FreedomWorks Sets GOP Health Care Strategy: ‘Don’t Focus On How Many People Are Covered’

FreedomWorks Chairman Dick Armey

In a memo to House Republicans marked “confidential”, the Tea Party group FreedomWorks praises the GOP for passing health care repeal legislation in the House, but argues that the party must now turn its attention on the ‘repeal’ part of its agenda to build greater support for rescinding the law. In a reversal of past strategy which urged members to hold votes on specific provisions of the law, the Dick Armey-led group is now asking Republicans to “improve” the law “so long as the improvements don’t significantly increase its support.” Similarly, the group warns the GOP against collaborating with health care groups to eliminate that IPAB board or other provisions “unless the affected industries endorse full repeal.” A more effective strategy is to “Highlight the special interest deals and corrupt bargains. Scrutinize the hundreds of waivers and thousands of pages of regulations issuing from HHS. Publicize the premium cost increases and coverage losses. Keep Dr. Berwick talking,” the memo says.

Republicans should reject some of the most popular elements of reform and offer legislation that embraces the existing individual market, Armey writes. He dismisses reforms like “the unnecessary small-business tax credits” and describes caps on annual limits, the ban on lifetime limits, the adult children coverage provision, and the caps on insurance company profits as “cost insurance mandates.” The memo argues that “[b]anning preex condition clauses is counterproductive, because it raises premiums and causes coverage to be dropped.” “It’s also unnecessary because federal and state laws already offer significant protections,” it says, ignoring the fact that more than 40 states and the District of Columbia don’t have laws protecting individuals with pre-existing conditions from being denied coverage.

Instead, Republicans must focus on expanding the unregulated individual health insurance market, without paying too much attention to “how many people are covered,” the memo states. It also encourages the GOP to embrace the health care portions of Rep. Paul Ryan’s (R-WI) Roadmap:

True insurance, which exists to help people pool risks, should be kept distinct in our minds from group “insurance,” which is really a form of pre-paid benefits. With true (individual) insurance, prices need to vary according to risk and purchasers need to plan ahead. You can’t buy fire insurance after your house has burned down. By contrast, pre-paid benefits are generally open to everyone in the group (guaranteed issue) and the price is the same for everyone, regardless of the amount of risk each person brings to the plan (community rating). Many states and Obamacare try to regulate true insurance as if it were pre-paid benefits. That’s misguided in the extreme. When government does that, it merely drives up the costs of the insurance or causes it to become unavailable. Therefore, we should always favor policies that lower the costs of true insurance and increase the number of people who can obtain it. We should grow the individual market.

Not only will this replacement legislation face overwhelming public opposition — polls have consistently shown that Americans approve of the consumer protection provisions in the law — but it would also take away the means by which individuals with chronic conditions can find affordable insurance. FreedomWorks suggests that the 129 million Americans with pre-existing conditions should purchase insurance in state-based high-risk pools, but existing pools have failed to attract enough beneficiaries because the cost of covering large groups of sick individuals is simply too great.

FreedomWorks’ solution to transform Medicare into a voucher program and give states block grants to fund Medicaid, would similarly devastate access to coverage. Under the voucher scheme, seniors would have to pay more for comparable coverage, while states received Medicaid block grants — a fixed dollar amount annually that would fall below current growth — would either have to (as the CBO put it) “provide less extensive coverage or to pay a larger share of the program’s total costs.”

Read the full memo HERE.