The plan claims to guarantee coverage for people with pre-existing conditions, but there is a big catch.he New York Times, Editorial (2/1/14)
Three Republican senators — Orrin Hatch of Utah, Tom Coburn of Oklahoma and Richard Burr of North Carolina —have issued an alternative to the health care reforms that they deride as Obamacare. Conservative analysts have hailed their proposals as “an important milestone in the health care debate” and a “reform that has enormous promise.” But the plan, which is hard to parse because it has not been put into precise legislative language, looks inferior in most respects to the existing law.
The plan would repeal the Affordable Care Act and substitute an alternative that would likely cover fewer uninsured people, raise premiums for many older adults, shrink Medicaid, cut back on subsidies for middle class Americans, scale back protections for people with pre-existing conditions, and allow private insurers to escape many of the consumer-friendly requirements now imposed on them.
It is a blueprint for what the Republicans hope to do if they capture the White House in 2016. They say they are relying on market competition to keep costs down; empowering consumers to choose plans they want, not plans whose benefits are set by the federal government; emphasizing private insurance, not government programs; and giving states the primary role in managing the reform effort.
All of these ideas have been debated for decades, and the most important have been incorporated into the existing reforms, which also rely on market competition and give consumers tools to choose among private insurance plans. In fact, the Republican plan keeps some parts of Obamacare that the public has embraced — like guaranteed coverage for pre-existing conditions in some circumstances, allowing children to remain on their parents’ policies until age 26, and barring insurers from imposing lifetime benefit caps. But simply grafting those popular elements onto a package that reduces coverage will not mask the defects in the Republican plan.
The plan claims to guarantee coverage for people with pre-existing conditions, but there is a big catch. It is only guaranteed if they maintain “continuous coverage.” If they lose a job and the insurance that went with it, they must enroll in another plan promptly or they could be locked out of insurance or charged unaffordable rates if they have pre-existing conditions.
Although the Republicans would retain the most popular provisions of the reform law, they would drop consumer protections like a ban on annual benefit limits, free preventive services, equal premiums for men and women, and comprehensive benefits designed to make sure all plans are adequate.
Federal tax credit subsidies would be limited to those earning up to three times the federal poverty level, not four times as under the existing law. How those subsidies would be paid for is not clear.
The expansion of Medicaid in 25 states and the District of Columbia, which was intended to enroll millions of uninsured Americans, would be repealed, and the amount of federal money provided for Medicaid would be capped, endangering coverage for tens of millions of Americans enrolled in Medicaid. The plan does away with the mandate that virtually all Americans obtain health insurance or pay a penalty. The mandate is a critically important element of reform because it drives young and healthy people into the insurance pools, making it possible to reduce the cost of premiums for the old and the ill. The Republicans, in eliminating the mandate, are simply hoping that insurers will offer up a batch of low-cost policies that don’t provide comprehensive benefits and will attract young and healthy consumers who don’t expect to need much medical care.
The exchanges on which consumers currently shop for private insurance would be eliminated, and no federal funds could be used to establish alternative websites; people would have to rely on brokers and private-sector websites unless a state funded its own website. One way the Republicans plan to reduce the number of uninsured people is by allowing states to enroll those who receive federal tax credits in a randomly chosen plan with a premium exactly equal to the tax credit. While this means there would be no cost to the individual in terms of premium payments, the insurance might not be worth much. Insurers could raise the deductibles and co-payments to very high levels, leaving consumers with bare-bones catastrophic coverage that might not prove adequate in a medical or financial crisis.
The Republican plan would be costly and disruptive — to millions of Americans who have already signed up for private plans or Medicaid or will do so in the next few years; to insurance companies; and to state insurance commissioners who have based plans on the existing law and spent substantial money carrying them out.
Instead of trying to replace the health reform law with an inferior version, the Republicans should work to make the current law better, perhaps by encouraging more states to expand their Medicaid programs and intensify their outreach to the uninsured.