House Republicans yesterday introduced a plan to repeal the Affordable Care Act and replace key pieces of it with high-risk health pools and tax credits that benefit industry experts oppose, saying it would undermine the employer-sponsored health care system in place today.

The Republican Study Committee’s American Health Care Reform Act would fully repeal the ACA and create an above-the-line tax deduction applied to both income and payroll taxes of $7,500 for individuals or $20,500 for a family — available to all Americans with qualifying health insurance.

The deduction would be applicable to existing, employer-sponsored insurance or to the purchase of insurance on the individual or small group market. It would eliminate the tax exclusion for employer-paid health insurance and the self-employed health deduction, a move the National Association of Health Underwriters contests.

“NAHU has always been a very strong advocate for the employer-based system. We oppose this part of the legislation because it would replace the employer exclusion with the tax credit which would undermine the system that covers the vast majority of Americans efficiently and cost-effectively today,” says Jessica Waltman, senior vice president of government affairs.

“NAHU supports market-based changes to make health insurance products accessible and affordable for all Americans. We encourage the development of policies that will continue to allow both employers and individuals to choose the benefits that are most appropriate for them on an individual basis, and oppose any measures that would allow the government to dictate how and when health insurance should be provided by employers,” she says, adding that the trade group also “strongly supports the role of the broker, which has evolved into a more specialized and necessary occupation to properly assist employers of all sizes as they attempt to make practical, responsible and fiscally equitable decisions that benefit their workforce.”

Representatives from the Society for Human Resource Management and The Big “I” said their groups were still evaluating the proposal and had no comment at this time.

The Republican reform plan was drafted by the RSC’s Health Care Task Force, co-chaired by Rep. Phil Roe, (R-Tenn.), who introduced it as legislation yesterday, and Rep. Austin Scott (R-Ga).

Key provisions

Based upon Kaiser Family Foundation data, the RSC says it feels a vast majority of Americans would receive a tax cut under this plan.

“The tax benefit will be portable, will provide payroll tax relief to the working poor, and will give families the flexibility to choose a plan that best fits their needs,” the committee says in a summary of the plan.

In addition, it says, the bill would expand access to and allowable expenses for health savings accounts, increase the maximum allowable contribution into HSAs, and allow employers to offer a larger benefit for successful completion of a wellness program than is currently permitted.

RSC Chairman Bill Flores (R-Texas) commended the plan, saying he believes it would “lower costs, expand access, encourage innovation and put patients back in the driver’s seat of their own health care decisions.”

The plan would also eliminate the ACA’s requirement insurers sell coverage to individuals regardless of pre-existing conditions. Instead, it would expand federal support for state high-risk pools. The pools would get $25 billion in federal funds over 10 years and would be required to cap premiums at twice the amount of the average premium in the state.

The Republican plan would also establish an eight year, $15 billion spending fund through the National Institutes of Health to develop biomedical breakthroughs in the five diseases that cost the most American lives each year: heart disease, cancer, stroke, Alzheimer’s and diabetes. It would also create a $1 billion prize, similar to the X Prize, for a cure to Alzheimer's disease. 

The RSC says the new plan would also spur competition in the market by allowing Americans to purchase health insurance products across state lines and by permitting small businesses to pool together to negotiate better rates.

“Before coming to Congress, I owned and operated a small insurance agency for 20 years, and I’ve seen firsthand how unfair policies and limited competition in the insurance market increases premiums, restricts access to care, and hurts American families,” says Rep. Scott.

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