House Republicans are finally putting their weight behind a single Obamacare alternative plan, according to The Washington Post. It looks really familiar — and voters in close Congressional districts will soon hear a lot about it.
Like the several plans hinted at and pitched before it, this one features conservative-friendly ideas on high-risk insurance pools, insurance sales across state lines and medical-malpractice regulations. And like all those past plans there are a lot of policies that would lead to reduced protections for consumers, especially those with pre-existing conditions.
This plan likely won't see the light of day until after the midterm elections (and then it will be killed by the Senate or President Obama). "Republican sources" say that House Majority Leader Eric Cantor hopes to at least create a plan to campaign on, according to The Washington Examiner, for reasons we explained earlier. But, to get a sense of what Republicans mean when they say healthcare reform, here's a breakdown of the key concepts that will definitely and possibly be included.
Expansion of high-risk insurance pools: These are insurance pools that only include people with pre-existing conditions, the sort of people who couldn't get insurance before Obamacare. There are three problems with high-risk insurance pools: they are expensive to fund, they are expensive to participate in, and they don't include all high-risk patients.
The Incidental Economist found back in 2009 that high-risk pools, which were active in 35 states, only accommodated up to 54 percent of possible individuals within a state, and sometimes only one percent. Premiums were often 25 percent of a person's income. States found that they couldn't afford to subsidize more of the premiums, or expand the program so more people could enroll.
Healthy people would benefit if the sickest patients were no longer in their insurance pool, since rates could be lower. Those less healthy individuals would be competing for spots in the high-risk pools.
Promotion of health savings accounts: Health savings accounts allow you to deposit pre-tax funds into a savings account towards qualifying medical costs if you have a high deductible plan. Obamacare makes the accounts slightly less necessary by capping out-of-pocket costs. It also prohibits the use of HSA funds to buy over the counter drugs (without a prescription) and raises the withdrawal fee from 10 to 20 percent.
When President Bush started promoting the accounts in 2006, Mother Jones described the pros and cons. "Many health care analysts fear that widespread acceptance of HSAs will separate the wealthy and healthy from the sick in insurance pools," they wrote, "and drive up premiums and out-of-pocket health costs for the latter." It's not clear whether that happened, but HSAs grew in popularity between 2007 and 2013 (from five percent to 20 percent of workers) as employers tried to cut down on healthcare costs. The plans definitely benefit wealthy individuals over low income individuals, who can't use the tax benefits or afford high deductibles as easily.
Inducements for small businesses to purchase coverage together: The Small Business Health Options Plan — the SHOP exchange — already allows business owners to sign up and select plans for employees to choose from. Enrollment has been slow, but unlike the individual market, the SHOP exchange is open year round. The GOP likely wouldn't offer an exchange, but just encourage businesses to buy insurance together with tax breaks.
Buying insurance across state lines: As Jonathan Cohn at The New Republic explains, in the past insurance was more expensive in some states because of regulations that required insurers to sell plans regardless of pre-existing conditions. If insurers could sell across state lines, insurers would relocate to states with lower regulation, where they would be allowed to identify customers more freely.
Guaranteed renewability of policies: What's important here is that Republicans are only considering including guaranteed renewability in their plan. The GOP plan might reverse that provision in Obamacare, but it's unlikely.
Changes to medical-malpractice regulations: This is something both Democrats and Republicans support, depending on what the reforms are. "There are versions that simply shield physicians from lawsuits or limit their liability, rather than improving the system so that truly bad providers receive punishment and quality of care improves," writes Cohn. In the past the GOP has supported bills to cap pain and suffering payments at $250,000, but states' rights activists within the party derailed efforts for federal regulation.