Empowering Patients First Act
The Empowering Patients First Act of 2009 (H.R. 3400, introduced July 30, 2009) is legislation proposed in the United States Congress during the 1st Session of the 111th Congress as a Republican alternative to the America's Affordable Health Choices Act of 2009 (H.R. 3200.)
It contains clauses that are intended to reduce costs in the health care system (such as reducing the scope of mandated health care coverage, giving insurers new subsidies, and reducing the cost of medical liability insurance).
The bill proposes (but does not mandate or create) the creation in each State of a high risk insurance pool for people with pre-existing conditions who have been refused private insurance.
Proposer claims and CBO assessment
Speaking directly to President Obama, Rep. Tom Price, the proposer of the bill, claimed that his bill "would provide health care coverage for all Americans, would correct the significant health care challenges of portability and pre-existing conditions, would solve the lawsuit abuse issue which is not addressed significantly in any of the other proposals going through the House or Senate, would write into law that medical decisions are made by family members and doctors, and does all of that without raising taxes by a penny". In his reply, President Obama was skeptical, saying "if you say that we can extend coverage to all Americans and it won't cost a penny, that's just not true. You cannot structure a bill in which suddenly 30 million people have coverage, and it costs nothing." He went on to say that he too could make similar claims which would be great politics, but it would just not be true. He said that "there has to be some test of realism in any of these proposals, my own included".
While H.R. 3400 has not been assessed by the Congressional Budget Office (CBO), former Congressional Budget Office director Douglas Holtz-Eakin in an independent review estimated that the bill would yield a net savings of $2.3 trillion over ten years, and would increase the number of insured individuals by 29% by 2016.
The proposal places a mandate on States requiring them to provide premium assistance for Medicaid and CHIP enrollees with access to employer-sponsored insurance. It requires states to offer private insurance subsidies to individuals who would otherwise be eligible for Medicaid and CHIP for the purchase of alternative private health insurance. The net effect of this is to use state taxes to put more money into the hands of private insurers.
On his web site, Tom Price asserts that the bill "covers pre-existing conditions", by allowing states to set up high risk insurance pools for high risk individuals who are otherwise unable to purchase insurance. In this way, high risk individuals would be able to buy insurance as a group at a lower cost than purchasing policies as individuals and offers tax credits to lower the overall expense of the insurance. In effect, the cost of insuring high risk individuals is, in this bill, carried by the high risk individuals collectively and by the taxpayers.
Section 211 of the bill provides that the Federal government will distribute a block grant of 300 million to the States to offset the cost of Medicaid and the cost of running the high risk pools.
As part of his independent review, former Congressional Budget Office director Douglas Holtz-Eakin writes that the bill "will lower premiums in all categories of insurance except high deductible health plans in 2016. But due to slowing of premium increases, high deductible health plans will be 6 percent cheaper by 2023" and that it "will yield substantially lower premiums than current law in all insurance product categories with savings up to 19 percent for single policies and up to 15.1 percent in savings for family policies".
Writing in the Washington Post, Ezra Klein said that the bill had some good ideas but that it would not work. In particular he said "its version of the health insurance exchanges will collapse pretty quickly because the bill contains
- no individual mandate ensuring that the pool includes both healthy and sick individuals
- no insurance market regulations stopping insurers from cherrypicking
- no risk adjustment rebalancing the scales when they do.
He said "In other words, this looks much like the reforms that collapsed in Texas, and in California. Price isn't learning from past policy mistakes, and so he means to repeat them." The good elements, he said, were its proposal for automatic enrollment (of employees in employer health care schemes) and the extension of tax exemption on the purchase of private insurance by buyers in the individual insurance market currently enjoyed by the employed. These, however, would be capped at "the average value of the national health exclusion for Employer Sponsored Insurance (and not at the true cost). He pointed out that this tax exemption amounts to a huge tax increase, but said that "(Tom) Price won't call it that". Presumably this is because the exemption is not specifically tax funded but would increase the deficit and would have to be paid for from taxes eventually.
The medical journalist Maggie Mahar has criticized the bill for the suggestion that people with pre-existing conditions should be moved into high risk pools run in each state. She points out that that existing state-based high risk pools can’t provide affordable coverage for nearly enough of the medically needy who have no other option, and that others have noted how "high-risk pools have been around for over 30 years and currently exist in 35 states, but they only cover about 207,000 Americans. The biggest barrier to enrollment is cost. High-risk pools are inevitably expensive because all of the enrollees have medical conditions that could potentially result in costly medical bills, which means the pools cannot spread costs across low-risk and high-risk individuals. Despite attempts to cap premium rates, the coverage is still unaffordable for many. In fact, a recent study found that premiums for high-risk pools are unaffordable for about one-third of eligible individuals." 
- Tom Price speaking to President Obama (at about 39 minutes in)