exclusions. The law would prevent denials of coverage to certain individuals based on preexisting conditions so long as those individuals have maintained “continuous coverage” for at least 18 months prior to the date of enrollment. If a person has a lapse in insurance coverage, insurers may be allowed to deny coverage or charge up to 150 percent of the standard premium for two years under the continuous-coverage provision.

As for consumer mandates, Empowering Patients would remove the so-called “individual mandate” requiring patients to obtain insurance or else pay a tax penalty.

2)  Essential Health Benefits. Empowering Patients eliminates the essential health benefits package mandated by Obamacare, which required insurers to cover a set of 10 different types of care under all insurance plans. Empowering Patients would allow insurers to cut whatever benefits they no longer wish to cover.

3)  Tax Credits. Like Obamacare, Empowering Patients would extend annual tax credits to individuals purchasing private health insurance. However, how tax credits are structured under Empowering Patients is very different than under Obamacare. Obamacare’s tax credits are based upon income, with individuals who earn less getting more assistance. Empowering Patients bases annual tax credits only upon age, providing greater help to individuals who are older. The annual tax credits proposed by Empowering Patients are as follows:

a.   $900 for children under 18

b.   $1,200 for those between 18 and 35

c.   $2,100 for those between 36 and 50

d.   $3,000 for those 51 and older

4)  Medicaid Expansion. Simply put, Empowering Patients promises to undo the Medicaid expansion initiated by Obamacare. Unlike other alternatives to Obamacare, such as Rep. Paul Ryan’s ‘Better Way Plan,’ which allow states to continue operating currently expanded programs albeit with quickly diminishing federal support, Empowering Patients does not offer an alternative to the Medicaid expansion. People previously covered by the Medicaid expansion, if removed from their states’ Medicaid rolls, would be eligible for the age-based tax credits listed above if electing to purchase coverage through the private marketplace under Empowering Patients. 

5)    Employer-Based Insurance Limits. Empowering Patients would also impact employer-sponsored insurance. Empowering Patients proposes limiting employer-tax exclusions for insurance to $20,000 for a family and $8,000 for an individual. Any additional funds above those amounts would be treated as taxable dollars.

6)    New Provisions. Among Rep. Price’s proposals not directly tied to Obamacare are an emphasis on health savings accounts to allow for tax-deductible contributions to special accounts reserved for healthcare expenses; new laws aimed at allowing insurers to sell their products across state lines; medical malpractice reform aimed at changing the burden of proof in malpractice cases; and various provisions allowing beneficiaries under public programs (Medicare, VA, etc.) to seek coverage in the private marketplace.

Empowering Patients contains scant mention of the ACA’s innovation models that have steered federal reimbursement away from fee-from-service and toward quality-based care. However, in September 2016, Rep. Price co-authored a letter to CMS challenging the agency’s authority to enact certain mandatory programs under its Center for Innovation.

As HHS Secretary, Price can impact health reform through the regulatory process, but legislation is ultimately required to replace Obamacare. Price’s detailed Empowering Patients proposal will likely provide a framework for Congressional Republicans as they draft an alternative to Obamacare in the coming months.


Disclaimer: The foregoing materials are provided for informational purposes only, and are not to be construed as legal advice. The information relies on limited authority and has not been screened or approved by any governmental agency. Please consult an attorney before applying this guidance to any particular facts or circumstances.