I 
111TH CONGRESS 
2D SESSION 
H. R. 5444 
To amend the Internal Revenue Code of 1986 to repeal the Patient Protection 
and Affordable Care Act and the Health Care and Education Reconcili-
ation Act of 2010 and to replace it with provisions reforming the health 
care system by putting patients back in charge of health care. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 27, 2010 
Mr. PAUL introduced the following bill; which was referred to the Committee 
on Energy and Commerce, and in addition to the Committees on Appro-
priations, House Administration, Ways and Means, Education and Labor, 
Natural Resources, the Judiciary, and Rules, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to repeal 
the Patient Protection and Affordable Care Act and the 
Health Care and Education Reconciliation Act of 2010 
and to replace it with provisions reforming the health 
care system by putting patients back in charge of health 
care. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Private Option Health Care Act’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Repeal of Patient Protection and Affordable Care Act and Health Care 
and Education Reconciliation Act of 2010. 
Sec. 3. Refundable credit for health care costs. 
Sec. 4. Disposition of unused health benefits in cafeteria plans and flexible 
spending arrangements. 
Sec. 5. Strengthening health savings accounts. 
Sec. 6. Repeal of 7.5 percent threshold on deduction for medical expenses. 
Sec. 7. Purchase of health insurance across State lines. 
Sec. 8. Facilitation of importation of drugs approved by Food and Drug Ad-
ministration. 
Sec. 9. Credit for purchase by patient of insurance against negative outcomes 
resulting from surgery. 
Sec. 10. Exclusion from gross income for medical malpractice awards granted 
in binding arbitration. 
SEC. 2. REPEAL OF PATIENT PROTECTION AND AFFORD-
ABLE CARE ACT AND HEALTH CARE AND 
EDUCATION RECONCILIATION ACT OF 2010. 
(a) PPACA.—Effective as of the enactment of the 
Patient Protection and Affordable Care Act, such Act is 
repealed, and the provisions of law amended or repealed 
by such Act are restored or revised as if such Act had 
not been enacted. 
(b) REPEAL OF HCERA.—Effective as of the enact-
ment of the Health Care and Education Reconciliation Act 
of 2010, such Act is repealed, and the provisions of law 
amended or repealed by such Act are restored or revised 
as if such Act had not been enacted. 
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SEC. 3. REFUNDABLE CREDIT FOR HEALTH CARE COSTS. 
(a) IN GENERAL.—Section 35 of the Internal Rev-
enue Code of 1986 (relating to health insurance costs of 
eligible individuals) is amended to read as follows: 
‘‘SEC. 35. HEALTH INSURANCE COSTS. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this subtitle an amount equal to the sum of— 
‘‘(1) the amount paid by the taxpayer for insur-
ance which constitutes medical care for the taxpayer 
and the taxpayer’s spouse and dependents, plus 
‘‘(2) the amount contributed to a health savings 
account of the individual (or the individual’s 
spouse). 
‘‘(b) LIMITATION.—The credit allowed by subsection 
(a) for the taxable year shall not exceed the sum of— 
‘‘(1) the taxpayer’s net income tax for the tax-
able year, plus 
‘‘(2) the taxpayer’s Social Security taxes (as de-
fined in section 24(d)) for such taxable year. 
For purposes of paragraph (1), the term ‘net income tax’ 
means the sum of the regular tax liability plus the tax 
imposed by section 55, reduced by the credits allowable 
under this part (other than this subpart). 
‘‘(c) DENIAL OF DOUBLE BENEFIT.— 
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‘‘(1) IN GENERAL.—Any amount allowed as a 
credit under this section shall not be taken into ac-
count in determining the amount of any deduction 
under this chapter. 
‘‘(2) COORDINATION
WITH
HEALTH
SAVINGS 
ACCOUNT CONTRIBUTIONS.—For purposes of para-
graph (1), amounts taken into account under sub-
section (a) for a taxable year shall be treated as 
being attributable to amounts paid for insurance to 
the extent of such payments.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 223(b) of such Code, as amended by 
section 5, is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) 
COORDINATION
WITH
CREDIT
FOR 
HEALTH
INSURANCE.—The limitation under para-
graph (1) shall be reduced by the amount treated as 
being taken into account under section 35(a)(2).’’. 
(2) Section 223(e)(3)(B) of such Code, as 
amended by section 5, is amended by inserting ‘‘nor 
treated as being taken into account under section 
35(a)(2)’’ before the period at the end. 
(3) Section 4973(g) of such Code is amended— 
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(A) in paragraph (1) by inserting ‘‘or a 
credit under section 35’’ after ‘‘section 223’’, 
and 
(B) in paragraph (2)(B)(i) by striking 
‘‘maximum’’ and inserting ‘‘sum of the amount 
treated as being taken into account under sec-
tion 35(a)(2) plus the’’. 
(4) Section 162 of such Code is amended by 
striking subsection (l). 
(5) Chapter 77 of such Code is amended by 
striking section 7527 and by striking the item relat-
ing to section 7527 in the table of sections for such 
chapter. 
(6) Subpart B of part III of subchapter A of 
chapter 61 of such Code is amended by striking sec-
tion 6050T and by striking the item relating to sec-
tion 6050T in the table of sections for such chapter. 
(7) Section 6103(l) of such Code is amended by 
striking paragraph (18). 
(8) Section 6103(p) of such Code is amended— 
(A) in paragraph (3)(A) by striking ‘‘(17), 
or (18)’’ and inserting ‘‘or (17)’’, and 
(B) in paragraph (4) by striking ‘‘or (18)’’ 
after ‘‘any other person described in subsection 
(l)(10), (16)’’ each place it appears. 
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(9) Section 7213A(a)(1)(B) of such Code is 
amended by striking ‘‘subsection (l)(18) or (n) of 
section 6103’’ and inserting ‘‘section 6103(n)’’. 
(10) Section 6724(d)(1)(B) of such Code is 
amended by striking clause (xiii). 
(11) Section 6724(d)(2) of such Code is amend-
ed by striking subparagraph (DD). 
(12) The item relating to section 35 in the table 
of sections for subpart C of part IV of subchapter 
A of chapter 1 of such Code is amended to read as 
follows: 
‘‘Sec. 35. Health insurance costs.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
SEC. 4. DISPOSITION OF UNUSED HEALTH BENEFITS IN 
CAFETERIA PLANS AND FLEXIBLE SPENDING 
ARRANGEMENTS. 
(a) IN GENERAL.—Section 125 of the Internal Rev-
enue Code of 1986 (relating to cafeteria plans) is amended 
by redesignating subsections (i) and (j) as subsections (j) 
and (k), respectively, and by inserting after subsection (h) 
the following: 
‘‘(i) CARRYFORWARDS OR PAYMENTS OF CERTAIN 
UNUSED HEALTH BENEFITS.— 
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‘‘(1) IN GENERAL.—For purposes of this title, 
a plan or other arrangement shall not fail to be 
treated as a cafeteria plan solely because qualified 
benefits under such plan include a health flexible 
spending arrangement under which not more than 
$500 of unused health benefits may be— 
‘‘(A) carried forward to the succeeding 
plan year of such health flexible spending ar-
rangement, or 
‘‘(B) paid to or on behalf of an employee 
as compensation as of the end of such plan year 
or upon the termination of, or failure to re-en-
roll in, such plan or arrangement. 
‘‘(2) DISTRIBUTION OF UNUSED HEALTH BENE-
FITS ON BEHALF OF EMPLOYEE.—For purposes of 
paragraph (1)(B), unused health benefits paid as 
compensation on behalf of an employee by the em-
ployer shall be— 
‘‘(A) includible in gross income and wages 
of the employee, whether or not a deduction for 
such payment is allowable under this title to the 
employee, and 
‘‘(B) excludable from— 
‘‘(i) gross income to the extent pro-
vided under section 402(e), 457(a) (with 
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respect to contributions to an eligible de-
ferred compensation plan (as defined in 
section 457(b)) of an eligible employer de-
scribed in section 457(e)(1)(A)), or 220, 
and 
‘‘(ii) wages to the extent otherwise 
provided for amounts so excludable. 
‘‘(3) HEALTH FLEXIBLE SPENDING ARRANGE-
MENT.—For purposes of this subsection, the term 
‘health flexible spending arrangement’ means a flexi-
ble spending arrangement (as defined in section 
106(c)) that is a qualified benefit and only permits 
reimbursement for expenses for medical care (as de-
fined in section 213(d)(1)) (without regard to sub-
paragraphs (C) and (D) thereof). 
‘‘(4) UNUSED
HEALTH
BENEFITS.—For pur-
poses of this subsection, the term ‘unused health 
benefits’ means the excess of— 
‘‘(A) the maximum amount of reimburse-
ment allowable during a plan year under a 
health flexible spending arrangement, over 
‘‘(B) the actual amount of reimbursement 
during such year under such arrangement.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2009. 
SEC. 5. STRENGTHENING HEALTH SAVINGS ACCOUNTS. 
(a) REPEAL
OF
REQUIREMENT
FOR
COVERAGE 
UNDER HIGH DEDUCTIBLE HEALTH PLAN.— 
(1) IN GENERAL.—Section 223 of the Internal 
Revenue Code of 1986 (relating to health savings ac-
counts) is amended by striking subsections (a), (b), 
and (c) and inserting the following: 
‘‘(a) DEDUCTION ALLOWED.—In the case of an indi-
vidual, there shall be allowed as a deduction for the tax-
able year an amount equal to the aggregate amount paid 
in cash during such taxable year by or on behalf of such 
individual to a health savings account of such individual. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount allowable as a 
deduction to a taxpayer under subsection (a) for the 
taxable year shall not exceed $8,000 ($16,000 in the 
case of a joint return). 
‘‘(2) COORDINATION WITH OTHER CONTRIBU-
TIONS.—The limitation which would (but for this 
paragraph) apply under this subsection to a tax-
payer for any taxable year shall be reduced (but not 
below zero) by the sum of— 
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‘‘(A) the aggregate amount paid for such 
taxable year to Archer MSAs of the taxpayer, 
and 
‘‘(B) the aggregate amount contributed to 
health savings accounts of the taxpayer which is 
excludable from the taxpayer’s gross income for 
such taxable year under section 106(d) (and 
such amount shall not be allowed as a deduc-
tion under subsection (a)). 
‘‘(3) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No deduction shall be allowed under this 
section to any individual with respect to whom a de-
duction under section 151 is allowable to another 
taxpayer for a taxable year beginning in the cal-
endar year in which such individual’s taxable year 
begins.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 223 of such Code is amended 
by redesignating subsections (d), (e), (f), (g), 
and (h) as subsections (c), (d), (e), (f), and (g), 
respectively. 
(B) Section 223(f) of such Code (as redes-
ignated by subparagraph (A)) is amended to 
read as follows: 
‘‘(f) COST-OF-LIVING ADJUSTMENT.— 
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‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 2010, each 
dollar amount in subsection (b)(1) shall be increased 
by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins, deter-
mined by substituting ‘calendar year 2009’ for 
‘calendar year 1992’ in subparagraph (B) 
thereof. 
‘‘(2) ROUNDING.—If any increase under para-
graph (1) is not a multiple of $50, such increase 
shall be rounded to the nearest multiple of $50.’’. 
(C) Section 26(b)(2)(S) of such Code is 
amended by striking ‘‘section 223(f)(4)’’ and 
inserting ‘‘section 223(e)(4)’’. 
(D) Each of the following sections of such 
Code is amended by striking ‘‘section 223(d)’’ 
and inserting ‘‘section 223(c)’’: 
(i) Section 35(g)(3). 
(ii) Section 106(d)(1). 
(iii) Section 220(f)(5)(A). 
(iv) Section 848(e)(1)(B)(v). 
(v) Section 4973(a)(5). 
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(vi) Section 4973(g). 
(vii) Section 4975(c)(6). 
(viii) Section 4975(e)(1)(E). 
(ix) Section 6051(a)(12). 
(E) Section 4973(g) of such Code is 
amended— 
(i) in paragraph (1) by striking ‘‘sec-
tion 223(f)(5)’’ and inserting ‘‘section 
223(e)(5)’’, 
(ii) in paragraph (2)(A) by striking 
‘‘section 223(f)(2)’’ and inserting ‘‘section 
223(e)(2)’’, and 
(iii) in the matter following paragraph 
(2) by striking ‘‘section 223(f)(3)’’ and in-
serting ‘‘section 223(e)(3)’’. 
(F) Section 4975(c)(6) of such Code is 
amended by striking ‘‘section 223(e)(2)’’ and 
inserting ‘‘section 223(d)(2)’’. 
(G) Section 6693(a)(2)(C) of such Code is 
amended by striking ‘‘section 223(h)’’ and in-
serting ‘‘section 223(g)’’. 
(b) DEDUCTION ALLOWED FOR PREMIUM PAYMENTS 
FOR HIGH DEDUCTIBLE POLICIES.—Section 223(c)(2)(C) 
of such Code (as amended by subsection (a)) is amended 
by striking ‘‘or’’ at the end of clause (iii), by striking the 
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period at the end of clause (iv) and inserting ‘‘, or’’, and 
by inserting after clause (iv) the following new clause: 
‘‘(v) a high deductible health plan.’’. 
(c) 
PURCHASE
OF
MEDIGAP
POLICIES
PER-
MITTED.—Clause (iv) of section 223(c)(2)(C) of such 
Code (as amended by this section) is amended by striking 
‘‘other than’’ and inserting ‘‘, including’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
SEC. 6. REPEAL OF 7.5 PERCENT THRESHOLD ON DEDUC-
TION FOR MEDICAL EXPENSES. 
(a) IN GENERAL.—Subsection (a) of section 213 of 
the Internal Revenue Code of 1986 (relating to deduction 
for medical expenses) is amended by striking ‘‘to the ex-
tent that such expenses exceed 7.5 percent of adjusted 
gross income’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2009. 
SEC. 7. PURCHASE OF HEALTH INSURANCE ACROSS STATE 
LINES. 
Notwithstanding any other Federal or State law, any 
individual residing in a State in the United States may 
purchase health insurance coverage from a health insur-
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ance issuer located in any other such State so long as such 
issuer is in compliance withal relevant laws of the State 
of its incorporation (or the State where it is domiciled or 
primarily does business). 
SEC. 8. FACILITATION OF IMPORTATION OF DRUGS AP-
PROVED BY FOOD AND DRUG ADMINISTRA-
TION. 
(a) IN GENERAL.—Chapter VIII of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 381 et seq.) 
is amended— 
(1) by striking section 804; and 
(2) in section 801(d)— 
(A) by striking paragraph (2); and 
(B) by striking ‘‘(d)(1)’’ and all that fol-
lows through the end of paragraph (1) and in-
serting the following: 
‘‘(d)(1)(A) A person who meets applicable legal re-
quirements to be an importer of drugs described in sub-
paragraph (B) may import such a drug (without regard 
to whether the person is a manufacturer of the drug) if 
the person submits to the Secretary an application to im-
port the drug and the Secretary approves the application. 
‘‘(B) For purposes of subparagraph (A), the drugs 
described in this subparagraph are drugs that are subject 
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to section 503(b)(1) or that are composed wholly or partly 
of insulin. 
‘‘(C) The Secretary shall approve an application 
under subparagraph (A) if the application demonstrates 
that the drug to be imported meets all requirements under 
this Act for the admission of the drug into the United 
States, including demonstrating that— 
‘‘(i) an application for the drug has been ap-
proved under section 505, or as applicable, under 
section 351 of the Public Health Service Act; and 
‘‘(ii) the drug is not adulterated or misbranded. 
‘‘(D) Not later than 60 days after the date on which 
an application under subparagraph (A) is submitted to the 
Secretary, the Secretary shall— 
‘‘(i) approve the application; or 
‘‘(ii) refuse to approve the application and pro-
vide to the person who submitted the application the 
reason for such refusal. 
‘‘(E) This paragraph may not be construed as affect-
ing any right secured by patent.’’. 
(b) CONFORMING AMENDMENTS.—Section 801(d) of 
the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
381(d)) is amended— 
(1) by redesignating paragraphs (3) and (4) as 
paragraphs (2) and (3), respectively; 
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(2) in subclause (III) of paragraph (2)(A)(i) (as 
redesignated by this subsection), by striking ‘‘para-
graph (4)’’ and inserting ‘‘paragraph (3)’’; and 
(3) in paragraph (3) (as redesignated by this 
subsection), by striking ‘‘paragraph (3)’’ each place 
such term appears and inserting ‘‘paragraph (2)’’. 
SEC. 9. CREDIT FOR PURCHASE BY PATIENT OF INSUR-
ANCE AGAINST NEGATIVE OUTCOMES RE-
SULTING FROM SURGERY. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to nonrefundable credits) is amended by 
inserting after section 25D the following new section: 
‘‘SEC. 25E. COST OF INSURANCE PURCHASED BY PATIENT 
AGAINST NEGATIVE OUTCOMES RESULTING 
FROM SURGERY. 
‘‘(a) IN GENERAL.—In the case of an individual, 
there shall be allowed as a credit against the tax imposed 
by this chapter for the taxable year an amount equal to 
the cost of negative outcomes insurance covering the indi-
vidual or the spouse or any dependent (as defined in sec-
tion 152) of the individual. 
‘‘(b) NEGATIVE OUTCOMES INSURANCE.—For pur-
poses of this section, the term ‘negative outcomes insur-
ance’ means insurance covering any negative side effect 
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of surgery, including those caused by malpractice from the 
action or inaction of a physician.’’. 
(b) CONFORMING AMENDMENT.—The table of sec-
tions for such subpart A of such Code is amended by in-
serting after the item relating to section 25D the following 
new item: 
‘‘Sec. 25E. Cost of insurance purchased by patient against negative outcomes 
resulting from surgery.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 10. EXCLUSION FROM GROSS INCOME FOR MEDICAL 
MALPRACTICE AWARDS GRANTED IN BIND-
ING ARBITRATION. 
(a) IN GENERAL.—Section 104 of the Internal Rev-
enue Code of 1986 (relating to compensation for injuries 
or sickness) is amended by redesignated subsection (d) as 
subsection (e) and by inserting after subsection (c) the fol-
lowing new subsection: 
‘‘(d) MEDICAL MALPRACTICE BINDING ARBITRATION 
AWARDS.—In the case of damages awarded for medical 
malpractice in binding arbitration, gross income does not 
include such damages (whether for lost wages or other-
wise).’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to damages awarded after the 
date of the enactment of this Act. 
Æ 
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