Congress is working to pass comprehensive health reform legislation that builds on the employer-based health care system and lowers the growth of health care spending. But Republicans are trying to slow down the effort and mischaracterizing reform as a costly and ultimately ineffective endeavor that would expand government health care, take away Americans’ existing coverage, ration care, and contribute to run-away government spending.
Last month, Republicans promised to introduce their own health care alternative, but are now “suggesting no such bill will be introduced.” As Rep. Roy Blunt (R-MO), chairman of the GOP Health Solutions Group explained, “Our bill is never going to get to the floor, so why confuse the focus? We clearly have principles; we could have language, but why start diverting attention from this really bad piece of work they’ve got to whatever we’re offering right now?” But a close examination of the so-called principles in The Patient’s Choice Act, Commonsense Health Care Reform to Lower Costs and Increase Access and Quality at a Price Our Country Can Afford, Improving Health Care for All Americans Act, Health Care Freedom — suggest that Republicans would only break-up employer-based coverage, endanger the coverage of Americans with pre-existing conditions, and drive-up health care spending.
Generally, these alternatives claim to expand access by giving Americans a tax credit to purchase health care coverage outside of the employer based system and control health care spending by capping awards for malpractice claims, and eliminating “waste, fraud, and abuse” from the system:
Patient’s Choice Act
(Sens. Burr, Coburn & Rep. Ryan, Nunes)
Commonsense Health Care
(Rep. Blunt, Camp, Cantor)
Improving Health Care for All
(Rep. Shadegg, Bishop, Blackburn, Burgess, Franks, Gingrey, Hoekstra)
Health Care Freedom
‘Freeing-Up’ The Insurance MarketTaxes employee health benefits. Establishes voluntary state-based Exchanges. Limits pre-existing condition exclusion, and requiring guarantee issue.Establishes Association Plans: Small businesses, associations can pool risk and offer coverage.Association Plans, Federal match to sates that establish high-risk pools. Can shop for plans across state lines. New Subsidies$2,290 per individual, $5,710 per family.”Above the line deduction” equal to cost of insurance premiums, refundable and advancement tax credits.$2,500 per individual, $5,000 per family.$2,000 per individual, $5,000 per family.Paying For Reform Money from the exclusion.Paid for entirely by “rescinding billions in Wall Street bailout.”The Unraveling of Employer-Based Coverage:
Breaks-up employer pools, doesn’t offer viable alternative.
The Patient’s Choice Act eliminates the exclusion and taxes the full value of an individual’s employer-sponsored coverage. The other alternatives don’t specify how they would treat the exclusion. Still, all of these proposals break up the employer-pool by encouraging younger workers to opt out of their current coverage and purchase insurance elsewhere. The departure of healthy workers from employer insurance pools would drive up average health costs, forcing more workers to opt out entirely. This unravels employer health insurance for Americans who prefer it.
Endanger The Coverage Of Americans With Pre-Existing Conditions:
After losing employer-based coverage, Americans will have no place to go.
All four Republican plans would offer Americans a tax credit varying from $2,000 — $2,290 per individual and $5,000 — $5,700 for families. Uninsured Americans or those who opt out of their employer-sponsored coverage could either purchase insurance through voluntary state based exchanges, associations, high risk pools or across state lines (presumably in the individual market). Unfortunately, none of these options provide viable alternatives for the 56 million non-elderly Americans struggling with diseases like cancer and diabetes who are now covered through their jobs. Under the Republican plans, insurance companies could still “cherry pick” only those individuals for coverage who do not have costly health conditions.
Voluntary exchanges are not adequate:
If a state fails to establish an Exchange, then Americans will be left at the mercy of the individual market — which the alternatives do not explicitly regulate. Plans in the individual insurance market cost less but also cover less, and provide inadequate safeguards against insurers who refuse to cover patients with pre-existing illnesses, deny coverage outright, or engage in other discriminatory practices. As Elizabeth Edwards points out, “nine out of every ten people seeking individual coverage on the private insurance market never got it. Insurers will disqualify you for just taking certain medicines because of the possibility of future costs…and insurers make it a practice to deny coverage to individuals in high risk occupations, such as firefighting, lumber work, telecom installation, and pretty much anything more risky than working in an office.”
Association health care plans drive-up costs, exclude Americans with pre-existing conditions:
In theory, Association Health Plans (AHP) are intended to implement a laudable goal: allow small employers to pool their risk nationally so they can get the same economies of scale and negotiating power as large employers. But in reality, Association health care arrangements would allow businesses with healthier to pool risk, while excluding firms with sicker employees.
A Congressional Budget Office study estimates that “4 out of 5 small businesses and their workers would see their premiums increase. CBO based this estimate on its assumption that AHPs could save money and encourage small businesses to join only by avoiding current state benefit mandates and by selecting out healthier groups and individuals. Those left behind in the state-regulated market would be less healthy and more in need of comprehensive coverage, creating an adverse selection risk spiral that would drive up the cost of coverage.”
High-Risk Pools provide costly and inadequate coverage:
The Health Care Freedom plan proposes to cover people denied insurance though “high-risk pools.” Nationwide, high-risk pools cover fewer than 200,000 people. Often, enrollees face high premiums and are denied benefits for treatments related to their preexisting conditions — the very thing DeMint thinks the plan will help. Because these pools will be full of only sick people, covering all high-risk Americans through these pools is likely to be prohibitively expensive. According to the Tax Policy Center, using high-risk pools “to prevent large losses in insurance coverage among the sick and needy could …[cost] on the order of $1 trillion over ten years given projected health care pay-costs.”
Purchasing plans across state lines drives up costs:
The Health Care Freedom Act claims to expand coverage by allowing Americans to purchase coverage across state lines. But DeMint’s plan would undermine the patient safeguards that do exist under many law by letting insurers to sell across state lines and avoid state consumer-protection laws and solvency requirements. Specifically, under DeMint’s plan, insurance companies “would have little incentive to continue doing business” under certain state rules which “require that companies issue coverage to all new customers and not set higher rates for people who are already sick.” Companies will charter in states with scarce regulations, and will no longer have to provide mental health parity, cancer screenings, or abide by regulations that “limit the rates that can be charged to higher-cost consumers and that limit who can be excluded for a health plan.
Fail To Control Skyrocketing Health Care Costs: No mechanism to control skyrocketing health care costs.
Only the Patients Choice Act specifies that it would pay for its expansion of coverage with the money from the tax exclusion. DeMint laughably finances the Health Care Freedom Act by “rescinding billions in Wall Street bailouts.” But since the government has already distributed the great majority of the funds, DeMint would not have enough money to finance significant reform. For instance, experts estimate that the TARP fund has only $63 billion left that is still uncommitted.
All of the plans rely on malpractice reform, promoting prevention and wellness, and eliminating waste, fraud, and abuse as a way to reduce long-term spending. These savings are not likely to be scored by the Congressional Budget Office and would have little effect outside of the context of comprehensive reform that covers every American. The proposal of tort reform, for instance, addresses only 0.46 percent of total health care expenditures.