This week, we revisited 2015 legislation introduced by Georgia Congressman Tom Price, who was announced this week as President-elect Donald Trump’s nominee for Secretary of the U.S. Department of Health & Human Services (HHS). Representative Price’s 2015 bill, H.R. 2300, known as the “Empowering Patients First Act,” included a full repeal of the Affordable Care Act (ACA) as well as all health care provisions in the related Health Care and Education Reconciliation Act passed in 2010. A version of the Empowering Patients First Act has been introduced in Congress every year since 2009. Below, we review Representative Price’s proposed replacement plans around insurance coverage, and provide brief summaries of some of the other provisions in the legislation.
The Empowering Patients First Act would fully repeal the Medicaid expansion and, as written, offers no replacement Medicaid coverage options for the newly eligible category of assistance. Individuals impacted by the repeal of the Medicaid expansion would likely be eligible for tax credits in the individual insurance market, as detailed below. However, as Chairman of the U.S. House of Representatives Committee on the Budget, Representative Price’s 2016 budget framework, “A Balanced Budget for a Stronger America,” proposed changing Medicaid to a block grant program, referred to as “State Flexibility Funds.”
It is also worth noting that President-elect Trump’s pick to lead the Centers for Medicare & Medicaid Services (CMS), Seema Verma, worked under Vice President-elect Mike Pence in Indiana, and was involved in the development of the Healthy Indiana Plan (HIP) 2.0 Medicaid expansion model. HIP 2.0 expanded Medicaid up to 138 percent of the federal poverty level (FPL), requiring member contributions to health savings accounts (HSAs), and limiting benefits or disenrolling members for non-payment.
Individual Market Affordability Provisions
Representative Price’s proposal would preserve the concept of an advanced premium tax credit for individual insurance market coverage, although the structure of the premium tax credit would be altered significantly. Under the ACA, the advanced premium tax credit is tied to an enrollee’s income level, setting a maximum income-based premium payment, and allowing the associated credit, pegged to the second-lowest priced Silver tier plan in the region, to be applied to most Marketplace plan selections.
The Empowering Patients First Act would base tax credits exclusively on age, regardless of income, adjusting annual credit amounts annually for inflation based on cost of living factors. The annual tax credits range from $1,200 for individuals between ages 18 and 35, up to $3,000 for individuals over the age of 50.
|Age Rating Band||Annual Tax Credit||Monthly Tax Credit|
|Individuals Ages 18-35||$1,200||$100|
|Individuals Ages 35-50||$2,100||$175|
|Individuals Ages 50 and Older||$3,000||$250|
|Each Child Under Age 18||$900||$75|
Given the full repeal of the ACA, individual market health plans would no longer be required to offer the Essential Health Benefits package, allowing for individual plans to offer limited benefit plans. In the event that an enrollee’s tax credit exceeds the monthly or annual premium amount, the excess funds may be rolled into a HSA-like account.
Additionally, the Empowering Patients First Act allows individuals in Medicare, Medicaid, TRICARE, and those receiving Veterans Affairs benefits to opt-out of existing coverage and take the tax credit to purchase coverage in the individual market.
Preexisting Conditions and High Risk Pools
While Representative Price’s bill does not include guaranteed issue or community rating mandates (like the ACA), the bill would prevent insurers from imposing preexisting condition coverage exclusions if an enrollee has had continuous insurance coverage for the 18 months prior to the date of enrollment. If a prospective enrollee does not have continuous coverage for the 18 months prior, the Act allows for a 150 percent premium surcharge to the “applicable standard rate” for a period of two years. The Act further provides that standard premium rates may not be based on health status-related factors (further delineated in the Act).
To provide coverage for individuals with preexisting conditions or other high-cost conditions, the Empowering Patients First Act would fund state high risk pools for three years, with $1 billion in federal funds to be divided among states each year. This funding is available to existing, as well as new, high risk and reinsurance pools. States would be eligible to receive bonus grants for things like reduction in premium rate trends or broadening the pool of high risk individuals eligible.
Other Provisions of Note
There are a number of additional provisions in the Empowering Patients First Act that go beyond the main coverage provisions described above. Several provisions of note follow. The full text of the bill and a section-by-section overview are available at the link below.
- Independent Health Pools (IHPs) and Association Health Plans (AHPs). The Act would establish IHPs as non-profit entities established with the purpose of forming an insurance risk pool for its members. Members can be individuals or an employer. AHPs would allow small business owners to purchase insurance within their state or across state lines through membership in a trade or professional association.
- Purchase of Insurance Coverage across State Lines. The Act would allow individuals to purchase health insurance offered in another state, provided the insurer meets some basic requirements.
- Expansion of Health Savings Accounts (HSAs). Incentivizes HSAs through a one-time tax credit and amends rules around HSAs, including increased contribution limits, account rollover to families, bankruptcy protections, and other incentives.