Hatch-Brady Proposal Would Reform Obamacare While Funding Cost-Sharing Reduction Payments

Plan would eliminate individual and employer mandates for a period of time, expand health savings accounts

Sen. Orrin Hatch (R., Utah) / Getty Images
• October 24, 2017 3:50 pm


Sen. Orrin Hatch (R., Utah) and Rep. Kevin Brady (R., Texas) have introduced a proposal that would reform Obamacare while providing funding for cost-sharing reduction payments.

The cost-sharing reduction payments, which lowers the amount an individual has to pay for copays, deductibles, and coinsurance, would be funded until 2019 and include pro-life protections. The proposal also states that insurers will have to meet certain requirements to receive the payments to avoid "double dipping."

The Hatch-Brady proposal would also waive the individual mandate, which forces individuals to purchase health care or pay a fine, until 2021. The employer mandate would also be waived from 2015 to 2017, and they would be exempt from penalties if they hadn't provided coverage. Finally, the proposal would also expand health savings accounts to lift the maximum contribution limit.

"As I have said all along, if Congress is going to appropriate funds for cost-sharing reductions, we must include meaningful structural reforms that provide Americans relief from Obamacare," Hatch said. "This agreement addresses some of the most egregious aspects of Obamacare—delaying Obamacare's individual and employer mandates so consumers and employers won't be penalized for purchasing health care they don't like and can't afford and expanding tax-free Health Savings Accounts (HSAs) to allow Americans to save more of their hard-earned income for health costs."

"It also provides much-needed certainty for the individual market in the near term as Congress continues to debate an alternative to the law," said Hatch. "This proposal should be part of any discussion about what to do to provide Americans relief from Obamacare."

Rep. Brady said millions of families in his home state of Texas are still trapped in Obamacare and are looking for relief.

"What we're proposing not only helps treat some of Obamacare's symptoms—rising premiums, fewer choices, and uncertainty and instability," Brady said. "It takes steps to cure Obamacare's underlying illness through patient-centered reforms that deliver relief from federal mandates, protect life, and increase choices in health care."

"It also empowers individuals and families to save and spend their health care dollars the way they want and need by expanding and enhancing a popular, tax-advantaged savings tool known as health savings accounts," said the Texas congressman. "These are the types of real reforms that must be included as part of Congress acting to temporarily and legally appropriate funds for cost-sharing reduction payments."

According to Mercatus Center scholar Dr. Robert Graboyes, the plan resembles July's skinny repeal bill because it eliminates the mandates, encourages HSA's and includes abortion-related provisions. "It appears to have dropped skinny repeal's focus on state waivers and added a provision restoring the cost-sharing reduction payments eliminated recently by President Trump's executive order."

"Opponents will argue—correctly—that eliminating the mandates while leaving guaranteed issue and modified community rating in place has a destabilizing effect on the ACA marketplaces," Graboyes said. "Proponents will argue—correctly—that ACA marketplaces are already unstable."

"At any rate this bill, like its predecessors, is unlikely to substantially solve the problems inherent in the ACA or the problems that pre-dated the ACA," Graboyes said. "To solve the real shortcomings in American health care, Congress and the president will have to shift their focus away from insurance and toward the delivery system—the ways doctors and hospitals and others actually deliver care to patients."

In addition, it is unclear if President Donald Trump will support the proposal, since he has said that he does not support a bailout of insurance companies. Two House committees have called the cost-sharing reduction payments unconstitutional in the past because they said they were made without an appropriation from Congress. The Trump administration recently announced these payments would end.

Last week, Sen. Lamar Alexander (R., Tenn.) and Sen. Patty Murray (D., Wash.) introduced legislation that would fund the cost-sharing reduction payments for two years.

Following the legislation's introduction, Trump tweeted that he could not support bailing out insurance companies.

"I am supportive of Lamar as a person and also of the process, but I can never support bailing out [insurance companies] who have made a fortune [with Obamacare]," Trump said.

Published under: Health Care, Obamacare, Orrin Hatch