On January 23, 2017, Senate Republicans Bill Cassidy, M.D. (LA), Susan Collins (ME), Shelley Moore Capito (WV) and Johnny Isakson (GA) introduced the legislative text for the Patient Freedom Act of 2017, a proposed replacement plan for the ACA that would allow states to either maintain key aspects of the ACA or adopt market-based alternatives.  The Patient Freedom Act of 2017 marks the seventh proposal from Republicans to replace the ACA and more are expected to be put forward over the coming weeks. 

The Senators who introduced this latest bill promise to return healthcare decisions to the states and individuals by repealing federal mandates requiring individuals and business owners to buy insurance under Title I of the ACA.  The proposal would retain, however, popular consumer protections such as prohibitions on annual and lifetime limits, prohibition of pre-existing condition exclusions, and prohibitions on discrimination.  The bill preserves the following provisions, which are also preserved in certain of the other Republican proposals: guaranteed issue and renewability; coverage of young adults on their parents’ plan until age 26; and coverage for mental health and substance use disorders.

After the bill was unveiled, Sen. Collins emphasized that the plan is “still a work in progress” but the intent is to let states decide whether they want to continue with the current system of state and federal insurance exchanges, new state-run marketplaces with health savings accounts funded with tax credits, or no federal funding at all.

More specifically, the bill repeals Title I of the ACA (covering employee and individual mandates) and offers states to select from one of the following three options in structuring their insurance markets:

• Reimplementation of the ACA:  Under Option 1, states can choose to reinstate Title I to recreate the ACA, including its mandates and other requirements.  The state can continue to receive federal premium tax credits, cost-sharing subsidies, and Medicaid funds, provided that these subsidies do not exceed the contributions that would have been made under Option 2 below.
• Adopt a New State Alternative:  Option 2 allows states to adopt a market-based health insurance system using federally-funded Roth Health Savings Accounts (HSA).  This option provides financial assistance to qualifying residents not receiving health insurance through their employer or public programs like Medicare or Medicaid by providing a high deductible health plan and a basic pharmacy plan to individuals with a HSA.  As for funding, a state could continue to receive the same level of funding it would have received under the ACA if 95 percent of those eligible for subsidies enroll.  If states have already expanded Medicaid, the state can choose to continue with the Medicaid expansion or convert that funding into subsidies to assist individuals with purchasing private insurance.  States will be able to auto-enroll uninsured individuals in basic health care coverage unless that individual opts out. 
• Design an Alternative Solution without Federal Assistance:  Option 3 allows states to design and regulate insurance markets without any federal assistance.

States may change their election at any time, and states that do not select an option within one year of enactment are automatically assumed to have elected Option 2.

The full legislative text of the Patient Freedom Act of 2017 is available here, a brief summary of the proposal is available here, and a breakdown of each section is available here.

Please also refer to today’s Health Headline on “Transition Update,  ACA Repeal and Replace, and Look Ahead” for other recent legislative developments.