Republicans’ replacement for Obamacare
All Americans face the prospect that very shortly after Jan. 20, Congress will repeal the Affordable Care Act (ACA). That means between 14 and 17 million people (depending on the report you want to use) will have their health care benefits in jeopardy. It is estimated that over one million of them are in Illinois.
But if you are one of the majority of Americans who have not purchased health care insurance via the ACA, you still need to be concerned. The Republican plan is certain to have provisions that ultimately will impact all insurance policies.
On Speaker Paul Ryan’s website at abetterway.speaker.gov , the Full Task Force Report on Healthcare gives us an idea. Here are the big nine points:
1. The Republican plan places emphasis on tax-advantaged health savings accounts (HSAs) to which the individual contributes. Similarly, in place of a group health plan there can be employer health reimbursement accounts (HRAs) where the employer can reimburse the employee for some health care expenses including premiums for private insurance.
These options ignore the fact that individually purchased health care insurance is very expensive because individuals are not in a strong position (like large employers) to negotiate concessions on price and services covered.
2. Those without job-based coverage, Medicare or Medicaid would get an advanceable, refundable tax credit to be used to offset the cost of purchasing a private health care plan. But whether HSAs and HRAs with a tax credit will provide enough funds for individuals to purchase private health care insurance, especially in the middle and lower classes, remains to be seen.
3. Currently the portion of employer-sponsored health insurance that is paid by the employer is not counted as income for payroll/income tax purposes. The Republican plan criticizes providing non-taxable “generous health benefits” rather than taxable pay. They hold that placing a cap on the value of a health insurance plan that will not be taxable and taxing the excess value will result in lower premiums (because you will have to take a less generous plan or pay more taxes). They also hold out the fantasy that if the employer has to contribute less to health care benefits they will redirect that savings into taxable employee salary.
4. The Republican plan offers another fantasy that cost will go down if consumers can buy plans licensed in another state. Large insurers already break down their operations on a state-by-state basis. This provision would only put smaller regional insurers at a disadvantage in competing with large multistate insurance corporations.
5. Republicans criticize the state-run health care exchanges mandated by the ACA and want to abolish them. These exchanges currently function to pool individuals together and then the exchanges negotiate for better benefit packages at lower prices.
Yet a key part of the Republican proposal is the development of individual health pools and small business association health plans that would do the same thing as current ACA health care exchanges – negotiate on the behalf of groups of individuals to get favorable rates. They offer no clear rationale why this can’t be done by current ASA state exchanges or how individuals could band together to start such an organization.
6. The Republican plan wants employers who provide health insurance to sponsor wellness programs (such as weight loss and smoking cessation) that reward voluntary participation with lower premiums. However they push for provisions stating that if a disability prevents your participation in a wellness program, you can’t sue with a claim that you are discriminated against with higher premiums because of your disability. Similarly, employers can require they be provided with confidential health care information about employees and their families as a condition of participation without legal recourse.
7. The Republican plan promotes self-insurance, where the employer writes their own health insurance plan and assumes the risk for paying health care providers directly or reimbursing the employee for covered costs. This allows the employer to decide what services they will or won’t pay for when writing the plan and has the potential for bare bones plans to count as having coverage. If the employer has not purchased stop-loss insurance (insurance that limits liability for very large claims), the company can face catastrophe. It is not clear whether self-insuring companies will be required to purchase stop-loss insurance
8. The plan calls for malpractice reform with a cap on non-economic damage awards and limits on attorney contingency fees. It is interesting to see the Republicans propose a big government intervention when they trumpet that so many other things (such as voting rights) should be controlled by the states.
9. The plan calls for possible repeal of the current limited antitrust exemption for insurance companies to encourage competition, to which I say amen.
The bottom line is that just as the ACA was not perfect, neither is the Republican plan. The next few weeks is a critical time for every citizen to carefully read the Republican proposals and write our representatives, senators and president-elect regarding what we think of the Republican proposals and make it clear we do not want any actions that again swell the ranks of the uninsured.
Dr. Stephen Soltys of Springfield is a retired professor emeritus and still teaches at SIU School of Medicine on a voluntary basis.