Sen. Rand Paul, R-Ky. (A, 92%) has been nothing if not vocal about his belief that a new set of health care reforms should be voted on at the same time as a repeal of Obamacare. This week, Sen. Paul has revealed his proposal to replace Obamacare, by introducing S. 222, the Obamacare Replacement Act.

His bill is obviously designed to work in tandem with the partial repeal that was passed by Congress last year, in that it sweeps away the parts of Obamacare that the other bill leaves behind, particularly the regulations. While the bill being passed via the budget reconciliation process repeals only the taxation and spending portions of Obamacare, if Paul’s plan were advanced at the same time, the two bills would add to up to a fairly complete repeal of Obama’s health care takeover.

More so than other GOP proposals for life after Obamacare, Paul’s plan focuses much of its effort on removing barriers to competition in the health insurance market that existed well before 2010. First and foremost, it puts individuals on an equal footing with employers with respect to tax treatment for health insurance costs. He does this by allowing the full tax deductibility of health insurance premiums. He allows the deductions to apply not only to income taxes, but also to payroll taxes, meaning that even lower-income individuals benefit.

In addition, a tax credit of up to $5,000 per individual is allowed for contributions to a health savings account. This allows employers to make the choice whether to continue directly purchasing insurance to offer to employees or simply to contribute an equivalent sum to an employee’s health savings account.

HSAs are then greatly expanded to allow individuals to use their funds for many products and services that are currently not allowed, including health insurance itself as well as over-the-counter medications, physical fitness programs, and nutritional supplements.

Another major drawback of the individual insurance market has been that larger companies are able purchase health insurance in bulk and thus reduce the cost per plan. Paul’s plan creates the framework for individuals and small businesses to be able to easily band together into a larger purchasing pool. While Obamacare attempted to do this for small businesses with its SHOP program, the law increased premiums and regulated the market so much across the board that it hasn’t worked well. This new framework leaves wide open space for innovation in health insurance pools.

One consistent talking point for health care reformers on the Right has been allowing health insurance to be sold across state lines. Specifics of how to accomplish in a way that doesn’t violate federalism have generally been in short supply, but Paul’s plan appears to do a pretty good job of squaring that circle. It allows insurers from one state to offer their products in other states while acknowledging certain constraints imposed by secondary states.

Allowing cross-state sales further boosts insurance pools by increasing the ability to pool together by trade or organizational ties, rather than just by geography. Unions and other professional associations have had some ability to do this through association health plans for years, but Paul’s plan greatly loosens the restrictions on these plans.

Of all the new problems created by Obamacare, the Medicaid expansion is the most difficult to deal with politically. Although Medicaid generally provides poor quality coverage and Medicaid enrollees are rejected by a huge (and increasing) percentage of physicians, millions of Americans have now been brought into the program via Obamacare. Paul’s plan addresses the Medicaid issue in a way that would benefit both states and the covered individuals regardless of whether or not the expansion is fully repealed in the accompanying reconciliation bill.

He does this by granting states the ability to change how they deliver coverage under Medicaid. Previously, states have had to request a waiver from the Department of Health and Human Services to get permission to experiment with better ways to administer their Medicaid programs. Paul’s bill eliminates the need to request the waivers, allowing states to follow in the steps of states like Florida, where reforms carried out under waivers have been very successful in improving the quality of care that Medicaid provides.

Overall, Sen. Paul’s plan focuses reform where it ought to be — breaking down barriers in the marketplace and allowing innovation and competition to increase access to affordable health care. From a free market perspective, it stands head and shoulders above any other plan yet offered to reform health care in the wake of Obamacare’s repeal. (For more from the author of “FINALLY! Sen. Rand Paul Offers Worthy Obamacare Alternative GOP Can Get Behind” please click HERE)

Follow Joe Miller on Twitter HERE and Facebook HERE.