Posted on 08/10/2013 6:36:19 AM PDT by Kaslin
Republicans are virtually unanimous about one thing: They want to repeal and replace the Affordable Care Act (ObamaCare). But what would they replace it with?
Actually, there is a serious GOP proposal. It's called the Patients' Choice Act, sponsored by Sen. Tom Coburn (R-Okla.) and Rep. Paul Ryan (R-Wisc.). This is essentially the health reform plan that John McCain proposed when he ran for president in 2008.
The GOP proposal is actually more "progressive" than ObamaCare. And, unlike the Democratic approach, it solves problems rather than creating new ones. Yet Republican politicians almost never mention it.
How does it work? Let's consider the current system's problems that need solving:
•People who obtain insurance through an employer are able to buy insurance with pre-tax dollars, whereas people who purchase insurance on their own are basically forced to purchase it with after-tax dollars. For a middle-income family, having to buy individual coverage almost doubles the after-tax cost of the insurance. This encourages people on their own to remain uninsured and to seek insurance through an employer if a family member happens to get sick.
•Group insurance, however, is not portable. So the kind of insurance the government encourages all of us to have is the kind of insurance that does not travel with us from job to job and in and out of the labor market. This, in turn, virtually guarantees problems with pre-existing conditions and lack of continuity of care.
•Further, the subsidy for employer-provided coverage is open-ended. This means people can always lower their taxes by buying more insurance. As a result, most Americans are over-insured -? leaving patients with perverse incentives to over-consume care and providers with perverse incentives to maximize against payment formulas. This is the principal reason why health spending is growing faster than our incomes in this country and elsewhere around the world.
•Also, until recently the subsidy for employer-purchased insurance applied only to third-party insurance and not to self-insurance (say, through a Health Savings Account). This encouraged everyone to (wastefully) rely on insurance companies and employees to pay every medical bill. This, in turn, destroyed price competition and quality competition and effectively suppressed normal market forces throughout the health care system. Although we now allow tax-advantaged self-insurance, the conditions are highly restrictive.
What does the Affordable Care Act do about all this? It leaves every single one of those perverse incentives in place and adds new ones! What does the Republican approach do? It eliminates every one of them by offering a fixed-sum, refundable tax credit for the purchase of private health insurance. Every individual and every family would get the same amount of help from government, regardless of where the insurance is purchased -? at the office, in an exchange or in the marketplace.
People would no longer be encouraged to buy employer-specific, non-portable coverage. Because the subsidy is a fixed sum, it would apply only to the core insurance we want everybody to have. Any additional insurance would be purchased with after-tax dollars. People would be discouraged from buying an additional dollar of insurance unless it was more valuable than a dollar spent on other goods and services.
The Republican approach also gives people greater flexibility in combining health care savings with third-party insurance.
Here is another problem: the current system of subsidies is arbitrary and unfair. It penalizes people who must purchase insurance on their own, and it gives the greatest tax relief to those who least need it. A family earning $100,000, for example, gets six times the tax subsidy as a family earning $25,000.
What does the Affordable Care Act do about that? It leaves the current inequities in place and layers on a whole set of new ones. A family of four at, say, 138% of the poverty level will be able to enter Medicaid and obtain coverage worth about $8,000 a year for free. Families that earn one dollar more will be able to go into a health insurance exchange and obtain, say, a $16,000 insurance plan in return for a premium of about $900 out of their own pockets. Yet, employees of the Hilton Hotel, earning similar incomes, get no new help from government, and the tax relief they get from the current income tax system is less than $2,500.
By contrast, the Republican approach does not force families into Medicaid, and it gives everyone who buys private insurance the same help under the tax law.
The Republican approach is a defined contribution approach. People are given a sum of money to buy health insurance. They may add funds of their own to this amount. Suppliers of insurance will then be allowed to compete in the private marketplace to see what they can offer for premiums people can afford.
By contrast, ObamaCare takes a defined-benefit approach. The government intends to tell all of us what insurance we must have, whether it is affordable or not. Further, the ObamaCare approach double penalizes people who choose not to insure: failure to claim the credit means they will pay higher taxes and there is a penalty imposed on top of that.
Here are a few more ways in which Republican and Democratic approaches differ:
Tax Fairness. Under the Republican approach, every individual and every family will get the same help from government:
•Regardless of whether they work less than 30 hours a week or more;
•Whether their workplace has fewer than 50 employees or more; and
•Whether they are in a union or not.
Fair Treatment of Employers, Employees and Retirees. Unlike ObamaCare, the Republican approach:
•Would not encourage employers to avoid hiring new workers;
•Would not encourage employers to drop health coverage for current employees or for their retirees;
•Would not penalize employees and their employers if they work full time rather than part time;
•Would not favor small over large business or vice versa;
•Would not favor non-union over union firms or vice versa; and
•Would not encourage outsourcing or labor saving technologies or in other ways discourage economic recovery.
No Mandate. No one would be forced to buy health insurance. People who turn down the tax credit and elect to be uninsured would have a higher tax bill, however. For families that pay income taxes, failure to insure would result in $2,500 in higher taxes for individuals and $8,000 for a family of four. They could either use these funds to buy health insurance or give them to Uncle Sam.
Universal Coverage. ObamaCare is expected to leave 30 million people uninsured and the actual number is probably much greater than that. By contrast, under the Republican approach it's hard to imagine anyone remaining uninsured. The reason: every adult can have at least $2,500 of health insurance for free. Every family of four can have $8,000 of insurance for free. Insurance at this premium may consist of very narrow networks and perhaps pay provider fees only a bit better than Medicaid. Still, it's free. I'm sure some will turn down the offer anyway, however. I wish Republicans would deal with that eventuality by sending unclaimed tax credits to safety net institutions in the communities where the uninsured live. This would guarantee a form of universal coverage for everyone.
Minimum Bureaucracy. The Republican bill is only 56 pages long. One suspects that the regulations needed to implement it would fall well short of the 20,000 pages needed to implement ObamaCare. Because the tax credits are the same for everyone, there would be no need for an exchange to verify income or establish that an applicant had not been offered affordable coverage by an employer or link electronically to five or six different government agencies. Uwe Reinhardt has written about the highly complex assignments the ObamaCare exchanges must carry out. So have I. By contrast, EHealth (a private online exchange that has allowed more than 3 million people to obtain health insurance) could handle the entire process under the Republican plan without spending millions of dollars on new technology ? as the Obama administration is doing.
How can we pay for the Republican plan, especially given our frequent criticism of ObamaCare's unsustainable cuts in Medicare and our dislike of ObamaCare's taxes on capital? I believe it can be done with money already in the system (that is, with no new taxes) even after restoring some Medicare spending and reversing the taxes on investment income.
If I could summarize these huge differences in one sentence, it would be this: The Republican approach is focused on getting rid of perverse incentives and treating everyone equitably, while the Democratic approach leaves the current system's perverse incentives and inequities in place and adds new ones.
Yeah, its called the government getting out of the business.
Why is this never said?
Why is the debate always framed as “Well, what are you going to do to help provide Americans with affordable insurance?!”
My response would be, “The same thing I am going to do to help provide Americans with affordable X-Boxes and cars and barbeque tongs. Leave it to the free market.”
The free market is the conservative alternative to Obamacare. I don’t know what the Republican alternative would be.
The free market.
Why replace obamacare with anything? Outlaw corporate insurance plans, put a timetable on the elimination of medicare, and be done with it.
Looking for a conservative alternative to Obamacare.
RE: The free market.
Also called THEY DON’T WANT THE POOR TO HAVE HEALTHCARE in Obamaland.
It would be the same as the democrat version, just a few years later.
Free market is the only way to go.
Our healthcare system has gotten to be prohibitively expensive, because it is over-regulated.
The GOP should be for de-regulation, and for bringing back more affordable healthcare.
Period.
In my opinion the GOP is on the wrong side, on this. Obama’s plan is not an optimal plan, but it claims to be for more universal coverage.
That should be the common goal. Universal coverage. How that is accomplished - what portion should be private coverage, what should be government assistance is certainly open to debate. But cover everyone.
That is where the GOP should START.
Universal coverage. The trick is, how to accomplish that. I think under that framework the GOP could be infinitely superior.
But everyone needs to be covered.
That is a starting point.
The government needs to stay out of it.
/johnny
Not something the federal government is constitutionally authorized to do. Period.
/johnny
The toadies of RomneyCARE and alQaeda
dare preach this nonsense
and then purport to be ‘conservatives’?
No way.
That way, there will be far more competition for buying medical insurance, and that means lower prices overall.
No, because the gop wing of the uniparty is as enthusiastic about implementing owebamacare as the ‘rat wing is. Owebamacare isn’t about delivering healthcare, it’s about the accumulation of power.
While we will see some carefully staged theatrics in the coming months, we can rest assured that when the day arrives, owebamacare will be implemented.
Indeed it will
1) Promote private HSA’s
2) fast track the FDA process—someone dying of cancer should be allowed to take a risk on a procedure without government interference
3) promote alternative medicine...our grandmothers knew a hell of a lot more about basic health care than the drug companies or the federal government
4) Hold up a mirror and tell folks the person most responsible for their healthcare is the reflection in the mirror
5) Put a spotlight on the AMA....they are not run by choirboys and they distort the market with some of their cartel practices.
Maybe, maybe not. There DOES NOT HAVE TO BE an alternative in order to erase the abortion called Affordable Healthcare Act.
Perhaps, some relief in medical efficacy of treatment and cost could be attained through vigorous control of Medicare and Medicaid Fraud - by users (illegals, ineligibles) and providers (scam transport companies, Medicare mills, et al).
If you want to control costs, do come tort reform and changes in the law that require plaintiff payment for frivolous and unsuccessful malpractice claims - require lawyers that lose these cases to pony up a third of those costs.
Just because someone has given you a turd to eat doesn’t mean you have to come up with some other variation of a turd to eat in its place.
Toadies is a good term. I need to use it more often. Thanks.
Here’s what I would like. I pay for doctor and treatments. I decide whether to buy a new car or save up for future medical emergencies or major medical insurance. It is all about what my health is worth to me instead of what some faceless Democrat ... er ...bureaucrat thinks my life is worth.
I don’t have any idea what the Republican plan espouses, but if McCain was for it, I don’t trust it.
I want to see Congress repeal Obamacare and NOT replace it. Let the free market work.
Why is this never said?
Why is the debate always framed as “Well, what are you going to do to help provide Americans with affordable insurance?!”
My response would be, “The same thing I am going to do to help provide Americans with affordable X-Boxes and cars and barbeque tongs. Leave it to the free market.”
I agree completely. Attacking one program like Obamacare lacks the punch of attacking all of them, including Medicare and Medicaid. An opposition to all government involvement in health care provides a philosophical basis that is lacking in the opposition to just one of the government's programs.
I am convinced that eventually this country will have a health care system that is free of all government interference, but we may have to wait for this current (and bloated) crop of seniors to disappear down the drain. Seniors today are totally addicted to big government.
If it is replaced with something 100 percent better and affordable, why not?
All alternatives are just a load of crap until all insurers can cross state lines and purchase whatever level of insurance the individual requires. No one is seriously addressing the ridiculous and incestuous relationship of states to insurance companies.
This singular fix would be a market revelation. I also remember reading of a hospital posting their fees online for everyone to see.
If I am force to look at how many calories my delicious quarter pounder deluxe has, why not do the same for healthcare? Reminds me, I have got to get out of the medical field.. it’s going broke and broker.
That would definitely be an improvement
Sure there is a better option but we cannot even win the war of words on “Pre-Existing Conditions” which is simply ultra low class people avoiding paying for their own health insurance then suddenly demanding coverage AFTER they developed some medical problem.
Repeated often but not often enough, we don’t allow people to buy their car insurance after the accident.
Now, where there is a pre-existing condition problem in some states is where you have insurance and change jobs or carriers and the new carrier does not want to cover a condition which pre-existed the change over. THAT IS WRONG and simple legislation is all it would take to resolve this.
Allow Ins. companies to sell across state lines as long as they have a product which covers that state’s minimum requirements.
Tort reform! The real reason behind all this crap. Lying lawyers and lying lawyers who become politicians have a vested interest in keeping this cash cow not only alive but putting it on steroids.
If a drug is approved by the FDA and NO investigation shows they tampered with any of the studies prior to FDA approval, no law suits can be filed just because for some reason you body has an adverse reaction to an FDA approved treatment.
I am allergic to penicillin, should I be able to sue a company which makes such a valuable drug? No of course not.
If a drug company, in anyway, plays with the results of a study, sue the pants off them and put every executive in jail for 10 years minimum.
Make more drugs available OTC (only with a doctor’s prescription for the initial purchase). So many drugs can be used without repeated trips to the doctor IF and I stress IF a patient wants to accept that slight added risk! Blood pressure medicine is a good example especially when you can take your own blood pressure and if it starts to spike you can call the doctor.
The very first bill the Republicans should propose is the “Federal Welfare Liberty Act”, a means by which citizens can permanently opt out of *any* federal welfare liability or benefits, ever.
This means they would never have to pay FICA, which doubles their income taxes. But they would never be part of the Social Security or Medicare systems, nor receive benefits from them.
The bill would very clearly state that once someone opts out, they can never again be involuntarily enrolled in either program.
Would you be willing to have your after tax income doubled now, in exchange for never getting Social Security or Medicare benefits when you retire?
The *second* bill the Republicans should propose is to make Medicaid a block grant to the states, based on their per capita needs as determined by an “actual enumeration” census, not estimates. How that money is spent is left up to the states, removing the need for any federal Medicaid bureaucracy, other than to investigate accusations of fraud.
The *third* bill will be to substantially limit third party insurance for routine medical care, which is a ridiculously inefficient and an expensive drain on our medical infrastructure.
Instead, the insurance industry needs wide latitude to offer catastrophic medical insurance as well as extended care and rehabilitation medical insurance.
FREE MARKET.com OR FREE MARKET.org!!!!
There’d better not be! Providing health insurance is not a legitimate function of government. Any small-government “conservative” who says otherwise is no small-government conservative. He may be a REPUBLICAN, but that’s part of the problem ...
Their is one brewing in Michigan.
Unfortunately, no one on the National Stage has noticed it other than myself and posting it here on FR.
The links below. And you wonder why I am so frustrated with the E-GOP?....
And what's to happen to all the FICA tax money the government has coerced from the working population prior to age 65? Let me guess, shift it over to the general fund and buy more phones for the gimmedats...
No thanks, Medicare may need some tweeking but eliminating the program would be outright theft.
Regards,
GtG
I believe in markets, not government.
Why is this never said?
An excellent point and something I've been wondering for quite awhile now myself.
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