Republican Health Plans

There is a debate about whether Republicans have offered plans for addressing the health care situaiton in the USA.  They have offered a patchwork of plans, but nothing comprehensive that coverss the pre-exisiting conditon problem facing all approaches.  The critical problem is that the Republicans have not backed any single plan and therefore none of the plans will be pushed forward for discussion.  The major plans are the Empowering Patients First Act, Patients Choice Act, and Healthcare Freedom Act.  This will be a multipart blog due to the complexity of commenting on the plans.

 

Empowering Patients First Act

Major Tenents of the Plan -

• Allow people who purchase coverage in the individual market to deduct the cost of premiums from their income taxes.
• Provide refundable tax credits to individuals and families with incomes below 300% FPL to purchase insurance in the individual market. Establish Association Health Plans and Individual Membership Associations through which employers and individuals can purchase coverage.
• Implement state highrisk pools or reinsurance programs to provide coverage for people with pre-existing health conditions.
• Require states to provide coverage to 90% of children with family incomes below 200% FPL as a condition for expanding child eligibility to 300% FPL, and require states to provide vouchers to children eligible for Medicaid and CHIP, to be used to purchase private insurance. 
• In this program, the concept is to allow people that do not get coverage from employers to be given tax deductions for paying insurance premiums.
• It offers additional assistance to those at the lowest income levels. Provides additional loan assistance for doctors in certain feilds in return for service in under covered locales.
• It also specifically prohibits any plan that might be fully or subsidized from offering abortion coverage.
• It permits insurance companies to cross state lines with the laws in their primary state applying to plans offered in other states. It states that the cost for the plan is paid for by limiting malpractice claims, reducing payments to hospitals that cover a high percentage of uninsured people and reducing discretionary non-defense spending.
• It would automatic enrollment and opt out approaches to get more people convered by employers.
• It would allow you to "own" your policy as opposed to the current system where your employer owns it. 

 The concept covers several of the key problems with today's plans by allowing deduction of insurance plans by individuals.  Today, only companies get that benefit.  It helps get more children covered by allowing Medicaid or SCHIP coverage to a greater extent.  It encourages employers to adopt plans where individuals with healthy lifestyles will pay less for insurance.  Insurers can vary insurance premium by up to 50% for participation in a wellenss plan.  It also sets up a website to allow comparision of health plans. 
 

It does not allow any government sponsored plan and therefore avoids the major costs associated with most of the Democratic plans.  It is not great for those that have unhealthy habits or are unwilling to partipate in a wellness program because the 50% premium savings becomes a 50% increase for those that do not participate.  The plan allows insurers to use pre-existing conditions to prevent coverage but forces states to adopt a high risk pool to cover those people.  This just transfers the costs to the states, where it resides today with Federal copayments for the un-insured.

 

This plan is great for those with Health Savings Accounts and Insurance, I.e. people that already are covered.  It is also good for those that want coverage but need to get some added benefit in the form of tax credit to afford it easily.  It does not allow coverage of illegal aliens and leaves the problems found in our emergency rooms exactly where they are today, with the hospitals.  It gives an added deduction for self employed persons, but will require significant auditing to make sure it is not abused.

The major complaints about this plan is that the subsidies only cover about 1/2 of the cost of a typical high deductible plan leaving people exposed to major costs and still does not significantly increase the number of people covered.  Like the current Democratic plans, it relies on heavy Medicare cuts and requiring seniors to pay more.  These policies would not have to comply with the rules in the state where the customer lives. Thus, insurers could offer cheaper, stripped-down plans, for instance, by not having to cover mental health conditions, maternity care or well-child care.  That is fine for generally healthy people but not for young parents or people with pre-existing conditions.

State insurance commissioners say the plan would leave consumers vulnerable to abusive out-of-state insurers who can't or won't pay claims, which has happened in the past. It would encourage cherry-picking of healthier subscribers and hurt people with medical conditions that states now require insurers to cover. Insurers likely would set up shop in states with the loosest coverage and consumer protection rules. 

While it adds equity to employer paid plans, it may also encourage employers to drop people and force them out into the general pool of people looking for insurance.  Your pre-exisiting condition that is covered today may destroy you financially under this plan if you are dropped.  That is true of all plans today, unless you utilize Cobra and HIPAA.

To be reasonably attractive they need to modify the bill to set up a system to guarantee payments of claims, and resolve the problems of cherry picking of clients.  Opening the door to competition is great at keeping costs down, but if health coverage is anything like phone service coverage, there are significant gaps that will need to be closed. 

The cost of this plan ranges from a low end of $0 to a high end of ~ $50B per year.  The cost savings are optimistic since there is no proven record of saving for eliminating malpractice claims.  The current CBO and other government venues estimate that the total cost savings is 0.5%, but in a Trillion dollar arena, it is still not chicken feed.

The Empowering Patients First Act would require Medicare to cut payment or services if costs rose above a certain threshold, so it could force the same kind of cuts or rationing health care that people worry about with the Democratic Plans.  Keeping costs down is important for our countries fiscal health, so it is not a bad thing, just the reality of our situation.  There will be some form of rationing in all plans and this plan is a small step forward with gaps that can be addressed if it makes it out of committee.

Next blog I will cover the Patients Choice Act.