Republican Senators Unveil Affordable Care Act Alternative

On Monday, three Republican senators released a legislative blueprint that would replace the Affordable Care Act with what aides called "common-sense, patient-centered" reforms, Reuters reports.

The proposal -- called the Patient Choice, Affordability, Responsibility and Empowerment Act, or CARE Act -- was developed by Republican Sens. Richard Burr (N.C.), Tom Coburn (Okla.) and Orrin Hatch (Utah) (Morgan, Reuters, 1/27).

What the Proposal Would Change

The proposal would make several significant changes to the ACA. First, it would repeal the ACA's individual mandate, employer mandate and minimum coverage requirements (Rovner, NPR/KPCC, 1/27). It also would make the state-based health insurance exchanges optional (Howell, Washington Times, 1/27).

Further, the proposal would eliminate most of the taxes and fees on insurers, hospitals and medical device companies created under the law to help fund the ACA (Kliff, "Wonkblog," Washington Post, 1/27).

Instead, the proposal would be funded primarily by changing the way employer-based health benefits are taxed. Specifically, the plan would cap the employer health insurance exclusion at 65%, which would make 35% of a plan's value taxable for employees, while maintaining employer tax deductions under the ACA (NPR/KPCC, 1/27).

What the Proposal Would Keep

The proposal would keep in place some popular ACA provisions, such as banning insurers from imposing lifetime limits on insurance benefits and allowing children to remain on their parents' coverage until age 26.

It also would maintain the ACA's Medicare provisions, including $700 million in reduced Medicare payments (Reuters, 1/27).

What the Proposal Would Tweak

Meanwhile, the proposal would alter several other aspects of the ACA.

For example, it would allow insurers to charge older enrollees up to five times as much as younger individuals. The ACA caps older individuals' premiums at three times higher than younger enrollees.

Further, the GOP proposal would adjust a provision that prohibits insurers from discriminating against individuals with pre-existing conditions ("Wonkblog," Washington Post, 1/27). The plan would create a one-time enrollment period, in which insurers could not discriminate against those with pre-existing conditions, for individuals who lost or lack coverage (Washington Times, 1/27). According to NPR/KPCC, those who remain "continuously covered" for at least 18 months could not be denied coverage or charged more because of a pre-existing condition (NPR/KPCC, 1/27).

The GOP plan also would limit the ACA's Medicaid expansion. Instead of allowing all U.S. residents with incomes up to 138% of the federal poverty level to enroll in Medicaid, it would limit the expansion to pregnant women, children and individuals who are elderly or disabled, Reuters reports (Reuters, 1/27).

According to the Washington Times, federal funding for state Medicaid programs would be capped and disbursed based on the number of "most deserving residents" -- typically mothers and children -- with annual incomes below the federal poverty line (Washington Times, 1/27). States would be able to opt in or out of the program or to use tax credit to help individuals purchase private coverage ("Wonkblog," Washington Post, 1/27). However, the proposal contains no plan to continue coverage for those who have gained coverage under the ACA's Medicaid expansion, according to NPR/KPCC (NPR/KPCC, 1/27).

The plan also offers low-income residents federal subsidies to offset the cost of purchasing coverage. Individuals with annual incomes below 300% of FPL, or about $36,000 for an individual, would be eligible for the tax credits ("Wonkblog," Washington Post, 1/27). According to NPR/KPCC, the subsidies would be adjusted for age but not for geographic location (NPR/KPCC, 1/27).

Reaction

Some analysts say the proposal could help Republicans in the upcoming election by providing a comprehensive plan on how they would handle health care reform, Reuters reports.

Joseph Antos, a health care policy expert at the American Enterprise Institute, said, "It gives [Republicans] an opportunity to talk about these things in a more positive way than just repeal and replace" (Reuters, 1/27).

White House press secretary Jay Carney dismissed the proposal as "just another repeal proposal." He said, "Republican energy on this issue has been focused on repeal, focused on, again and again and again, the ideological pursuit that would result in depriving millions of Americans of what are core benefits" (Washington Times, 1/27).