House Republicans Healthcare Blueprint

June 29, 2016

pic-health-cost-blueOn June 22, House Speaker Paul Ryan (R-Wis.) along with the House Republican task force on health care reform – which includes Ways and Means Chairman Kevin Brady (R-Texas) along with other chairs of committees with jurisdiction over the issue – released their health care blueprint which would revamp our health care system by repealing the Patient Protection and Affordable Care Act (ACA) and replacing it with a series of reforms intended to reduce the cost of coverage and allow individuals to carry coverage with them while they move from job to job, while also preserving the current system of employer-provided health insurance.

The 37-page document calls for repealing several of the provisions included in the ACA. Specifically, the blueprint eliminates:

  • the 3.8 percent bracket in the Medicare payroll and self-employment tax;
  • the 3.8 percent “net investment income tax” (NIIT) on savings and investment;
  • the additional 10 percentage point surtax for non-qualified health savings account (HSA) withdrawals;
  • the “medicine cabinet tax” which denies the use of pre-tax HSA, health reimbursement arrangement (HRA), and flexible spending account (FSA) dollars for the purchase of non-prescription, over-the-counter medicines;
  • the $2,500 cap on medical FSA deferrals;
  • the “Cadillac plan” tax of 40 percent on high cost health insurance plans;
  • the “health insurance tax” (HIT);
  • the tax penalties associated with the individual and employer mandates;
  • the medical device excise tax;
  • the industry tax on pharmaceutical companies;
  • the “high medical bills tax” which disallows an itemized deduction for medical expenses for millions of middle class families;
  • a tax on employers helping their retired employees purchase Medicare Part D plans.

The blueprint also calls for expanding HRAs, an employer-funded benefit under which employees are reimbursed tax-free for qualified medical expenses up to a maximum dollar amount for a coverage period.

To encourage “consumer-directed health care,” the blueprint calls for expanding access to HSAs – tax-preferred savings accounts which, when used in conjunction with a high-deductible health insurance plan, allow individuals to pay for qualifying out-of-pocket health care expenses “using tax-free dollars.”

Specific reforms cited in the blueprint would:

  • Allow spouses to make catch-up contributions to the same HSA account;
  • Allow qualified medical expenses incurred before HSA-qualified coverage begins to be reimbursed from an HSA account as long as the account is established within 60 days;
  • Set the maximum contribution to an HSA at the maximum combined and allowed annual deductible and out-of-pocket expense limits; and
  • Expand accessibility for HSAs to certain groups, like those who get services through the Indian Health Service and TRICARE.

Additionally, for individuals and families without access to employer-sponsored health insurance, the blueprint proposes the creation of a “universal advanceable, refundable tax credit” that could be used to purchase insurance coverage in the open market. The blueprint does not specify the credit amount, but indicates that it “would be adjusted for age, ensuring older Americans receive more support, and would grow over time.”

Since the credit is refundable, an individual who purchases insurance coverage that costs less than the credit amount would be able to have the difference deposited into “an HSA-like account” to pay for other health care expenses such as over-the-counter medicines or dental and vision care.

The blueprint is intended to provide congressional Republicans a policy platform for this year’s election season and to lay the groundwork for legislation the party hopes to see enacted if there is a Republican in the White House in 2017.

NSBA ultimately opposed the ACA and the Health Care and Education Reconciliation Act of 2010 due to its failure to truly address health care costs and insurance premium prices. NSBA is focused on reform efforts to fix some of the issues most burdensome to small businesses. Understanding that the ACA, as passed, was primarily about expanding access, not reducing costs, NSBA believes efforts should be made to prioritize health care cost containment and reduce the rate of medical utilization while improving health care quality and empowering consumers.

Details of the House Republican health care blueprint can be found here.