Obamacare

How Republicans Could Replace Obamacare

A new proposal from three GOP Senators tackles access and affordability.

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House.gov

What is the GOP's health care plan? For years, this has been the rejoinder from supporters of Obamacare whenever asked to confront the flaws in their own legislation. It was an attack line, but also a question worth asking: For the last five years, Republicans have spent plenty of time bashing the president's health law, but far less time describing what they would do instead.

A new proposal from Republican Sens. Coburn (Okla.), Burr (N.C.), and Hatch (Utah) represents a tentative attempt to respond substantively to the question. It's called The Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act, and it's not intended to be the answer, but one possibility—a first step toward a Republican vision for reform.  It's less radical in scope than Obamacare, and more modest in its aims: The goal isn't to rethink the health care system. It's to make it better, cheaper, and more accessible for the majority of people.

The plan begins by repealing Obamacare in its entirety: No more exchanges, no more individual mandate, no more federal benefits requirements. From there, it works from a simple understanding: Most Americans already have health coverage, and the large majority of them say they like it. The biggest complaint about the system is cost. Accordingly, that's where the plan devotes much of its focus.

Gone are Obamacare's raft of expensive health insurance mandates, as well as its restrictive age-rating rules. Those rules prohibit insurers from charging older adults more than three times what they charge young adults in premiums—in effect, forcing the young to subsidize the old. In place of those rules, the GOP proposal would set a looser federal age rating benchmark, one that states could alter or eliminate if they wished. Much of the plan involves returning insurance regulation to the states. Without the heavy hand of the federal government directing health plan design, insurers would be able to design a wider array of cheaper plans tailored more to consumer demand than government rules.

That's not to say that the plan would impose no restrictions on the health insurance market, however. Most forms of rescission, in which insurers unilaterally terminate coverage, often when expensive treatments begin, would be prohibited. (Insurers could still cancel plans in instances of clear-cut fraud.) The proposal would continue to allow dependents up to the age of 26 to stay on their parents' health plans. And it would eliminate medical underwriting for the continuously insured; those switching plans, even from employer coverage into the individual market, would not have to worry about being denied coverage due to preexisting conditions. If you have a plan, you can keep your plan—or get another one.

For those who don't already have insurance, the proposal envisions a one-time open-enrollment period, in which the currently uninsured can sign up regardless of health status. Everyone, even the sick uninsured, would have an opportunity to buy in. But unlike Obamacare, no one would be required to do so.

The plan would set up a system of targeted tax credits to help those who wanted coverage afford it. The credits would be available to individuals and families up earning up to 300 percent of the poverty line, and would increase with age, so that older individuals with more expensive coverage would be given more assistance.

Those credits would be advanceable and refundable, and thus would cost money to offer. The proposal doesn't offer a dollar figure for how much the credits would cost, but it does suggest a way to pay for them: capping the tax exclusion for employer provided care at 65 percent of an average plan's cost. None of the taxes that Obamacare relies on to pay for its coverage expansion would remain.

The combined effect of its changes, the plan's authors say, would be revenue neutral and competitive with Obamacare in terms of coverage. No independent entity has scored the plan, however, and a reasonable assumption is that in the long run, the plan would leave more people uninsured than Obamacare.

By design, the plan is less ambitious than Obamacare. And it is less ambitious than a Republican plan that might have been proposed had Obamacare never passed: It leaves the tax exclusion for employer-sponsored coverage in place, capping it rather than ending it. And it does away with most of the health care payment and delivery system reform that Obamacare's authors and supporters hoped would slowly reshape the system.

What the proposal's authors are betting, however, is that at this point the public does not want grand ambition so much as attainable, practical improvement. And they are willing to bend, if necessary, to get there. The plan has not yet been turned into legislation, and at least some of its details remain subject to change and negotiation. It's designed as a conversation starter rather than a final proposal, a starting point meant to build consensus rather than the final word.

Because the conversation is happening now, following years of blistering attacks on Obamacare, the plan works within the confines of the GOP's criticism of that law: For political and practical reasons, it's designed to minimize disruption to the health system rather than transform it, even where bigger disruptions might make for better policy. It's a necessary and productive starting point, but it also reveals how much the Republican party has limited its options by waiting so long to start talking about its own ideas. The plan sheds some light on Republican ideas about health policy—but also serves as a reminder that those ideas remain in Obamacare's shadow.

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  1. The goal isn’t to rethink the health care system. It’s to make it better, cheaper, and more accessible for the majority of people.

    RETHUGLICAN TEABAGGERZ WANT CHILDRUNZ TO DIE IN THE STREET!

    /prog

    1. MOAR WARZ ON TEH WOMENZ

    2. But will it provide free birth control for 30 year old law students?

  2. It’s a necessary and productive starting point, but it also reveals how much the Republican party has limited its options by waiting so long to start talking about its own ideas.

    What does t hat mean? The Republicans did everything they could to stop Obamacare. Every one of them voted against it.

    Is this some kind of rehash of the David Frum “Republicans missed out by not being a part of Obamacare and making it better” concern trolling?

    Suderman has done some good work covering Obamacare. But he has to be kidding with that sentence, especially since it comes after this

    the plan works within the confines of the GOP’s criticism of that law

    This big old meany Republicans were so awful to Obama that they are now the victims of their own hatred I guess. WTF?

    This is why people think Suderman and wife are Progs pretending to be Libertarians.

    1. Suderman is an idiot. Every article he writes is fundamentally wrong in at least one way.

    2. I think the “confines” line simply means they can advance their plan without it being hypocritical.

      But for the reasons we discussed yesterday, I don’t think it’s a good idea. Let Obama be hoist on his own retard.

      1. But the only way to avoid that problem would be to not criticize Obamacare.

        I think RobC may have a point.

    1. Funny how Rand Paul is totally answerable for his father holding what can at worst be described as a few out of mainstream views. But Obama’s parents and grandparents being communists is totally something that can never be mentioned.

    2. “I also told the lying little jerk at the New York Times…”

      I like it! Go on….

    3. I was stunned to read their claim that Walter Block described slavery as “being not so bad.”

      I remember that lecture very clearly (it’s online on mises.org) and he was being sarcastic. Anyone who listens to it and concludes he really is arguing slavery is not so bad is libeling him – willfully.

      1. In fairness, those people are so stupid understanding actual irony or sarcasm might be beyond them.

      2. Yeah, I just think it’s funny that the LRC crowd also beats the Kochtopus drum.

        1. They have a reputation of charmlessness to maintain.

          1. I just clicked over to some article there on Posse Comitatus. The first paragraph reads

            While visiting the elite Battle Command Training Program at Fort Leavenworth, “I head discussion of the Posse Comitatus Act, which forbids the National Guard to act as a local police force,” reported Robert D. Kaplan in his 1996 book An Empire Wilderness. “The implication was that turbulence within the United States might one day require the act to be repealed.”

            That statement is wrong in about four ways. PC prohibits the Title 10 military from engaging in LE. The National Guard when it is being funded by the states is not bound by PC. Indeed, they have general LE power in a lot of states.

            Beyond that, if there is a full on insurrection that results in the breakdown of civil authority, PC won’t apply anyway since the President could declare marshal law.

            There are legitimate concerns about the mixing of the military and LE. But those clowns don’t help the case for that by not understanding a basic concept like that.

            1. Even when I agree with LRC, I still feel like I need a bath afterwards.

              1. Here, try my bubble mixture, endorsed by waterlogged libertarians everywhere.

      3. Walter Block’s such a witty guy (I knew him when he lived in NY) that even though I never heard that lecture, I knew how he must’ve meant it.

  3. It’s a modest first step and at least it makes an attempt to address the real problem with health care, the cost.

    Of course the biggest contributors to the cost of health care aren’t really addressed at all. The biggest problem is the artificially suppressed supply of doctors, medical schools and hospitals by the AMA and state regulation authorities, all in the name of “public safety”.

    1. No, the biggest problem is the lack of price sensitivity among consumers.

      If consumers were price sensitive- that is, if their healthcare weren’t economically equivalent to an all-you-can-eat buffet- the price pressures on doctors, hospitals and others would simply force a change here.

      A perfect example is the clinics you find at Walgreens and other drug-stores (e.g. Minute Clinic). They have solved for the scarcity and expense of doctors by using auto-diagnosis and nurse practitioners to lower prices. They have had to do this because their clientele are largely paying out of pocket and are therefore price sensitive.

      Even plastic surgeons and other elective surgeries have managed to stabilize or reduce costs while other healthcare costs continue to rise- these medical practitioners deal with customers who are price sensitive. If they don’t find a way to provide better services for less, they will go out of business.

      There are few magic remedies in this world, but Health Savings Accounts paired with High Deductible Insurance truly is the panacea we need.

      1. Amen! What you say is correct. Get the government out of health care and deregulate it …. the price will come falling back down to Earth.

  4. “If you have a plan, you can keep your plan?or get another one.”

    A more honest phrasing, at least.

  5. Even among conservatives, the privilege of signing up for insurance when one has a pre-existing condition is popular. This proposal apparently retains that feature but only for a limited time and without mandates to sign up. Which will, of course, give the opposition party annual opportunities to trot out some poor uninsured schlub who never thought he’d get cancer and hammer the GOP over the head with the heartlessness of not making the more responsible insureds pay for the “grasshopper.”

    1. I think the pre-existing condition thing is a bit overblown. In order for it to be a problem there have be enough people who are willing to wait to get sick gaming the system in order to create a moral hazard. I don’t think there are.

      First, not every pre-existing condition is going to be treated even with insurance. Even with insurance you still have to pay for co-pays and such. So if you have a really expensive condition like say a knee replacement that you have been living with for years, you might not get it done even when you get insurance if you are poor enough.

      Second, you can’t insure for costs already incurred. So you still have some pretty big risks even without the exclusion. The result of that is that most people are going to buy health insurance when they have something to lose and can afford it, just like they do now. How many people who would have bought insurance before will say “i will just buy it if I am sick” while still risking the huge cost of a sudden illness or accident? A few. But not so many as to destroy the system. People are pretty risk adverse, especially as they get older and have assets and kids and other things to lose.

      What is driving costs up under Obamcare is not pre existing conditions. It is the mandated coverages and community rating.

      1. Hope you are right. But there will be some who make the conscious decision to not spend their money until they are diagnosed with cancer, and then there are the others who will get the idea from lawyers and other health advocates.
        My local paper is full of advice columns, etc. from elder care lawyers on how to beat the Medicaid system so you or the kids can keep your money while the taxpayer handles your nursing care.

        1. But there will be some who make the conscious decision to not spend their money until they are diagnosed with cancer,

          For sure. But even uninsured people with cancer get treatment. So it is not like they will be incurring any costs that are not already there. And I don’t think the effect of those few people is anything near the effect that community rating has.

          1. John, I don’t think your points are enough to solve for pre-existing conditions.

            There are always going to be problems with people going off coverage due to financial difficulty- especially if restrictions on community rating are loosened. People will lose their job, try to sign up for private insurance, and their diabetes (or whatever) will result in a cost that is so high, they cannot afford the premium.

            So Creech is right that the current proposal for Pre-Existing conditions is inadequate and will likely result in a never-ending string of hard-luck cases.

            And as I said above, the real problem with health care costs is the lack of Price Sensitivity among consumers. Even if we did away with community rating, unless people were expected to pay more out of pocket, we would still have similar problems (in addition to the really ill/old being unable to afford insurance).

            1. Portability of health insurance when changing jobs have been the law since 1996 (Kennedy-Kassebaum). Same standard, continuous coverage. If the unemployment period is lengthy between jobs, then COBRA allows the employee to continue the same coverage, at the same premium paid by the former employer.

              Here’s a hoot. Continuous coverage is also required by … Medicare. I’m on Medicare by I worked several years after age 65 with employer-paid coverage. When I enrolled in Medicare at age 69, I had to prove that I had “creditable coverage” for those four years, or … or …. I’d have been forced to pay a higher monthly premium.

  6. when the premise is “govt has to do something”, it’s likely that what follows won’t be good. Repubs had six years of controlling Congress and the WH to enact market-based reforms, something as simple as lifting the ban on interstate sales. Didn’t do that. Now, they are the font of knowledge. Frankly, I would rather they got out of the way, let O-care continue crashing, and suggest that perhaps govt is not the best place to look for this type solution.

    1. They never had a filibuster proof majority and no way were the Democrats going to let any such reforms get out of the Senate.

      And they only had the Senate for four years. From 00 to 02, the RINO from Vermont switched parties and make it a Dem majority. They didn’t get a majority until after the 02 elections.

    2. Repubs had six years of controlling Congress and the WH to enact market-based reforms

      They had no time for any of that. They had Iraqis to kill.

    3. wareagle I’m kind of with you on this, Its not a problem that the state can solve. I just want to get together family, friends, co-workers, and some of the small businesses that we work for, to draw up a contract, and keep a doctor, or a hospital on retainer without being treated like an insurance company by the state.

      1. No offence to employees who work for insurance companies. Insurance companies are Bean Counters. My doctor knows what to do when I’m sick. A bean counter just counts beans.

  7. Coburn (Okla.), Burr (N.C.), and Hatch (Utah)

    Not what I would call my Team Red All Star line up…

    1. Coburn at least has a brain. Actually, I think Hatch might, too, although he checks with the party leadership before using it.

  8. Wow. So now the Republicans want to eliminate rescission, stop denial of coverage for pre-existing conditions, and allow kids to stay on parent’s insurance until they are 26.

    Now where have I seen that before? That’s right, the ACA. We already have that.

    1. Obammacare “light”. =)

    2. Obammacare “light”. =)

    3. Obammacare “light”. =)

  9. Bzzzt, wrong again, Reason. Coburn’s plan most definitely increases taxes … a lot.

    Do the math. The tax-free portion of healthcare would be limited to 65%. Umm, what about the other 35%? Somewhat obviously, it gets added to taxable income! Cut through the smoke and mirrors and that’s a tax increase — at the taxpayers marginal (highest) rate.

    Pick an easy number. Let’s use the same $20,000 annual family premium that we see so often as an exemple, employer share. 35% of that is converted to taxable income of $7,000. If we assume a marginal tax rate of 20%, then we see a $1,400 tax increase per year.

    Republicans STILL lose, because they STILL have no credible alternative. And neither will libertarians if we keep sucking up to the GOP and TP, who we should instead be leading. And denying tax increases that should be obvious.

  10. Republicans have been inept on the health care debate; playing defense instead of offense, defending a status quo that was not theirs to defend: a health care marketplace badly distorted by the unintended consequences of employer health care tax incentives

    What they coulda/shoulda done a long time ago…
    Three point plane for free market health care reform:
    1. Reverse the tax incentives: employer health care is taxable, individually purchased health insurance is deductible. Employers will gladly pay higher cash salaries and skip the hassle of running health plans. Gets people shopping for the plans that best meet their needs and that they can take with them if they change jobs. And with premiums fully visible, individuals will make more rational decisions on deductibles, levels of coverage, etc.
    2. Insurance companies required to cover not pre-existing but POST-existing conditions. That is, even after coverage has expired, the insurer is still on the hook for illnesses that originated while the policy was in force. This protects responsible people from falling into the pre-existing trap without encouraging anyone to wait ’till they get sick to buy insurance.
    3. Income based assistance to buy health insurance. Get three quotes and submit with your 1040 to determine amount of assistance.

  11. The starting point should be to do away with or discourage employer provided coverage. One of the problems is that people too often say, “Oh my health insurance plan is so great. I only have a $5 copay!” They don’t realize that they’re paying for it — they just aren’t the one getting the bill in the mail.

    Why is this such a political liability? I’d think people would be receptive to choosing their own plan.

  12. This whole “what are you going to replace it with” argument is wrong from the start. The government has no business telling anyone what insurance they must have, or have any say in what anyone does about their healthcare. The free market, left alone, would do a much better job than the government. People are just not as stupid or incompetent as the elitests in govrnment believe.

  13. C’mon man, give Suderman some credit, he did say “Republicans” can replace obamacare with other nanny-statist ideas which could quite possibly float to the top of the GOP vs DEM cesspool of group think.

  14. This issue is really not that hard. I think there should be 10,000 average-to-smart people pushing a plan or two that most citizens would like a lot better than the ACA. Such as John H. Cochrane, an economist, specializing in financial economics and macroeconomics, and Professor of Finance at the University of Chicago Booth School of Business. Take a quick look at this PDF: “What to do when Obamacare Unravels” (Dec 26, 2013 from the Wall Street Journal). A free-market manifesto with emphasis on freeing the supply of health care:
    http://faculty.chicagobooth.ed…..c_2013.pdf

  15. Cancel it all and you end up with 87% covered by their own insurance, just what it was before healthcare was thought of. We screamed to The Congress but it was useless.

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