Figment and Reality: Republican Plans Part 2

This is the 2nd of the three plans I will cover. This plan is an adaptation of the McCain formula offered during his campaign. McCain's plan was targeted by the Democrats as being costly to middle Americans that already have insurance and of little value to the least insured group of people. I have also discovered that there are even more plans that I had originally thought. This makes a reasonable comparison difficult to impossible. Without narrowing the plans down to a manageable level, an analysis could be done on a plan that doesn't have a chance of moving forward.

Patients Choice Act

Plan Summary -

Stress prevention by giving some added money for the analysis and to make recommendations on preventative care and reward those that adopt healthy lifestyles with lower premiums in Medicare
Create Health Insurance Exchanges
Give Americans the option to buy into the same Heath Plan available to the Congress.
Protects the most vulnerable Americans to ensure that no individual would be turned down by a participating

Exchange insurers based on age or health
Creates a non‐profit, independent board to risk adjust among participating insurance companies to penalize
companies that “cherry pick” health patients and reward insurers that encourage prevention/wellness and cover
patients with pre‐existing conditions
Providing an advanceable and refundable tax credit of $2,300 per individual or $5,700 per family
Improving the operation of Health Savings Accounts [HSAs] by allowing health insurance premiums to be paid with HSAs without a tax penalty
Allowing preventative services to be covered by High Deductible Health Plans
Increasing the amount of money an HSA owner may annually contribute to their account. Under the Patients' Choice Act, individuals and families could buy a private policy through state-run health insurance exchanges, which Obama also proposes. Plans in the exchange would have to offer coverage to all comers, regardless of age or health status.
Encouraging states to adopt a number of legal alternatives entirely run by the state that would include the establishment of expert medical panels to resolve disputes, creation of health courts, or a combination of both. This eliminates your own personal expert and substitutes a panmel of experts picked by states.
Creating a Healthcare Services Commission that relies on a public/private partnership to enhance the quality,
appropriateness and effectiveness of health care services through the publication and enforcement of quality
and price information
No mandatory requirement for everyone to get coverage

This plan attempts to create a level playing field where everyone receives the same deduction for their healthcare and provides a subsidy for low income individuals to buy plans. It solves the problem of pre-existing conditions to some extent but for those people deemed uninsurable, they are ported to the states high risk pools (similar to what happens today). It places a higher burden on those with unhealthy lifestyles or that make bad choices. The plan is one where responsibility and knowledgeable consumerism is rewarded.

It places a state board in charge of determining reasonableness in fees and coverage instead of a Federal panel, like the Democratic Plans, so it really doesn't use true free market principles to guide pricing and procedures. Which board is better is debatable.

The main financial feature of the plan is removing the tax exemption for benefits from employers and using that money to directly provide refundable tax credits. This tax credit can only go for either health insurance or health care – it can’t be used for anything else. It can go to pay part of your premiums for your employer-based insurance, it can go to you buying your own, or it can go into a Health Savings Account.

Costs are paid for in a manner similar to the the Empowering Patients Act via changes to medical malpractice but adminstered via the states versus the federal level in the Empowering Patients Act. Further decreased costs are claimed by pushing for preventative care versus catastrophic care, like every other plan. The plans also eliminate the problem of insurance companies crossing state lines which will increase competition and the lost deduction for insurance by employers. It covers its costs better than most other plans because of the revenue gained by the lost deduction by employers.

The potential problem areas -

Health insurers are unlikely to participate in the GOP version of the exchanges. That's because the Patients' Choice Act (and the other GOP bills) would not require Americans to obtain coverage. The insurance industry has stated it will only agree to accept all comers if everyone is mandated to buy. Otherwise people could buy coverage at the point when they need care. That's a sure way for insurers to lose money.
The GOP subsidies would cover less than half the cost of a comprehensive health insurance policy and they might barely pay for a high- deductible policy. This leaves people exposed to steep out-of-pocket costs, a major problem causing bankruptcy today. A family earning $40,000 a year would receive no more help than a family earning $200,000. The proposal would encourage people to start tax-free health savings accounts to cover these expenses, but don't explain where families would find the money.
These policies would not have to comply with the rules in the state where the customer lives. Insurers could offer cheaper, stripped-down plans, for instance, by not having to cover mental health conditions, maternity care or well-child care. On top of that, the out of state plans will have to work hard to negotiate discounts with local doctors. Without agreeing to discounts, doctors will be able to charge whatever they want for procedures.
Under the heading of government controlled insurance.

"The PCA creates a Healthcare Services Commission that relies on a public/private partnership to enhance the quality, appropriateness and effectiveness of health care services through the publication and enforcement of quality and price information.”

After much protest that a bureaucrat should not be involved, this plan created their own bureaucracy. Both plans utilize a board to review insurance, it is just a matter of where the board is located.

If you think you get to keep your policy under this policy, you need to think again. The Republican Policy summary states

Americans happy with their employer‐sponsored health benefits should be able to keep what they have, but they should make that decision instead of the government. Tax breaks should go directly to every individual with a healthcare plan. This will give hardworking Americans the control and the freedom to decide how best to spend their hard earned dollars when it comes to providing superior healthcare to their families.

In the Democratic Plan, Obama has stated

“Under our plan, if you like the health coverage you have, you can keep it. If you have health insurance through your employer, nothing will change.”

These two statements are different but mean the same thing. Your current plan is normally covered by your employer and he gets a tax deduction. Whatever plan you have isn't up to the individual, it is probably employer based and therefore the employer will make a decision about whether you keep your policy or it gets changed or eliminated. It is also up to your fellow employees, who could opt for the credit and leave the employers plan. This would have devastating results for small businesses that depend upon having higher numbers i nthe plan to keep costs down. If this Patients Choice Plan works, most employees will leave the small business plan to join a better or larger group plan admisntered by the state and only large companies will keeep their insurance plans, since they already have a large group.

A general summary -

This plan has the tenents of a big government plan, just administered by the states. The major benefits are the portability of the plan since your insurance can come from the Exchanges and giving deductions to everyone, whether buying a policy as an individual or as a employee. It levels the plain for more people. It strongly encourages healthy lifestyles through preventative care and "bad choices" we make to cost us in higher costs for insurance. The HSA approach has significant benefit for younger people but assumes you have money to put in the plan.

The problems for some of us will be that it will cost those of us with great plans because our good insurance becomes taxable. The credit does not offset the tax deduction benefit since the typical policy value is over $8,000 and the credit is $5,000 for a family. For small businesses, it may force them into the Exchange, just like the Democratic Plans.

If a plan covers more people and does not significantly increase costs, then it should be considered. The final cost of any plan has to be weighed against the benefits of covering more people. Encouraging healthy lifestyles is always a good step but it does seem that the plan's state boards seem like another big government entrance into our home.

In any plan chosen so far, there appear to be added costs borne by people that have insurance, so there always seems to be a tax increase coming if a new Federal Policy or Plan is adopted.