The Empowering Patients First Act is legislation sponsored by Rep. Tom Price, first introduced as H.R. 3400 in the 111th Congress. The bill was initially intended to be a Republican alternative to the America's Affordable Health Choices Act of 2009 (H.R. 3200), but has since been positioned as a potential replacement to the Patient Protection and Affordable Care Act (PPACA). The bill was introduced in the 112th Congress as H.R. 3000, and in the 113th Congress as H.R. 2300. As of October 2014, the bill has 58 cosponsors. An identical version of the bill has been introduced in the Senate by Senator John McCain as S. 1851 (113th Congress).
Major provisions of the Act include tax deductions and credits to aid in the purchasing of health insurance, the promotion of state-based high-risk insurance pools, the creation of individual and small employer membership associations and association health plans, allowing for interstate insurance markets, a reform of malpractice lawsuits, and loan and loan repayment programs. The Act intends to fund itself through cuts to future spending increases, more commonly known as sequestration, and expected declines in the uninsured population. The Act's effects on the general public and the federal budget have yet to be assessed by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT).
Provisions Sections 1 through 3 before the first title contain the Act's short name, table of contents, repeal of the Patient Protection and Affordable Care Act (PPACA), repeal of the health care-related provisions of the Health Care and Education Reconciliation Act of 2010, and a statement that the Act does not possess a guaranteed issue and community rating mandate.
Title I – Tax Incentives for Maintaining Health Insurance Coverage Section 101 creates a refundable income tax credit of a maximum of the lesser of either the aggregate amount of money paid in premiums in a single taxable year or the sum of the monthly limitations for months that the taxpayer or the taxpayer's qualifying members are considered eligible. The monthly limitation is one-twelfth of the sum of $2,000 ($4,000 if filing a joint tax return) and $500 per dependent. A maximum of two dependents can be claimed and the credit adjusts to inflation annually. The tax credit can only be claimed if the taxpayer and the taxpayer's spouse and dependents have purchased a qualified health insurance plan. The credit can be claimed in full by taxpayers at or below 200% of the federal poverty level (FPL). Above 200% of the FPL, the percentage of the credit that can be claimed decreases by 1 percentage point for each $1,000 earned over 200% of the FPL. Section 102 directs the Secretary of Health and Human Services (HHS) to create a payment system to allow for the credit to be paid directly to the insurance provider to cover premium expenses in advance. Under Section 103, individuals who are otherwise eligible for Medicare, Medicaid, a state child health insurance program (SCHIP), TRICARE, veterans' benefits, federal employee health benefits (FEHBP), or a group health plan subsidized by the employer may choose to claim the aforementioned tax credit instead of receiving any benefits under such program.
Section 104 creates an itemized tax deduction for individuals equal to the amount paid in premiums by the taxpayer for qualified health insurance in a taxable year, provided that the deduction does not exceed the average value of the national health exclusion for employer-sponsored health insurance.
Section 105 prohibits funds authorized from the Act, as well as tax credits and deductions in the Internal Revenue Code (IRC), from being used to pay for any abortion or to pay for any part of the costs of health insurance plans that cover abortion procedures, excluding instances in which the pregnancy was the result of rape or incest, or if the life of the mother is endangered. Section 106 further prohibits the federal government from discriminating against any health care professional, health care facility, health care organization, or health insurance plan that does not provide, pay for, provide coverage of, or refer for abortions. This prohibition extends to state and local governments that receive federal financial assistance.
Section 107 lifts the 25% excise tax on nonconforming group health plans, plans that don't meet all coverage requirements, and exempts these plans from the Health Insurance Portability and Accountability Act (HIPAA), if any employee can choose to have the employer or employee organization pay a contribution of a minimum of the contribution amount to any health insurance provider for coverage instead of receiving coverage under the group health plan, and if any coverage provided to a participant or beneficiary is treated as a group health plan under section 9801 of the IRC, which permits group health plans to exclude individuals with preexisting conditions under certain circumstances. This extends to the FEHBP, in which contributions to all plans are to be equal irrespective of which benefits plan an employee is enrolled in.
Section 108 prohibits states from establishing laws that would prevent any employers that are allowed an exclusion of gross income, a deduction, or a tax credit for the federal income tax for health benefits from automatically enrolling employees in a group health plan, on the condition that employees are to be enrolled in the plan with the lowest premiums, and that employees are given the option to opt out of auto-enrollment for the employer-sponsored plan. Employers are to provide their employees with a 30-day period to elect to opt out, after which employees will be automatically enrolled.
Section 109 creates a new small business health care tax credit to replace the one currently present in the PPACA. The number of employees in a "small business", for the purpose of this tax credit, would be increased from 25 to 50. The maximum tax credit allowed is revised to be equal to $1,500 more than the sum paid in premiums for an auto-enrolled plan by the taxpayer in all previous taxable years. The tax credit is to be a part of the general business credit.
Section 110 makes a number of modifications to several health tax deductions. Capitated payments to physicians and pre-paid physician fees are to be considered medical expenses under the medical expense tax deduction. Individuals eligible for treatment in the Veteran and Indian health systems will not be considered covered under a health plan merely because they receive periodic medical care from the foregoing health care systems, and will thus not be considered eligible for the health savings account (HSA) tax deduction for that reason.
Title II – Health Insurance Pooling Mechanisms for Individuals
Subtitle A – Federal Grants for State Insurance Expenditures Section 201 authorizes $300 million to be split between the states annually as a grant for states to establish their own qualifying high-risk or reinsurance pool or other risk-adjustment mechanism used for the purpose of subsidizing the purchase of private health insurance. Qualifying high-risk pools must cover only high-risk populations, their spouses, and dependents, offer multiple competing health plan options, and offer at least one or more high-deductible plan in combination with a contribution to an HSA. Qualifying reinsurance pools and other risk-adjustment programs must cover only the same individuals as qualifying high-risk pools, but only on a prospective basis under which the insurer cedes the insured to the pool in exchange for a reinsurance premium. Bonus payments made available under this section can only be used for providing health insurance coverage to certain individuals with prior group coverage, a reduction in premium trends, actual premiums, or other cost-sharing requirements, any expansion of the pool of high-risk individuals, or for adopting the Model Health Plan for Uninsurable Individuals promoted by the National Association of Insurance Commissioners (NAIC).
Subtitle B – Health Care Access and Availability Section 211 allows for the creation of "individual and small employer membership associations" (IMAs), associations that make health insurance available to members of the association through contracts with health insurers. Rates for health insurance plans are to be determined by the insurer, and plans offered to any member of the IMA must be available to all members of the IMA. The IMA and its members are not to be held financially liable for any potential losses by the insurer. There are no limits as to where an IMA may operate within the country or how many IMAs may operate in a single geographic area. Coverage in the plans offered to IMAs must comply with state consumer protection laws and can be through a health maintenance organization (HMO), in connection with a preferred provider organization or licensed provider-sponsored organization, indemnity coverage through an insurance company, in connection with a contribution to a medical savings (MSA) or flexible spending (FSA) account, through coverage that includes a point-of-service option, or through any combination of those types of coverage. State laws regulating any benefits requirements, or composition and structure of IMAs, not including requirements under Title XXVII of the Public Health Service Act, shall not apply to IMAs. Any IMA may choose to have its own criteria for individuals or small employers to enter, and insurers contracting with any IMA may choose to have premium discounts, rebates, or modification of copayments or deductibles for members in return for adherence to health promotion and disease prevention programs.
Subtitle C – Small Business Health Fairness Subtitle C of Title II can be referred to as the Small Business Health Fairness Act. Most provisions of this subtitle are amendments to the Employee Retirement Income Security Act (ERISA). Under Section 226, the amendments present in this subtitle go into effect within one year after enactment. Group health plans and other arrangements that provide benefits to employees and employees' beneficiaries of participating employers, that have a minimum of 200 participating and contributing employers, and have been in existence for at least 10 years, are grandfathered into the law.
Section 222 allows for the creation of "association health plans" (AHPs), group health insurance plans sponsored by trade, industry, business, or professional associations that function primarily for non-medical care purposes. Members of any AHP must pay regular dues and these payments cannot change based on any member's health status. All AHPs are required to be certified by the applicable authority, and membership cannot be restricted to individuals of any particular trade or industry. Plans must be operated a 3-year basis by a board of trustees, whose members are individuals selected by employers in the AHP from the employers' company, so long as they are active participants of the company, and their employment is not directly related to the plan, excluding if members of the association are providers of medical care. The board of trustees is tasked with approving applications for participation in the plan and administering day-to-day affairs of the plan. An AHP may terminate if the board of trustees notifies in writing to participants and beneficiaries at least 60 days before termination, a plan exists to timely pay all benefits under the plan to the termination date, and if that plan is submitted to the applicable authority.