HealthCare Brief

A.M. Best Comments on Republicans’ Proposal to Replace ACA

Patient CARE Act would scrap individual and employer mandates

OLDWICK, N.J., March 24, 2015—A.M. Best has released a briefing exploring the differences between a health-reform blueprint proposed by U.S. Republican senators and the Patient Protection and Affordable Care Act (ACA).

The Best's Briefing, titled, “A.M. Best Comments on Republicans’ Proposal to Replace the Affordable Care Act,” states that the Patient Choice, Affordability, Responsibility and Empowerment Act (Patient CARE Act), intended to replace the ACA, would scrap the individual and employer mandates while still envisioning that Americans with pre-existing medical conditions could obtain health coverage.

The Patient CARE Act includes areas targeting insurance industry reform, small business and individual incentives, state market reforms, consumers’ continuity of care, Medicaid reform, medical practice protections, decision making tools and a tax code correction on rich benefits or “Cadillac plans.” The repeal of the ACA would eliminate subsidies supporting a sizable number of enrollees in plans with private carriers participating in federal and state-run health insurance exchanges.

King v. Burwell

However, A.M. Best recognizes that the U.S. Supreme Court case, King v. Burwell, could eliminate subsidies on the federal health insurance exchange. Similar to the ACA, the Patient CARE Act proposal eliminates lifetime limit requirements and any individual qualifying as a dependent may remain on his or her parent’s plan until age 26, unless the state opts out of this provision.

While the ACA has guaranteed issue coverage for all, the Patient CARE Act states that no individual can be denied insurance based upon a pre-existing condition. However, those individuals who had a break in insurance coverage can be medically underwritten as well as possibly charged a higher premium. In addition, the ACA requires health insurance plans to have minimum essential health benefits, which eliminates mini-med and other types of lower cost plans.

at this time it is unclear if the proposed Patient CARE Act would contain provisions to aid in controlling medical costs

Under the Patient CARE Act, individuals would be allowed to keep their coverage, as there is no minimum type of benefits required to be offered. The Republican plan would eliminate the federal funding for Medicaid expansion, part of the ACA, and funding would revert to at or below 100% of the federal poverty level (FPL). For states that expanded their Medicaid programs to 133% of the FPL, they would need to find additional funding to cover these individuals or change the enrollment eligibility definition to meet the new funding level, which would lead to loss of coverage for some Medicaid eligible individuals.

The guidelines also call for revision of the unlimited exclusion of taxes in an employer-sponsored plan to a capped exclusion at $12,000 for an individual and $30,000 for a family. Prior to passage of the ACA, the medical consumer price index was at its highest at 5.2% in 2008, compared with 3% reported at the end of 2014. However, it is unclear to A.M. Best if the lower medical consumer price index is driven by the components of the ACA or due to the cost shift to the consumer. A.M. Best believes that lower medical costs for the longer term without substantial cost controls on medical care, may be unsustainable.

The ACA does not provide incentives to lower medical cost spending and at this time it is unclear if the proposed Patient CARE Act would contain provisions to aid in controlling medical costs.


For the full copy of this briefing, please visit here. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit