What you need to know about the Patient Freedom Act of 2017

Last week, several senators introduced a proposed replacement for the Affordable Care Act (ACA), or Obamacare. The Patient Freedom Act of 2017 (PFA) attempts to bridge ACA replacement and repeal by highlighting principles of deregulation and transfer of responsibility to individual states.

The PFA was introduced by Sens. Bill Cassidy (R-LA), Susan Collins (R-ME), Johnny Isakson (R-GA) and Shelley Moore Capito (R-WV).

The PFA joins earlier proposals from Ryan et al¹ as alternatives to the ACA in addressing the pledges of the new administration and GOP lawmakers. The PFA features several components of earlier efforts from 2016, including pieces of the Healthcare Accessibility, Empowerment, and Liberty Act previously introduced into Congress and from previous Patient Freedom Acts versions introduced by Cassidy in advance of the Supreme Court’s decision on King v. Burwell in June 2016.

(Note: King v. Burwell was a legal victory for the Obama Administration, as affirmed in an opinion by Chief Justice Roberts, that tax credits in the ACA’s Section 36B were available to individuals who purchased health insurance on an exchange created by the federal government.)

Not a total repeal

This legislation represents a selective replacement of the ACA, as compared to a total repeal.

According to Sens. Cassidy and Collins, the PFA offers states the power to “increase access to health insurance and improve patient choice, while preserving important consumer protections” originating with the ACA.

Hailed as a commonsense approach by some in the GOP, the PFA may not be conservative enough for others.² States would be given three options under the PFA for replacing the individual mandate. These include:

• Keeping the ACA

• Rejecting any federal reform

• Utilizing a new approach based on Roth Health Savings Accounts (HSAs).

Roth HSAs, which work similarly to current HSAs (minus several tax implication differences), are at the heart of the bill’s feature option. Either the federal government or the state would fund the Roth HSAs, and these funds would then support the purchase of insurance and aim to cover cost sharing. The funds could be provided to any eligible individual-defined as a “citizen or lawful alien” enrolled in a health plan and not covered by an existing federal health program (e.g., Medicare, Medicaid, and the VA). Reimbursement could take the form of monthly refundable tax credits, which would then become taxable income. Multiple algorithms contained in the bill determine individual states’ subsidies depending upon the choices made, along with pages of rules that detail Roth HSA governance.³

It’s complicated

In response to the proposal, expert analysts have acknowledged the PFA’s striking complexity as exceeding that of the ACA.  Significant stakeholder challenges have been identified, and commentary continues to emerge about the PFA’s feasibility.⁴

Along with the three main separate state options to consider, other PFA components include the creation of a new high-deductible “default health insurance” that states could use for auto-enrollment of uninsured individuals. However, such a move could make healthcare services unattainable for low-income individuals currently assisted by the ACA. Another possible component is a new “modified health status insurance” method-insurers would be required to subsidize their competition when people choose to switch healthcare plans-that appears to provide benefits to insurers.  

More details needed

While this legislation aims to appeal to a broad base (i.e., those who support the ACA as well as those who favor a state-centered, less regulation, market-based tactic), the proposal lacks detail and clarity in:

• How it will work

• How much it will cost

• How it would be enacted

And, as with the Republicans’ self-imposed deadline for producing legislation to repeal the ACA and subsequent acknowledgement that they were unlikely to meet it,⁵ it is also unlikely that the required timeline for transition to the PFA would meet the PFA’s January 1, 2018, date.

How it will affect doctor and patient

With regard to any replacement/repeal and the potential impacts on healthcare providers and the public, it is still too early to know.

Based on an early 2015 survey of AMA-member primary-care providers (PCPs), we do know that at that time PCPs were split in their opinions, with about half favorable to the ACA and half wanting repeal. In addition, a majority reported at that time they had seen an increase the number of Medicaid or newly insured patients without decreasing their ability to provide high-quality care.

A new survey⁶ reports almost universal support among PCPs for regulations that prohibit denial of coverage or higher pricing relative to pre-existing conditions. Only 15 percent of PCPs indicated a desire for ACA repeal, and they were much less likely than the general public to want repeal (26 percent of the public wanted repeal in its entirety).

This further highlights the wide gap that exists between PCPs and the public on provisions that allow coverage of preexisting conditions and ensure that both healthy and sick people are enrolled. Both conditions must be met in order for any plan to be sustainable.

It also demonstrates a need to educate all stakeholders on how policies that don’t address adverse selection would lead to increasing healthcare costs.

Additionally, it reinforces the need for in-depth discussion and debate among decisionmakers and their constituents to fill the gaps regarding the PFA (and other alternatives) and potential national impacts prior to any enactment.

As the primary eyecare profession, ODs will continue to play a major role in advocating for care delivery that improves population health. Such initiatives include expanded coverage for children and older adults served by Medicaid and coverage for those who are still non-insured. ODs also support maintenance of existing essential health benefits such as comprehensive eye exams for kids under age 18 and expanding that benefit to also include adults.

References

1. Antos J, Capretta J. The House Republicans’ Health Plan. Health Affairs Blog. Available at: http://healthaffairs.org/blog/2016/06/22/the-house-republicans-health-plan. Accessed 1/27/17.

2. Weixel N. Senators' ObamaCare replacement Bills Highlight GOP Divide. The Hill. Available at:  http://thehill.com/policy/healthcare/316429-senators-obamacare-replacement-bills-highlight-gop-divide. Accessed 1/27/17.

3. Jost T. ACA Replacement Bill from Cassidy and Colleagues Offers State Options, Roth HSAs. Health Affairs Blog. Available at: http://healthaffairs.org/blog/2017/01/24/aca-replacement-bill-from-cassidy-and-colleagues-offers-state-options-roth-hsas/. Accessed 1/27/17.

4. DeBonis M. Hill Republicans Leave Retreat with Few Answers on Key Questions. Wash Post. Available at: https://www.washingtonpost.com/powerpost/republicans-prepare-to-hear-from-trump-hash-out-health-care-plans/2017/01/26/cd2ad060-e3ce-11e6-a453-19ec4b3d09ba_story.html?utm_term=.549d9bcd6acf. Accessed 1/27/17.

5. Peterson K. GOP Acknowledges It Won’t Meet Self-Imposed Deadline to Repeal Obamacare. WSJ. Available at: http://blogs.wsj.com/washwire/2017/01/25/gop-acknowledges-it-wont-meet-self-imposed-deadline-to-repeal-obamacare. Accessed 1/27/17.

6. Pollack CE, Armstrong K, Grande D. View From the Front Line – Physicians’ Perspectives on ACA Repeal. NEJM. Available at: http://www.nejm.org/doi/full/10.1056/NEJMp1700144#t=article. Accessed 1/27/17.