Rand Paul's Obamacare replacement

Senator Rand Paul (R-Ky) has submitted a bill to repeal and replace Obamacare. So what does it do? (Details below are taken from the bill's fact sheet.)

1. Repeals parts of Obamacare, specifically:

Individual and employer mandates, community rating restrictions, rate review, essential
health benefits requirement, medical loss ratio, and other insurance mandates. 

2. Protect individuals with pre-existing conditions.

3. Makes health insurance premiums paid deductible to income taxes, both on payroll taxes and through income tax filing.

4. Expansion of Health Savings Accounts (HSA). This is, in my opinion, the best aspect of this bill. I won't print it all here, but I highly recommend you review the bill's fact sheet for the details to this. Basically, this bill finally provides HSA's with an incredible amount of flexibility that has long been needed. For example, this bill allows for HSA's to be used to pay for:

• Prescription and OTC drugs.
• Health insurance premiums.
• Medical expenses incurred prior to the establishment of the HSA.
• Certain exercise and physical fitness equipment.
• Dietary and nutritional supplements. 
• Pre-paid physician fees, which includes payments associated with “concierge” or “direct practice” medicine.  
• Contributions to Medicare Medical Savings Accounts (MSAs).

5. Charity Care and Bad Debt Deduction for Physicians.

6. "Establishes Independent Health Pools (IHPs) in order to allow individuals to pool together for the purposes of purchasing insurance." Good idea.

7. Interstate Market for Health Insurance. Long story short, this allows health insurers to sell policies across state lines. There are some restrictions (including allowing secondary states to require consumer protections, which should keep insurers from abusing this law), but overall this looks positive.   

8. "Association Health Plans (AHPs) allow small businesses to pool together across state lines

through their membership in a trade or professional association to purchase health coverage for their employees and their families. AHPs increase the bargaining power, leverage discounts, and provide administrative efficiencies to small businesses while freeing them from state benefit

mandates." This appears to be a slight variation on number 6 above, based on legal definitions of the groups involved. 

9. "Provides an exemption from Federal antitrust laws for health care professionals engaged in

negotiations with a health plan regarding the terms of a contract under which the professionals

provide health care items or services." I am not a big fan of antitrust laws anyway.

10. Increasing State Flexibility to Conduct Medicaid Waivers. State flexibility is always a good thing. 

11. A legal definition change for "stop-loss insurance", which is an excess insurance policy for self-insured employers.

In summary, where Obamacare took the stick approach to health insurance, requiring it under law, this bill takes the carrot approach. This bill does to HSA's what previous laws have done to 401k's and IRA's, and goes much further in my opinion. While I would prefer a world without income taxes, if we have to have them, then this law is the best health care prescription possible.