By Michael McGrady

The Obamacare Replacement Act would legalize the sale of inexpensive insurance and expand health care purchase options for patients.

Sen. Rand Paul (R-KY) has formally introduced legislation to repeal and immediately replace the Affordable Care Act (ACA) with expanded use of health savings accounts (HSAs) and more options for individuals to buy insurance.

Paul’s Senate Bill 222, the Obamacare Replacement Act, would let people buy, without penalty, inexpensive insurance products that need not comply with ACA’s existing 10 mandates for minimum essential coverage. The bill would also legalize the sale of insurance across state lines to increase competition and drive prices down. In addition, individuals would be allowed to buy insurance on their own or as members of a voluntary group unrelated to their employment, such as a church or public service organization. The bill would “equalize the tax treatment” of those buying insurance on their own versus through an employer.

More HSA Freedom

Paul’s plan would “provide individuals the option of a [non-refundable] tax credit of up to $5,000 per taxpayer for contributions to an HSA,” according to a section-by-section summary of the bill provided by Paul’s office. The proposal would eliminate the caps on annual HSA contributions, which are $3,400 per person and $6,750 per family in 2017, and would let people use tax-free HSA dollars to pay for insurance premiums in addition to prescriptions, dietary supplements, direct primary care memberships, and other health care-related purchases.

The bill would provide a two-year open enrollment period in which individuals with preexisting conditions could buy insurance, let states change their Medicaid programs “without interference from Washington,” and allow physicians a “bad debt” tax deduction equal to 10 percent of their gross income, the summary states.

The Senate has taken no action on SB 222 since referring it to the Committee on Finance on January 24, 2017.

‘Makes the Most Sense’

Michael Tanner, a senior fellow specializing in health care reform at the Cato Institute, says Paul’s proposal is great policy but politically challenged.

“I think it’s a very solid replacement,” Tanner said. “I think politically it has a lot of problems, but policy-wise, it makes the most sense.”

Paul’s plan rises above other Republican proposals by accommodating individuals with preexisting conditions outside the mainstream insurance market, Tanner says.

“The most innovative portion of it is the fact that he would not continue indefinitely some form of protection for preexisting conditions,” Tanner said. “I think that there is no realistic way to do that and yet make the other reforms that Republicans want to make by getting rid of the mandate.”

States could use their increased flexibility under Paul’s plan to provide taxpayer-funded insurance to their so-called uninsurable populations, Tanner says.

“Essentially, there’s no way to insure people who are uninsurable,” Tanner said. “I think his long-term plan to move them into some sort of expanded Medicaid-grant type of approach is probably the only reasonable way to do this.”

Patient Power

Paul says shifting decision-making from government to patients will make the country’s health care system much more efficient and increase access.

“Getting government out of the American people’s way and putting them back in charge of their own health care decisions will deliver a strong, efficient system that doesn’t force them to empty out their pockets to cover their medical bills,” Paul stated in a January 25 press release announcing the bill.

Tanner says Paul’s plan shares key components of other Republican plans to repeal and replace Obamacare.

“It includes the usual Republican things: expanding health savings accounts, purchase across state lines, expanding association health plans, and so on,” Tanner said.

The distinguishing and most effective feature of Paul’s plan makes it an easy target for opponents, Tanner says.

“Sen. Rand Paul’s proposal has the biggest obstacle,” Tanner said. “You are going to have the people who are covered today who the Democrats will trot out and say they’re going to lose their coverage. The fact is they are going to end up having to pay more or get less for it, because they simply are uninsurable, by definition. I mean, you can’t simply keep them in the insurance pool.”

Originally published by The Heartland Institute.



By Michael McGrady

The short answer is: “yes, but with some challenges and it won’t be as strong.”

But, please, allow me to go into context. The U.S. Food and Drug Administration, like several federal regulatory bodies, has experienced near immunity and lack of accountability in its dictation over the compliance landscape for many consumer products.

The FDA exemplifies self-empowered influence, continually regulating the pharmaceutical industry so tightly that it has killed new or biosimilar medications before they reach the marketplace, solidifying monopolies on medications. This crony capitalistic practice secures more market share and influence for major industry players, preventing healthy competition in a free market.

Now, with the Trump Administration already making or preparing to make sweeping changes throughout all areas in the executive branch, the FDA may face a major change, as well.

To his credit, President Trump has vowed to slash regulations with his “1 in, 2 out” mandate for all new regulatory guidance created by federal agencies.

In effect, for every one rule created, two old rules must be eliminated. This could lead to a major reduction in the regulatory regime that has engulfed several sectors of the American economy, including the pharmaceutical industry.

Certain rules passed in the lame-duck session to cap off Obama’s sundering FDA. The agency passed 20 rules and guidance regulations to furnish the legacy of the former president.

Several rules like those pertaining to stricter manufacturing practices and updating drug approval applications were directly challenged by the rule. Other rules pertained to the promotion of biosimilar and prescription medications. Many of the final rules were at major risk of getting shelved if not published by Obama’s FDA before the transition of power was complete in late January.

According to Real Clear Politics, the new president met with pharma executives to come up with an effort that can, effectively, get down prices for drugs.

“President Trump called for drug companies to get prices down, accelerating the FDA approval process, getting drugs to terminal patients, reducing the price of research and development, getting rid of some regulations,” according to the coverage via the report.

Nevertheless, even the slightest reduction in regulations is a win-win scenario. One major area of concern for many yielded to how the Trump FDA will deal with scandals like the Mylan incident where EpiPen prices rose astronomically.

One possible solution that the administration could employ, especially in an effort to control drug prices and rein in health expenditures for consumers, would be to compel the FDA to focus more on approving biosimilar drugs to compete with original products.

An example of this, as I reported for The Heartland Institute, was when the agency approved a biosimilar for Humira, the world’s bestselling drug.

Dr. Richard Dolinar, a practicing endocrinologist and pharmaceutical industry consultant, said in my report that “[Biosimilars] will bring competing drugs to the market at a lower price than the innovator company is currently charging, and by doing so, more patients will have access to these very expensive lifesaving and life-altering drugs. . . . Competition does not destroy free markets. Only government can destroy free markets.”

Biosimilar drugs are often proven to be effective, according to the National Institutes for Health. In addition, since the biosimilarities of these drugs are closely related to other key drugs that monopolize the specific segment of the market, the drugs are presented with more competition.

With more competition, the larger companies are forced to drop prices and, as we learned in Economics 101 class, let the best product win.

Biosimilar medication approvals, though, are only a handful of options that can promote free markets and a pro-business, market-friendly governmental presence in the industry.

Regardless, one thing that is for certain is that since the election of Donald Trump, publicly traded pharmaceutical and biotech companies have been performing exceptionally well.

This performance is mostly due in part to Trump’s then-little words on pharmaceuticals and making drugs more affordable.

Despite what it is, though, the FDA is ripe for widespread changes. We can see the beginnings of a breakup of the revolving door of the agency and pharmaceutical establishment.

Originally published by