Last week’s newsletter mentioned some conservative health care alternatives that seek to supplant Obamacare while steering away from the "status quo" healthcare delivery system. To briefly rehash, three Republican Senators (Tom Coburn, Orrin Hatch, and Richard Burr) have co-sponsored a proposal entitled the Patient CARE (Choice, Affordability, Responsibility, and Empowerment) Act. Again, this proposal has received both praise and criticism from both sides of the aisle.
The "Yeas"
The praise results from the fact that this proposal gives patients more purchasing power and choice over their health care coverage. Say goodbye to the 10 essential health benefits that must now be included in every health plan along with the 20 new Obamacare taxes and fees on individuals and employers. Say hello to individuals being able to build their own plans that best meet their individual needs.
The "Nays"
On the other hand, champions and critics of Obamacare mention that this alternative is so similar to current law that it’s not even worth a serious discussion. As stated in this week’s National Review:
So, for example, Sarah Kliff writes in the Washington Post that the Republican plan "takes some of the contours of Obamacare and works around them, such as ending denial of coverage for pre-existing conditions and continuing dependent coverage up to age 26." Donald Taylor blogs that "the rage machine that has been perfected to argue against Obamacare could get plenty cranked up against the plan." Andrew Sullivan referred to the plan as "Obamacare Lite" in several blog posts.
Additionally, Thomas Miller of the American Enterprise Institute has written a thought-provoking and insightful paper on some of the proposal’s loosely defined terms. He also questions how some aspects of this alternative will be faithfully executed and properly financed. It’s worth a read.
Here are just 3 more components to the CARE Act:
- Medicaid Reform: States would be given broader flexibility to redesign their Medicaid programs. If this were to occur, it would be wise for North Carolina to risk-adjust Medicaid patients or enforce per-capita block grants to ensure better budget predictability. Furthermore, the proposal offers Medicaid recipients the option to access private coverage with a refundable tax-credit (these would be available to individuals with incomes up to three times the poverty level, around $35,000) when purchasing private coverage. In addition, the CARE Act would bring back Health Opportunity Accounts (HOAs) that made an appearance back in 2005 under the Deficit Reduction Act. With a high-deductible health plan, the state and federal governments could contribute an annual $2,500 into each Medicaid patient’s HOA. This model of health care financing is more compatible with consumer-driven health care.
- Age-Rating Ratio: Under Obamacare, a high-risk, older individual cannot be charged more than three times the amount of a low-risk, young policyholder. As a result, the "young invincible population" is burdened with higher premiums to subsidize the cost of the high-risk population on the exchanges. The CARE Act would initially ease this price control from a 3:1 age-rating ratio to a 5:1 ratio. Power would be decentralized to states to manipulate community rating standards.
- Capping the Tax-Exclusion: Removing this exclusion for employer sponsored health insurance is probably the most controversial component.
The proposal has yet to be scored by the Congressional Budget Office (CBO). However, the Center for Health and Economy, a think-tank under the direction of former CBO Director Doug Holtz-Eakin, estimates that the CARE Act would reduce the number of uninsured just as much as Obamacare, if not more, and would reduce the federal deficit by over $1.5 trillion the next 10 years.
A unified vision still remains in its nascent stage, but Republicans seem aware that it’s time to put their noses to the grindstone.
You can learn more about the CARE Act at our upcoming headliner luncheon featuring Senator Burr on Monday, March 31. If interested, click here to purchase tickets for the event.
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