Rand Paul revealed a replacement for Obamacare that would have a bigger impact on employer-sponsored plans than other Republican alternatives.
Paul’s replacement plan, released Wednesday, carries several details shared with other GOP replacement plans. However, Paul’s plan would affect the employer market by allowing people on the individual market to deduct the cost of insurance from their income or payroll taxes.
Obamacare and GOP replacements have centered reforms on the individual market, which makes up 6 percent of the insurance marketplace and is for people that don’t get insurance through their job.
Paul’s plan also would spill into the employer-based market by taking aim at the tax exclusion for healthcare. Currently employer-paid premiums are exempt from federal income and payroll taxes.
However, the exclusion would cost the federal government an estimated $260 billion this year, according to a report from the Tax Policy Center.
Paul said the plan “does not interfere with employer-provided coverage for Americans” who prefer their plans.
However, he said it extends the exclusion to individuals who don’t get insurance through their job and shop for insurance on the individual market.
“It is an expansion, not a contraction,” he told reporters during a call Wednesday.
The plan includes other elements from other GOP plans. Those include expanding the use of health savings accounts, letting insurers offer plans across state lines and eliminating the individual mandate to get insurance.
Paul also would provide a tax credit of up to $5,000 per taxpayer for individuals and families to use in their HSA. It also would remove the annual cap on the amount that can be put into the accounts and let people use funding from the HSA to buy items such as dietary supplements, over-the-counter drugs and “nutrition and physical exercise expenses.”
Paul’s plan is the second just this week to propose an alternative for Obamacare.
Sens. Susan Collins, R-Maine, and Bill Cassidy, R-La., put out a plan this week that enables a state to keep Obamacare’s system if they want or go with another GOP alternative.
The House leadership also issued a collection of proposals last year called the “Better Way” agenda that includes several parts of Paul’s plan such as expanding HSAs and giving out tax credits. The Better Way plan would exempt employees’ HSA contributions from the cap.
The Better Way plan would cap the tax exclusion on employer-sponsored plans but doesn’t detail the amount of that cap.
