Senators Propose Giving States Option to Keep Affordable Care Act

JAN. 23, 2017

WASHINGTON — Several Republican senators on Monday proposed a partial replacement for the Affordable Care Act that would allow states to continue operating under the law if they choose, a proposal meant to appeal to critics and supporters of former President Barack Obama’s signature health law.

But the plan was attacked by Democrats as a step back from the Affordable Care Act’s protections, and it was unlikely to win acceptance from conservative Republicans who want to get rid of the law and its tax increases as soon as possible. If anything, the proposal — by Senators Bill Cassidy of Louisiana, a medical doctor, and Susan Collins of Maine, a moderate Republican — may show how difficult it will be for Republicans to enact a replacement for the Affordable Care Act.

Legislation that can pass muster in the more conservative House may not win enough support in the Senate. A bill with broad appeal in the Senate may fail in the House.

Under the proposal, states could stay with the Affordable Care Act, or they could receive a similar amount of federal money, which consumers could use to pay for medical care and health insurance. “We are moving the locus of repeal to state government,” Mr. Cassidy said. “States should have the right to choose.”

The proposal shares some features with House Republican proposals: It would encourage greater use of health savings accounts and eliminate the requirement for most Americans to have insurance or pay a tax penalty. But the option for states to keep the Affordable Care Act alive will rankle the most conservative Republicans who have been trying for nearly seven years to blow it up.

“Obamacare is flawed, failing and not fixable, and it needs to be fully repealed,” said Representative Mark Meadows of North Carolina, the chairman of the House Freedom Caucus.

A stalemate between the House and Senate would leave in place Mr. Obama’s health law, but efforts by President Trump and Congress to undermine it could send health insurance markets into a tailspin. On Friday, as one of his first official acts as president, Mr. Trump signed an executive order that could allow officials to ease up on enforcement of the mandate requiring most Americans to have insurance.

Supporters of the Affordable Care Act panned the Cassidy-Collins proposal. “Millions of Americans would be kicked off their plans, out-of-pocket costs and deductibles for consumers would skyrocket, and protections for people with pre-existing conditions, such as cancer, would be gutted,” said the Senate Democratic leader, Chuck Schumer of New York.

Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group, said the bill “falls way short of providing the protections and coverage people have under the Affordable Care Act.”

Ms. Collins said the bill would allow states to “keep the Affordable Care Act if it is working for their residents.” But she predicted that most states would choose something different.

Under the Cassidy-Collins bill, states could enroll people who would otherwise be uninsured in health plans providing basic coverage. These high-deductible health plans are intended to protect consumers against catastrophic medical expenses. They would cover generic versions of prescription drugs, and they would also have to cover recommended childhood immunizations without co-payments. States would contract with one or more insurers to offer this coverage.

Consumers could buy “more robust coverage” if they want, Mr. Cassidy said, but they could be automatically enrolled, by default, in the high-deductible health plans providing basic coverage. “A state could say, ‘All those eligible are enrolled unless they choose not to be,’” he explained.

This “passive enrollment” would provide insurers with a large pool of customers, including many healthy people, without the coercion of an “individual mandate,” Mr. Cassidy said.

“We think that we could cover more people than Obamacare,” Mr. Cassidy said, although he acknowledged that the effects of his bill had not been analyzed by the Congressional Budget Office, which serves as Capitol Hill’s official scorekeeper.

If a state opts out of the Affordable Care Act, many of the federal insurance standards established under the law would no longer apply. The bill would repeal federal benefit mandates that “often force Americans to pay for coverage they don’t need and can’t afford,” Mr. Cassidy said.

But some protections would remain in place. Parents would still be allowed to keep children on their insurance until the age of 26, and insurers could not impose annual or lifetime limits on benefits.

The Cassidy-Collins bill, called the Patient Freedom Act, would eliminate not only the unpopular individual mandate, but also the federal requirement for larger employers to offer coverage to full-time employees.

Mr. Cassidy said that Senators Shelley Moore Capito of West Virginia and Johnny Isakson of Georgia, both Republicans, were also sponsors of the bill.

The Senate majority leader, Mitch McConnell, Republican of Kentucky, and the No. 2 Senate Republican, John Cornyn of Texas, were sponsors of a similar bill that Mr. Cassidy introduced in 2015. But the legislative landscape is different now. Republicans in Congress can repeal the Affordable Care Act, with support from Mr. Trump. In the Senate, they will need help from Democrats to adopt a replacement because Republicans are eight votes shy of the 60 needed to stop a filibuster.