Unbiased Analysis of Today's Healthcare Issues

The Republican Response to Obamacare

Written By: Jason Shafrin - Feb• 17•15

For years, Republicans have campaigned to repeal Obamacare. The biggest question in their campaign is what to replace it with. One year ago, Republicans unveiled the Patient Choice, Affordability, Responsibility, and Empowerment Act (Patient CARE).  Now, the Republicans have a new plan.   What’s in the new plan?  The Healthcare Economist reviews the highlights.

  • No lifetime limits. “…insurance companies would be prohibited from imposing lifetime limits on a consumer”
  • Less restrictive community rating. “Under Obamacare, insurance companies are banned from charging older Americans more than three times what they charge younger individuals…Our proposal would repeal this costly mandate and…adopt an age rating ratio that limits the amount an older individual will pay to no more than five times what a younger individual pays in premium dollars (5 to 1) as a federal baseline…after the adoption of our proposal, any state could adopt age and family rating rules that are more or less restrictive than the federal standard.”
  • Dependent coverage to 26.  Like Obamacare, the Republican plan would allow adult dependents to stay on their parents insurance until age 26, but it would also allow states to opt out of this provisions if they should so choose.
  • Guaranteed renewability.  Insurance companies will not be allowed to cancel insurance coverage except in the case of fraud.
  • End of the individual mandate.  The individual mandate would be repealed, but…
  • “Continuous Coverage” protections. “Under this new protection, individuals moving from one health plan to another—regardless of whether it was in the individual, small group, or large employer markets—could not be medically unwritten and denied a plan based on a preexisting condition if they were continuously enrolled in a health plan.”  Although the individual mandate would be repealed, individuals would have an incentive to retain coverage because only by being continuously enrolled in health insurance could a person ensure they are not disqualified from the continuous coverage provision. “Insurers would be required to offer coverage at standard rates based on age and residence to individuals who have stayed continuously insured with at least catastrophic coverage for a period of at least 18 months, without a significant break in coverage, similar to the HIPAA protections that exist under some circumstances today. So long as an individual, or family in the case of a family policy, has stayed continuously covered, they could not be forced to pay a higher premium solely because of a costly health condition when switching plans.”
  • Subsidies based on age and income.  Individuals would receive a subsidy to purchase health insurance.  This subsidy would depend on the individual’s age, household composition (e.g., single vs. family) and income.
  • High-risk pools.  The goal would be to use some federal funding to help states cover the highest risk patients.  This will drive down premiums for the general consumer, but states’ budgets will certainly take a hit unless federal funding is generous.
  • Medicaid reform.  Obamacare expanded access to Medicaid; this plan aims to reduce the number of Medicaid beneficiaries.  The proposal states that “individuals eligible for Medicaid would also be eligible for and have the choice to use the health tax credit to help purchase health coverage.For example, if a state chose to auto-enroll an eligible individual into Medicaid, that individual could retain the right to opt-out of Medicaid and use the health tax credit to purchase health coverage.”  The federal funding for this program would grow at inflation + 1%.  The proposal would also allow states to experiment with health opportunity accounts (HOA) that Medicaid beneficiaries could use to fund health care expenditures out of pocket.
  • Malpractice caps. The Republican proposal would place caps on non-economic damages and limitations on attorney’s fees.
  • Tax deductability of health insurance.  The Republican proposal “…caps the tax exclusion for employee’s health coverage at $12,000 for an individual and $30,000 for a family.”  This is similar to Obamacare’s “Cadillac tax”, except the thresholds are even higher.

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