House Conservatives Push Health Policy Alternative

House.govHouse.govThe Republican Study Committee, a group of 175 conservative members of the House GOP, is backing a new health care proposal. The bill is new, but the ideas are relatively familiar: tax credits, high risk pools, and the continuation of a rules requiring continuity of coverage for the already insured. AP has the details:

A large group of House conservatives intends to unveil legislation providing an expanded tax break for consumers who purchase their own health coverage and increasing the government funding for high-risk pools, according to lawmakers who said the plan marked the Republicans' first comprehensive alternative to President Barack Obama's health care overhaul.

Under the proposal endorsed by the Republican Study Committee, individuals who purchase coverage approved for sale in their state could claim a deduction of $7,500 against their income and payroll taxes, regardless of the cost of the insurance. Families could deduct $20,000.

 ...Rep. Phil Roe, R-Tenn., who led a small group that drafted the measure, said the tax deduction would ensure that individuals and families enjoy "the same buying power" as employers who are permitted to deduct the cost of coverage they provide to their workers.

He also said the commitment of $25 billion over 10 years to defray the cost of coverage for high-risk patients would ease a problem caused when funding provided under Obama's plan ran out. Premiums in the high-risk pools would be capped at twice the average cost of insurance sold in the state.

Individuals with pre-existing conditions who already have coverage would generally be permitted to shift existing insurance without fear of losing it.

The legislation also includes expanded access to health savings accounts, which are tax-preferred accounts used to pay medical expenses by consumers enrolled in high-deductible coverage plans.

The introduction of this proposal is pretty clearly a response to the frequent complaint that Republicans have no ideas or alternatives on health care. The GOP's problem with health policy has never been that it has no ideas whatsoever. It's that the party has never coalesced around, or made a concerted attempt to sell, a coherent reform plan. There's no operating theory about what's wrong with the health system, or how it ought to work, which is why you sometimes see Republican legislators suggesting that the only real problem with the U.S. health system is the existence of Obamacare, and maybe a few insurance mandates as well. Some of the recurring Republican ideas, like allowing the purchase of insurance across state lines, are pretty good. But the party's ideas tend to be scattered, and focused on tweaking the Medicare/Medicaid/tax-advantaged-employer-coverage system rather than attempting to address its root problems. 

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  • Hugh Akston||

    Nothing about allowing insurers to sell policies across state lines or winding down the tax/regulation structure that makes employer-provided insurance the norm?

    Out with the bullshit, in with the horseshit. I expect nothing less of Team Red.

  • Hyperion||

    Nothing about allowing insurers to sell policies across state lines

    I just read somewhere this morning that selling insurance across state lines is part of it.

  • Brett L||

    No way this passes. No way. There's too much money in state governments extorting insurers.

  • ||

    Actually it would.

    Adding a tax deduction for individuals to purchase insurance would balance out the deduction for employers. The proposal here seems to give a tax advantage to individuals purchasing their own insurance.

  • Aloysious||

    Nice picture. Dems have a Weiner, and Repubs have a Boner. We are so fortunate.

  • sarcasmic||

    Libertarians have Gary's Johnson.

  • ||

    Yeah, but we couldn't get it erected.

  • Hyperion||

    I wrote my own bill. It's one page and only 5 words, in a really big font. It says:

    HEY, FEDERAL GOVERNMENT, FUCK OFF!

  • Aloysious||

    +1 rebellion

  • Brandon||

    I'll support your bill if you will co-sponsor my "Friends of Brandon Tax Credit" bill.

    -Business as usual.

  • Fatty Bolger||

    Some of the recurring Republican ideas, like allowing the purchase of insurance across state lines, are pretty good.

    That alone would go a long way towards solving the problem. It says a lot about the Republican party that they have never seriously pushed it. Aren't we always being told how they're the laissez-faire, deregulating, cut-throat capitalists? If only.

  • ||

    Personally, I think this is oversold. It's a good idea, but the primary problem is the tax incentives favoring employer-based care.

    Purchasing insurance across state lines only matters for the small slice of the market that is in the individual market.

  • John||

    You want to read something scary, read the comments to the NYT piece on how all the clowns who drafted Obamacare are making a fortune in the private sector. I would provide the link, but Reason refuses to allow links to the NYT. This one is typical

    Spartuchis
    Kew Gardens, NY

    Want to solve the problem? Encourage a massive shift to primary care (although there is much less money to be made in PC than in specialties) and then start rationing. Problem is, primary care is seen as boring and not financially profitable.

    An ounce of prevention. Duh, duh, DUH.

    Sept. 18, 2013 at 12:45 p.m.

    They are not even trying to hide their desire to send you to socialist hell anymore.

  • Dave Krueger||

    This is one of the reasons I don't have much sympathy when republicans get all whiny about Obama care. The one thing they hate most about Obamacare is that it comes from a democrat. It's really amazing how easy it is to identify all the bad things for any proposal from the other party. But, republicans really just want to tweak the existing system which is already a friggin' disaster.

    If republicans practiced what they preached, they would be pushing for the free market (mass repeal of regulation).

  • John||

    But if you won't support anything but a total overall of the entire system, something that is politically impossible, I don't see how I can have much sympathy when you get all whiny about Obamacare.

  • Zeb||

    Why? Dave's not in congress. There is no reason for him to want to see only what is politically possible.

  • ||

    You're not paying attention. The "tweaks" here would end the tax incentives favoring employer-based care. Which is FAR MORE SIGNIFICANT than it appears on the surface.

    If the change in tax incentives works, it will cause people to shift from employer-based care to purchasing insurance directly. Which will radically alter what types of plans people purchase, which will alter their spending habits in the healthcare market.

    What's especially interesting is that the tax deduction is flat regardless of what type of insurance you purchase. So it's a strong incentive to purchase lower-cost high-deductible plans.
    Which is exactly what we need.

  • Robert||

    Sure, like it's so simple. They're fighting a longstanding worldwide tide of socialized medicine. It's actually pretty astounding the USA has held out this much this long. Why do you think Medicare Part D passed? Like Bush Jr. & the Republicans would've pushed it if they thought they had much choice? It was their last chance to get in front of a wave that was coming anyway and ride it, rather than wait for the Democrats to come in & do it and once again paint the Republicans as meanies.

    Seriously, do you know how unpopular free market health care is? Anything close to the ideal in that vein? Not only that, but in most countries the populace is pretty satisfied with shit quality care as long as it's socialized, and in a poll in the UK the avg. respondent underestimated the cost of the NHS by an order of magnitude. Obamacare is good in that the bill for those who buy insurance will still be visible, so that misimpression of a bargain won't be there. But pretty much everyone is willing to sacrifice a heck of a lot in price & quality (though not in choice, apparently) in order to have some systematic way (not ER) to take care of everyone and not bankrupt the least fortunate.

  • ||

    Individuals with pre-existing conditions who already have coverage would generally be permitted to shift existing insurance without fear of losing it.

    This is a key point that I brought up repeatedly during the debates over the ACA in past years. Problem is that because most people have employer-based insurance, they lose coverage when they lose their job, which allows the insurers to get out of paying for treatment for on-going conditions. That's a major problem with the current market that is caused by employer based insurance.

    However, the way it should work is not that you just get to switch companies with the next insurer taking on the cost. The way it should work is that the previous insurer must buy you out, at least paying off the next insurer by transferring a lump sum corresponding to the expected cost of your future treatment. This avoids the adverse selection problem that would otherwise exist.

    I can't say much for the 'high-risk pools" nonsense, but this provision plus the tax incentives for individual insurance at least makes me thing they have seriously thought about what the problems in the market are. This sounds like a very good proposal to me.

  • John||

    But portability solved that issue. If you lose your job, you don't lose your insurance, provided you are willing to pay for it.

    And you don't need to have insurance companies buy anyone out. If they all have to take a previously insured person who got sick after buying insurance, it will even out on its own. For every sick person I pawn off on someone else, I get one right back pawned off on me.

  • ||

    We're talking replacing the ACA here.

    COBRA only gives you something like 6 months of existing insurance - at the price the company paid for it. After it runs out, you have to buy your own.

    I don't see how adverse selection is avoided if insurance companies are still allowed to turn people with pre-existing conditions down. You either would raise premiums, or you would not take those people. Unless the prior insurance company pays of it's successor, then we would have to have some kind of guaranteed-issue/community rating provision. Otherwise the successor insurer can only take "transferees" that are healthy.

  • ||

    Again, I'm totally opposed to guarentees-issue and community rating. The problem is you just can't force insurers to take on sick patients and let the previous insurer off the hook entirely, without creating all sorts of perverse incentives. The insurer that the patient had when he developed the problem, morally and legally, ought to be held financially liable for the full cost of treatment. Any law that changes that equation is going to cause problems.

  • John||

    Making people buy their own insurance is not a bug. And yeah, just tweek COBRA so that they do have to take pre-existing, provided that person can show they had insurance when they got sick and have continued to keep insurance since then.

  • ||

    The successor insurance company will just raise premiums for people that have pre-existing conditions. Why shouldn't they? They aren't a charity. Unless they are getting compensated for taking on that sick person it's only rational for them to want to get paid for the expected costs they will incur.

  • John Thacker||

    Because HIPAA applies to group coverage only, they at most raise the premiums slightly for the entire group of employees.

  • ||

    But then that doesn't apply to individuals that lose their jobs because they get too sick to work.

    90% of the people that have "pre-existing conditions" right now are people that were insured when they got sick, but lost their insurance when they became unemployed.

    We're not talking about you switching jobs from one company to another so you're still in a group plan. We're talking about people losing coverage entirely because they got laid off or got too sick to work, and having to go on the individual market to buy it.

  • John Thacker||

    He's not talking about COBRA. He's talking about portability under HIPAA.

    HIPAA portability prevents exclusion periods for preexisting coverage so long as you had continuous prior coverage, but AIUI only applies to group coverage.

  • ||

    Under the proposal endorsed by the Republican Study Committee, individuals who purchase coverage approved for sale in their state could claim a deduction of $7,500 against their income and payroll taxes, regardless of the cost of the insurance. Families could deduct $20,000.


    As a single, healthy male with no kids, I would say this is reform I could get behind! Especially considering that just this week I began the process of cancelling my insurance through my employer and switching to a HDHP and HSA. Although, SLD, and as Hugh mentioned above, it would have made much more sense to just get rid of the tax benefits to employers than to start doling out even more tax benefits to individuals.

  • ||

    I agree on getting rid of the tax benefit to employers, but that's not really politically feasible. In the current market, that tax break is EXTREMELY POPULAR. People being dumb as they are, they would see not getting healthcare from their employer as a loss of compensation, unless it was offset by a corresponding pay raise.
    This is the political path of least resistance.

    Tax reform can wait. After everyone has shifted out of the employer based system, then we can do tax reform and get rid of both deductions.

  • ||

    Oh I fully agree with you Hazel, I was just pointing out the obvious libertarian solution.

  • Robert||

    The obvious libertarian solution is to get rid of taxes, not tax deductions. If you got rid of the deduction, that'd be a net increase in taxes. And how would people be dumb to see loss of benefits as a cut in compensation? Or were you being uncharacteristically ironic?

  • ||

    And how would people be dumb to see loss of benefits as a cut in compensation?

    They're already paying for those benefits "out of pocket" anyway in the form of lower pay. Although he did say unless it was offset by a corresponding pay raise, so I'm not completely clear on that either

  • ChrisO||

    As long as a significant percentage of the population believes that they are ENTITLED to as much healthcare service as they want, regardless of cost, then free-market solutions are going to be an impossible sell.

    Overall, healthcare would be much more affordable (and better) if physicians were forced to compete to provide basic services in a fee-for-services market. Insurance could be limited to coverage of catastrophic injury and illness.

    The fly in the ointment is the healthcare industry's increasing ability to treat chronic illnesses at extremely high cost, especially among the elderly. Treatments that didn't exist 30 or 40 years ago. Even a rational insurance model would have a hard time dealing with this, since it's not a one-time event affecting only a few people. And the thing is, people EXPECT this sort of treatment to be available, regardless of whether they can pay for it.

    Also, another problem is the upward migration of what the left considers "the poor"--people who aren't eligible for Medicaid, but who don't have insurance. That's ultimately the main target of Obamacare, and it's what will bankrupt the system the most.

  • John Thacker||

    Technically the GOP did make an effort to sell a coherent reform plan when McCain ran, and Candidate Obama ran a ton of effective ads against it, talking about how ending the employer exclusion would "tax healthcare for the first time ever."

    They learned their lesson, any big new comprehensive reform plan is politically dangerous. Hence the tinkering around the ages-- things like HSA were popular because they weren't big and comprehensive.

  • John Thacker||

    And that plan was replacing the exclusion with a tax credit, yet it was still attacked.

  • Winston||

    Any good GOP coherent reform plan isn't going to pass anyway so I'm not sure what the point of these articles are except to inform us of his imminent Weigle turn.

  • Winston||

    Sudermann yesterday:
    The truth is that Republicans don't have much in the way of good options to fight Obamacare in Congress. What they can do, however, is try to avoid risky strategies that could backfire and do more harm than good.

    Man the libertarian moment is upon us.

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