This bill would repeal portions of the Affordable Care Act (commonly known as Obamacare) and enact a series of healthcare reforms aimed at replacing the healthcare law. The reforms would be focused on expanding access to inexpensive health insurance plans, letting people buy health insurance across state lines, and allowing people to deduct the cost of their health insurance from their tax bill in addition to improving the tax treatment of health savings accounts. The legislation would also give people with pre-existing conditions a two-year window to buy health insurance with existing protections in place while restoring rules ensuring such individuals can’t be denied coverage under group plans would be restored.
Among the provisions of Obamacare that would be repealed include the individual and employer mandates, community rating restrictions, the medical loss ratio, and other mandates. Obamacare’s essential health benefits requirement would also be eliminated, which would effectively legalize low-cost health insurance plans that had been eliminated because of the mandates.
Individuals with pre-existing conditions would have a two-year open-enrollment period in which they can get health insurance coverage. Health Insurance Portability and Accountability Act (HIPAA) rules that protect people with pre-existing conditions from being denied coverage under group health insurance plans would be restored.
Health insurance plans for individuals would made be available for purchase across state lines by exempting insurers from “secondary state laws” that prohibit the operation of health insurers in secondary states. If an insurer is licensed to sell health insurance policies in one state, they would be able to offer those policies to residents of any other state. The insurer’s primary state would be responsible for regulating the insurer wherever they operate, although secondary states could inform the primary state of failures to comply with the primary state’s insurance law.
Health Savings Accounts (HSAs) would be expanded to allow individuals a tax credit of up to $5,000 per taxpayer for contributions to an HSA. There would be no limit on contributions to an HSA, and everything in excess of $5,000 would still be tax-preferred even if a person chooses not to accept the tax credit. The requirement that participants in an HSA be enrolled in a high deductible healthcare plan would be eliminated. Individuals would be able to use funds from an HSA to pay for insurance premiums, medical expenses, and prescription or over-the-counter drugs.
The tax treatment of health insurance plans obtained individually or through an employer would be equalized through a universal deduction on both income and payroll taxes. This would be available regardless of how a person gets their health insurance, and wouldn’t interfere with employer-sponsored plans.
Individuals would also be allowed to pool together for the purpose of buying health insurance. Nonprofits (including churches, alumni associations, trade associations, and other civic groups) could also participate in the pools as long as they do not condition membership on any health status-related factor.