Legislative Summary: S. 3264/H.R. 6538, More Affordable Care Act
Summary: The bill creates a waiver program, whereby states can opt out of some (but not all) of Obamacare’s insurance requirements, and individuals can purchase coverage sold in any other state with a waiver. The bill allows states to direct funding that individuals would have received under Obamacare into a new Health Savings Account-like mechanism, the Trump Health Freedom Account, which individuals can use to purchase health insurance and/or health care. The bill also revises and expands Obamacare’s small business tax credit for small employers located in waiver states, and directs the executive branch to expand its efforts regarding price and outcomes transparency.
Health Freedom Waivers: Permits states, beginning in 2026, to waive certain federal requirements, “provided that the state maintains an invisible high-risk insurance pool or another program designed to mitigate risk to insurance premium costs.” Governors or a legislature (upon a majority vote) may submit such notifications at least 90 days before the waiver takes effect.
Permits states to waive the following provisions of Obamacare:
- Part 1 of Subtitle D of Title I (establishment of qualified health plans)
- Part 2 of Subtitle D of Title I (parameters for Exchanges)
- Section 1402 (cost-sharing reductions)
- Sections 36B and 5000A of the Internal Revenue Code (premium subsidies and the individual mandate)
Prohibits states from waiving provisions in the following sections of the Public Health Service Act:
- Section 2701 (community rating requirements, i.e., no variation in premiums based on health status)
- Section 2702 (guaranteed issue of individual and group health insurance)
- Section 2703 (guaranteed renewability of coverage)
- Section 2704 (prohibition of pre-existing condition exclusion)
- Section 2705 (prohibition on any eligibility rules based on health status)
- Section 2708 (maximum 90-day waiting period for coverage to take effect)
- Section 2711 (prohibition on annual and lifetime limits)
- Section 2712 (prohibition on rescinding coverage)
- Section 2718 (medical loss ratio)
Directs the Department of Health and Human Services (HHS) to “provide for an alternative means” by which subsidies that individuals otherwise would have received “shall be paid into the Trump Health Freedom Accounts” discussed further below. Directs HHS to calculate such amounts “based on the national average annual premium amount for a silver tier benchmark plan among” states not participating in the waiver program, and to make such deposits monthly, quarterly, or annually, “at the option of each eligible resident.”
Directs HHS to develop a process for coordinating waivers with the waiver process established under Section 1332 of Obamacare, and with waivers for Medicare, Medicaid, and the State Children’s Health Insurance Program, such that states can submit a single application for waivers covering multiple programs. Permits states using a waiver to either 1) operate their own Exchange, 2) allow one or more private entities to sell plans approved by the state insurance commissioner, or 3) default to a federal Exchange run by HHS, “provided that any state laws regarding the availability of health plans on, and the operation of, such Exchange shall apply in lieu of any provision” the state has waived.
Specifies that “any health insurance coverage offered in a state for which a waiver…is in effect…shall be made available on…the federal or state Exchange…of all states for which a waiver is in effect, subject to the laws of each such state.” This language effectively creates a compact among the various waiver states, whereby a plan sold in one waiver state can be purchased in any waiver state.
Some conservatives, while applauding the concept of state flexibility, may also consider the regulations that states cannot waive the prime driver of the premium increases that led individual health insurance premiums to more than double during the first four years of Obamacare’s implementation. Therefore, some conservatives may believe that keeping the law’s major regulations in place will limit states’ ability to arrive at innovative solutions that lower the cost of health insurance.
Trump Health Freedom Accounts: Adds new language to Section 223 of the Internal Revenue Code (which created Health Savings Accounts, HSAs) to create a new type of HSA, the Trump Health Freedom Account. The accounts will receive deposits of amounts transferred to individuals pursuant to the waiver program outlined above.
Specifies certain ways in which Trump Health Freedom Accounts will differ from traditional Health Savings Accounts:
- Individuals will not receive a tax deduction for any amounts that states deposit into their Trump Health Freedom Account.
- Individuals may use money in the Trump Health Freedom Accounts to purchase health insurance (generally not permitted with HSA funds).
- While individuals with an existing HSA may roll those funds over into a Trump Health Freedom Account, the account must be the individual’s only HSA, “and no amount shall be contributed from a Trump Health Freedom Account to any health savings account other than a Trump Health Freedom Account.”
- In addition to existing penalties regarding use of funds for items other than qualified medical expenses (i.e., payment of income tax plus a 20 percent penalty), prohibits using any Trump Health Freedom Account funds to pay premiums for a health plan covering gender transition procedures and/or abortion services, or to pay for gender transition procedures and/or abortion services directly. With respect to the definition of abortion services, exempts from the funding prohibition 1) treatment of ectopic or molar pregnancies, 2) treatment of miscarriages, 3) abortions “to prevent the mother’s death or immediate irreversible bodily harm,” and 4) services provided in pregnancies resulting from rape or incest.
Small Business Credit: Amends Obamacare’s small business tax credit for small employers located in waiver states, beginning in 2026. As amended, provides a 50 percent credit for the amount of non-elective contributions the employer made to purchase coverage made available on an Exchange in any waiver state. Defines an eligible small employer as one with no more than 50 full-time equivalent employees during the year (based on a 40-hour work week). Exempts employers in waiver states from restrictions included in the original Obamacare small business credit, including 1) phase-outs based on number of employees and workers’ wages, 2) a lower (35 percent) credit percentage for tax-exempt employers, and 3) a limitation on number of years a business can receive the credit.
Price and Quality Transparency: Requires the Departments of HHS, Treasury, and Labor to within 90 days update regulations and guidance pursuant to President Trump’s June 2019 executive order regarding health care transparency, to:
- Require disclosure of actual prices rather than estimates;
- Issue updated guidelines to ensure “pricing information is standardized and easily comparable across hospitals and health plans;”
- Update “enforcement policies designed to ensure compliance;” and
- Require reporting of outcomes data.
Cost: A formal Congressional Budget Office (CBO) cost estimate is not available. However, because the bill would re-direct existing Obamacare subsidy dollars, it should have minimal effects on overall spending and the federal budget deficit.