Senators Unveil New Legislation to Help States Fund Health Care

This afternoon U.S. Senators Lindsey Graham (R-SC), Bill Cassidy (R-LA), Dean Heller (R-NV), Ron Johnson (R-WI) and former US Senator Rick Santorum (R-PA) unveiled health care reform legislation.  The proposal repeals the “structure and architecture” of the Affordable Care Act (“ACA”) and replaces it with an annual block grant to help states fund health care.  The block grants remove federal restrictions and provide states with plenary power to design and implement health care within the state.  The following provisions are also included in the proposal:

  • Tax Repeals:
    • Individual and employer mandates and reduces the penalty to $0 for calendar years 2016 and beyond;
    • Premium tax credits beginning 2020;
    • Medical device tax;
    • Tax on over-the-counter medications;
    • Tax on health savings accounts reduced from 15% to 10%;
    • Small business health insurance tax credit beginning 2020;
  • Health Savings Accounts:
    • Increases the Health Savings Account (“HSA”) limits to match the maximum out of pocket expenses;
    • Allows both spouses to make catch-up contributions to the same HSA;
    • Amends the Internal Revenue Code (“IRC”) to allow an HSA to be used to pay for medical expenses incurred prior to the establishment of the HSA;
  • State Rights
    • Establishes an equitable block grant distribution;
    • Permits states to re-determine eligibility every six months or more frequently for individuals eligible for Medicaid;
    • Permits states to require non-disabled, non-elderly, non-pregnant individuals to satisfy a work requirement as a condition for receipt of medical assistance;
    • Provides states the option of extending Medicaid to individuals between the age of 21-65 to cover qualified inpatient psychiatric services;
  • Miscellaneous:
    • Permits Medicare Part D subsidies to be included in business tax expenses;
    • Requires excess premium tax credits received to be repaid beginning 2018;
    • Disqualifies a health plan as a group health plan if it offers abortion services (except to save the life of a woman or if pregnancy is the result of rape or incest);
    • Establishes protections for individuals with pre-existing medical conditions;
    • Introduces the Primary Care Enhancement Act where an individual is provided coverage restricted to primary care services in exchange for a fixed fee.
      • Amendment of the IRC to allow an individual to pay for primary care from a HSA and take a tax deduction for HSA contributions even if enrolled in a primary care service arrangement.
    • Enhances medical assistance funds to Native American tribes;
    • Extends catastrophic health plans purchased in the Exchange to any individual;
    • Establishes a health care implementation fund of $2B to administer this proposal.

For additional information, view Sen. Cassidy’s section-by-section breakdown and Frequently Asked Questions.

Stay tuned to USI Northeast’s Health Care Reform timeline for developments.

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