WASHINGTON - Maine Sen. Susan Collins has introduced legislation to revamp the Affordable Care Act. The proposed "Patient Freedom Act" is designed to soften the blow of an expected Supreme Court ruling that could eliminate subsidies in the federal health law.
At stake are insurance plans purchased by 6 million Americans and 60,000 Mainers. If those subsidies disappear, Collins says the Patient Freedom Act could swoop in to the rescue. But health policy leaders in Maine say the plan would be a step backward.
In the Supreme Court case known as King vs. Burwell, plaintiffs contend that insurance subsidies offered in 37 states that use federally-run marketplaces are illegal. Maine is one of them. At issue are four critical words in the law that say subsidies are for marketplace insurance plans "established by the state."
If the Supreme Court agrees, Collins says states have two options: "They could either set up a state-run exchange to ensure that their residents have access to the Affordable Care Act's subsidies, or do nothing and allow their residents to lose these Obamacare subsidies."
The Patient Freedom Act, which Collins is sponsoring with fellow Republican Sen. Bill Cassidy, of Louisiana, offers a third option. "Participating in the Patient Freedom Act would allow states to structure their health insurance market without an individual mandate or an employer mandate, or many of the other expensive mandates under Obamacare," Collins says.
In return, Collins says, states would offer insurance through Health Savings Accounts - where consumers save money - tax free, that can only be used to pay for high-deductible insurance plans and other health expenses. Federal and state governments would chip in subsidies for lower-income individuals.
But one key component that fixes what Collins sees as a major flaw in the federal health law, is that those subsidies would gradually phase out as income increases. Under current law, Collins says, subsidies disappear off a virtual cliff once an individual earns more than 400 percent of the federal poverty level. "Taxpayers who earn just $1 more than that threshold lose their entire subsidy. That makes no sense whatsoever."
But some health policy leaders in Maine don't think Collins' proposal makes much sense. "When I read the act, it really reminds me of the movie Back to the Future," says Dr. Wendy Wolf.
Wolf is president and CEO of the Maine Health Access Foundation. She says while the Patient Freedom Act retains some of the more popular reforms under the federal health law, like protecting those with pre-existing conditions and allowing children to stay on their parents' insurance plans until age 26 - it eliminates the requirement that health plans provide certain essential health benefits defined by the Affordable Care Act.
"If you eliminate that, it means we are then in a race to whittle benefits to eventually just have bare bones policies," Wolf says, "and we know in Maine that's what the majority of individual policy holders had prior to the Affordable Care Act, which was an average of about a $15,000 deductible plan."
Emily Brostek of Consumers for Affordable Health Care says Collins' proposal to remove the individual mandate will likely lead young, healthy people to drop out of the insurance market, which will drive up premiums for everyone else. And she's skeptical that Health Savings Accounts can be an effective replacement for marketplace insurance plans.
"There's a lot of research that shows that people in HSA's are more likely to avoid, skip or delay care compared to people with more comprehensive coverage," Brostek says. "And, you know, there's also the concern about will people even be able to afford to buy the HSA-compliant plans if the insurance rates are shooting up because we've lost the insurance mandate."
Brostek says a much simpler solution to the potential subsidy loss for millions of Americans would be for Congress to fix that four word phrase in the Affordable Care Act to include federally-run exchanges.
Wendy Wolf says states can also create their own solutions. In Maine, a proposed bill would designate the current federal marketplace as a legislatively-adopted state exchange should the Supreme Court rule that subsidies in federally-run exchanges are illegal. A decision is expected later this month.
