Top House Republican unveils Obamacare replacement
May 13, 2015 15:13:41 #
House Budget Committee Chairman Rep. Tom Price, R-Ga., on Wednesday unveiled a plan to repeal President Obama's healthcare law and replace it with an alternative.
The move is the latest effort by Republicans to show that they have a vision for reforming the healthcare system beyond merely undoing Obamacare. With Republicans taking over the Senate, a looming Supreme Court decision, and the 2016 campaign heating up, there has been increased pressure on the GOP to offer alternatives.
Price, an orthopedic surgeon who in January took over the budget panel from Rep. Paul Ryan, R-Wis., has been one of the leading voices on healthcare policy among Republicans.
His plan, an updated version of his "Empowering Patients First Act" released in the previous Congress, relies on a combination of tax credits and regulatory reforms meant to broaden access to health insurance and bring down costs without Obamacare. Its release is likely to reignite a debate on the right over whether such an approach goes far enough toward ushering in a market-based healthcare system.
The Price plan would start by fully repealing the text of Obamacare.
To assist individuals with the purchase of insurance in the absence of Obamacare's subsidies, it would provide refundable tax credits. In a change from Price's previous proposal, which adjusted the value of the credits based on the income level of the recipient, the new Price plan would adjust the value of the credits based on age. The credits would range from $1,200 for those between 18 to 35 and $3,000 for those over 50 with an additional $900 credit per child up to age 18.
It would also provide individuals with a one-time $1,000 tax credit to put in a health savings account, from which individuals could pay for routine medical expenses that aren't covered by their insurance. The legislation would increase the contribution limits of HSAs to match limits on Individual Retirement Accounts.
The idea of tying the credits to age was featured in a proposal released by a policy group, the 2017 Project, last year. The thinking of doing it based on age is that because younger individuals can obtain cheaper insurance, by weighting the subsidies toward older Americans, it's possible to cover more people. Also, it's easier to administer, because the government doesn't have to worry about estimating income. Because Obamacare subsidies are income-based, it resulted in added chaos during tax season. Many beneficiaries had to forgo all or part of their expected tax refunds because their actual income was different from their estimated income at the time they applied for subsidies.
It's long been the goal of market-based health plans to migrate away from the employer-based healthcare system. Not only does the system provide an unfair advantage to individuals who purchase insurance through their employers, but it restricts the control individuals have over their healthcare dollars and provides them less incentive to shop around for better prices driving up healthcare costs. It also means that individuals cannot take health insurance with them from job to job.
But the dream of equalizing the tax treatment of insurance has had to confront political reality. Roughly half of Americans obtain insurance through their employers, and when John McCain, during his 2008 campaign, released a plan to shift away from the employer market, he was effectively pummeled by Obama for raising taxes and unraveling employer insurance. There are also those on the right who argue that the employer market is the last remaining bulwark against a full single-payer healthcare system. Thus, more recent alternative plans have sought to limit disruption to the employer market.
Price's plan takes baby steps when it comes to changing the employer insurance market. He limits the value of the exemption for employer coverage, but at a high level up to $20,000 for a family and $8,000 for individuals (which would be adjusted to keep up with cost of living increases). Any money spent on employer insurance beyond that would be have to be taken out of after-tax income. The tax credits in his plan would only be available to those who do not receive employer coverage, though in theory, an employee could decline that coverage and claim a credit instead. Businesses would have the option of providing individuals a pre-tax benefit that workers could use to purchase their own plans.
Small business owners would be able to band together across state lines to purchase insurance through trade associations, and insurers licensed in one state would be able to sell insurance in any state.
In addition, the Price plan would allow individuals to opt out of programs such as Medicare, Medicaid and VA benefits and instead use credits to purchase private insurance.
To address those with pre-existing conditions, Price would provide grants to states to offer coverage to those with such conditions, using mechanisms that spread risk.
The plan would also include medical malpractice liability reforms, such as changing the burden of proof based on physicians following clinical guidelines. The guidelines would be issued by the secretary of Health and Human Services in consultation with medical societies.
Price's plan is likely to come under criticism from both the Left and the Right. Liberals will argue that the replacement plan won't cover enough people and would eliminate protections, such as for individuals with pre-existing conditions, that would leave millions more vulnerable.
Conservatives are likely to argue that even though it repeals Obamacare, it cedes too much ground to the Left.
Louisiana Gov. Bobby Jindal, who released his own healthcare alternative last year, has been arguing that plans released by Republicans in Congress are merely "Obamacare Lite." His argument is that by focusing too much on expanding coverage, Republicans are playing on Democrats' turf, since liberals will always be willing to spend more.
Unlike Price's plan, Jindal would offer individuals a standard deduction for health insurance, which would reduce their tax burden by the amount they spend on insurance up to a certain value. This functions more like a tax cut than a spending increase. The criticism of the Jindal approach is that the deduction wouldn't be of much value to low-income individuals with little or no tax liability against which to deduct, and thus it wouldn't do enough to expand coverage.
That's why proposals like Price's rely on a refundable tax credit. Under this approach, somebody who owes $1,000 in taxes and qualifies for a $3,000 tax credit would effectively receive a $1,000 tax cut and $2,000 in government subsidies.
Jindal has argued that this approach wouldn't represent a true repeal of Obamacare, because it would still be spending money to subsidize insurance relative to the system that existed prior to Obamacare.
Other Republicans, however, have argued that now that Obamacare is in place, it's unrealistic to think Republicans could scrap Obamacare and not have an answer for the millions of beneficiaries who would lose insurance coverage as a result. This dynamic has received added attention due to the Supreme Court case challenging the legality of subsidies offered on federal health insurance exchanges, which is expected to be decided in June and would mean millions of people in up to 37 states losing subsidies.
In my book Overcoming Obamacare, which examined the debate on the Right over healthcare alternatives, Price told me that his approach would provide "the financial feasibility for every single American to purchase the coverage that they want."
He added that, "The system doesn't work if people aren't covered."
In releasing the plan on Wednesday, he said in a statement, "Under Obamacare, the American people are paying more for health care and getting less less access, less quality, and fewer choices. The status quo and its defenders are empowering Washington and harming patients and doctors. With real, patient-centered reforms we can build a more innovative and responsive health care system one that empowers patients and ensures they and their doctor have the freedom to make health care decisions without bureaucratic interference or influence."
The move is the latest effort by Republicans to show that they have a vision for reforming the healthcare system beyond merely undoing Obamacare. With Republicans taking over the Senate, a looming Supreme Court decision, and the 2016 campaign heating up, there has been increased pressure on the GOP to offer alternatives.
Price, an orthopedic surgeon who in January took over the budget panel from Rep. Paul Ryan, R-Wis., has been one of the leading voices on healthcare policy among Republicans.
His plan, an updated version of his "Empowering Patients First Act" released in the previous Congress, relies on a combination of tax credits and regulatory reforms meant to broaden access to health insurance and bring down costs without Obamacare. Its release is likely to reignite a debate on the right over whether such an approach goes far enough toward ushering in a market-based healthcare system.
The Price plan would start by fully repealing the text of Obamacare.
To assist individuals with the purchase of insurance in the absence of Obamacare's subsidies, it would provide refundable tax credits. In a change from Price's previous proposal, which adjusted the value of the credits based on the income level of the recipient, the new Price plan would adjust the value of the credits based on age. The credits would range from $1,200 for those between 18 to 35 and $3,000 for those over 50 with an additional $900 credit per child up to age 18.
It would also provide individuals with a one-time $1,000 tax credit to put in a health savings account, from which individuals could pay for routine medical expenses that aren't covered by their insurance. The legislation would increase the contribution limits of HSAs to match limits on Individual Retirement Accounts.
The idea of tying the credits to age was featured in a proposal released by a policy group, the 2017 Project, last year. The thinking of doing it based on age is that because younger individuals can obtain cheaper insurance, by weighting the subsidies toward older Americans, it's possible to cover more people. Also, it's easier to administer, because the government doesn't have to worry about estimating income. Because Obamacare subsidies are income-based, it resulted in added chaos during tax season. Many beneficiaries had to forgo all or part of their expected tax refunds because their actual income was different from their estimated income at the time they applied for subsidies.
It's long been the goal of market-based health plans to migrate away from the employer-based healthcare system. Not only does the system provide an unfair advantage to individuals who purchase insurance through their employers, but it restricts the control individuals have over their healthcare dollars and provides them less incentive to shop around for better prices driving up healthcare costs. It also means that individuals cannot take health insurance with them from job to job.
But the dream of equalizing the tax treatment of insurance has had to confront political reality. Roughly half of Americans obtain insurance through their employers, and when John McCain, during his 2008 campaign, released a plan to shift away from the employer market, he was effectively pummeled by Obama for raising taxes and unraveling employer insurance. There are also those on the right who argue that the employer market is the last remaining bulwark against a full single-payer healthcare system. Thus, more recent alternative plans have sought to limit disruption to the employer market.
Price's plan takes baby steps when it comes to changing the employer insurance market. He limits the value of the exemption for employer coverage, but at a high level up to $20,000 for a family and $8,000 for individuals (which would be adjusted to keep up with cost of living increases). Any money spent on employer insurance beyond that would be have to be taken out of after-tax income. The tax credits in his plan would only be available to those who do not receive employer coverage, though in theory, an employee could decline that coverage and claim a credit instead. Businesses would have the option of providing individuals a pre-tax benefit that workers could use to purchase their own plans.
Small business owners would be able to band together across state lines to purchase insurance through trade associations, and insurers licensed in one state would be able to sell insurance in any state.
In addition, the Price plan would allow individuals to opt out of programs such as Medicare, Medicaid and VA benefits and instead use credits to purchase private insurance.
To address those with pre-existing conditions, Price would provide grants to states to offer coverage to those with such conditions, using mechanisms that spread risk.
The plan would also include medical malpractice liability reforms, such as changing the burden of proof based on physicians following clinical guidelines. The guidelines would be issued by the secretary of Health and Human Services in consultation with medical societies.
Price's plan is likely to come under criticism from both the Left and the Right. Liberals will argue that the replacement plan won't cover enough people and would eliminate protections, such as for individuals with pre-existing conditions, that would leave millions more vulnerable.
Conservatives are likely to argue that even though it repeals Obamacare, it cedes too much ground to the Left.
Louisiana Gov. Bobby Jindal, who released his own healthcare alternative last year, has been arguing that plans released by Republicans in Congress are merely "Obamacare Lite." His argument is that by focusing too much on expanding coverage, Republicans are playing on Democrats' turf, since liberals will always be willing to spend more.
Unlike Price's plan, Jindal would offer individuals a standard deduction for health insurance, which would reduce their tax burden by the amount they spend on insurance up to a certain value. This functions more like a tax cut than a spending increase. The criticism of the Jindal approach is that the deduction wouldn't be of much value to low-income individuals with little or no tax liability against which to deduct, and thus it wouldn't do enough to expand coverage.
That's why proposals like Price's rely on a refundable tax credit. Under this approach, somebody who owes $1,000 in taxes and qualifies for a $3,000 tax credit would effectively receive a $1,000 tax cut and $2,000 in government subsidies.
Jindal has argued that this approach wouldn't represent a true repeal of Obamacare, because it would still be spending money to subsidize insurance relative to the system that existed prior to Obamacare.
Other Republicans, however, have argued that now that Obamacare is in place, it's unrealistic to think Republicans could scrap Obamacare and not have an answer for the millions of beneficiaries who would lose insurance coverage as a result. This dynamic has received added attention due to the Supreme Court case challenging the legality of subsidies offered on federal health insurance exchanges, which is expected to be decided in June and would mean millions of people in up to 37 states losing subsidies.
In my book Overcoming Obamacare, which examined the debate on the Right over healthcare alternatives, Price told me that his approach would provide "the financial feasibility for every single American to purchase the coverage that they want."
He added that, "The system doesn't work if people aren't covered."
In releasing the plan on Wednesday, he said in a statement, "Under Obamacare, the American people are paying more for health care and getting less less access, less quality, and fewer choices. The status quo and its defenders are empowering Washington and harming patients and doctors. With real, patient-centered reforms we can build a more innovative and responsive health care system one that empowers patients and ensures they and their doctor have the freedom to make health care decisions without bureaucratic interference or influence."
May 13, 2015 15:22:48 #
Far better framework than the ACA, which is arguably the worst legislation of my lifetime. Then again I only go back to FDR.
May 13, 2015 16:02:34 #
theoldguy44 wrote:
Far better framework than the ACA, which is arguably the worst legislation of my lifetime. Then again I only go back to FDR.
Other Republicans, however, have argued that now that Obamacare is in place, it's unrealistic to think Republicans could scrap Obamacare and not have an answer for the millions of beneficiaries who would lose insurance coverage as a result. This dynamic has received added attention due to the Supreme Court case challenging the legality of subsidies offered on federal health insurance exchanges, which is expected to be decided in June and would mean millions of people in up to 37 states losing subsidies.
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