Obamacare is in peril, and many think that’s a good thing.
Last week, I had a conversation with Rep. Austin Scott, the co-chair of the Republican Study Committee’s Heath Care Task Force, who helped lead the effort to draft a Republican answer to our failing government attempts to regulate health care for Americans.
This is part 2 of a 2-part series of posts on what sets the Republican plan apart from Obamacare.
Part 1 covered the broken insurance market, and the fact that any plan is no silver bullet to fix a system that’s been broken for so many decades.
From Part 1:
Obamacare is a ferocious Leviathan that nobody expected to survive for very long. Its creators knew it was unworkable to force citizens to buy health insurance in a broken market controlled by just a few large players. But legislators did not read the bill until it was passed. Like two people deciding to marry after first meeting for the first time at a drunken party in Las Vegas, America has awakened in a bed shared with a stranger, a wedding ring and a huge hangover.
Either the country will move to a socialist-inspired single-payer system—a government-controlled universal healthcare system like they have in Canada and Europe—or we will move to a market-based approach that propelled America to its sole spot as the world’s largest economy.
If we do neither, during our children’s lifetime, America will no longer be able to afford to pay its bills, and instead of being the envy of the medical world, our children may find themselves languishing in a second-rate country with second-rate care.
Republicans have been roundly criticized for not fixing our health care system prior to President Obama’s term, and they have been challenged to produce a plan that addresses the skyrocketing cost of health care, onerous regulations, greedy insurance companies and drug manufacturers, and hospitals and doctors forced to provide more and more care for patients who can’t afford to pay.
Earlier this month, the GOP answered the challenge by unveiling the American Health Care Reform Act (AHCRA).
When Obama’s signature health reform in 2010, the Affordable Care Act, passed Congress without a single Republican vote, Rep. Austin Scott, Republican congressman from the 8th district of Georgia, wasn’t yet in office.
In conservative central Georgia, even the incumbent, Democrat Jim Marshall—who lost his seat to Scott that year—voted against Obamacare (a moniker that even the president has acknowledged as the de facto name for the ACA).
Scott was an insurance broker for 20 years before winning his congressional seat, and still maintains his professional license and an alphabet soup of qualifications. He also maintains his conservative credentials, with a Heritage Action score of 82% (the House Republican average is 69%).
This may be one of the key reasons why the GOP tapped Scott as one of its leaders in finding an answer to Obamacare. Scott is co-chair of the Republican Study Committee’s Health Care Task force, along with Rep. Phil Roe of Tennessee’s 1st district.
In my conversation with Scott about the proposed GOP health care legislation, he said, “The key to all of it is how many carriers the American citizen has access to.” For example, in Georgia, the insurance market has been narrowed down, in most communities, to two or three carriers. “That’s not a competitive market,” he added.
And here is the rest in Part 2.
Making health care affordable.
Affordable health care doesn’t just come from taking more tax money from the wealthiest Americans and paying for free care for poorer Americans. When the wealthy voluntarily pay for the poor, it’s called charity. When government forces those payments, it’s called wealth redistribution, a decidedly socialist concept.
AHCRA includes two provisions designed to lower costs: medical liability reform and a medical breakthrough fund.
Liability reform is a hot topic, generally opposed by personal injury lawyers who parade a long list of injustices to prove their case. The GOP plan tries to unclog the glut of medical malpractice cases which raise doctors’ and hospitals’ insurance costs, and steer medical professionals away from specialties with high rates of malpractice claims.
Republican Rep. Andy Barr of Kentucky’s 6th district wrote the liability reform provisions, according to Scott. The reform would allow cases to move to federal courts as long as there is a federal payer (such as Medicaid or Medicare), create an independent panel to review medical cases pre-discovery to help eliminate frivolous cases, and increase the burden of proof for plaintiffs from a “preponderance of the evidence” to “clear and convincing” if the review panel finds no evidence of negligence.
“The whole goal is to get the bad cases out of the system,” Scott said.
The medical breakthrough fund allocates $15 billion over 8 years to the National Institutes of Health to pursue cures for dreaded diseases. A $1 billion CV-prize, similar to the X-Prize, would be granted to the first entity that creates an FDA-approved cure or vaccine for Alzheimer’s, according to the RSC report.
If you like your health plan, you can keep your health plan.
AHCRA includes a standard $7,500 deduction for health insurance for individuals, and $20,500 for families, for all Americans with qualifying health insurance. If you like your health plan, you can keep your health plan. Whether a family chooses an individual plan or a group plan, the deduction remains the same.
Obamacare has a $28,000 threshold for families, according to Scott, and “Cadillac plans” are taxed at 40%. The GOP plan taxes these benefits at ordinary income rates. Scott asserted that the vast majority of Americans will end up with a tax deduction using the GOP plan.
The most striking difference between the Democrats’ approach to health care and the Republican plan is trusting people to make their own financial decisions. Obamacare rests on the assumption that people need to be told what they need, and that the government can spend money more effectively then individuals for their own good.
If Steve Jobs designed a health care system, it might resemble a single-payer system. “It’s really hard to design products by focus groups,” he famously told BusinessWeek. “A lot of times, people don’t know what they want until you show it to them.”
Now that Americans have seen Obamacare, they don’t like it. Scott said a Georgia small business owner told him that a single-payer system would be preferable to the confusing requirements and exploding costs of the current law. And that’s exactly how Democrats would “fix” the current unworkable system.
The Republican health plan allows individuals to fund their own Health Savings Accounts—a tax-exempt bank account for paying health care expenses created by the HIPAA law—a major expansion of that program. The High Deductible Health Plans (HDHPs) created by HIPAA would be renamed to “HSA-Eligible Health Plans,” and the limits on HSA contributions would be raised to the out-of-pocket deductible for the plans.
Premiums for eligible plans would also be payable using the HSA. For most families, this essentially make all heath care expenses tax-deductible.
Parents would receive a tax incentive to establish HSAs for their children up to 5-years-old, which can be funded by the parents until the child is 18 or obtains separate health coverage.
In a nod to pro-life conservatives, HSA funds would be prohibited from being used for abortions, with an exception for rape, incest, or threat to the health of the mother.
Obamacare’s test: it’s clearly not working.
Obamacare is facing its latest Supreme Court test in King v. Burwell, which, if the government loses its case, will scuttle the financial hull which keeps the law afloat. The Court will announce its decision on the case this month.
The current law provides federal subsidies for the 34 states that did not set up their own health insurance exchanges. Losing the subsidies would leave up to 5 million people without the affordable health care the law promised. This would likely start a scramble for Congress to “fix” the ACA.
A Republican plan to replace Obamacare is important, since the GOP enjoys majorities both houses of Congress. It’s almost unimaginable that Obama would sign such a bill if it were delivered to him, but if the Supreme Court were to create a crisis, it’s possible that Congress could override his veto if enough Democrats jumped onboard the GOP plan.
Just days after the AHCRA was unveiled, the Associated Press reported that the president said there was no reason for his health program to end up in court, maintaining that “it’s working.”
The latest polls show that most Americans disagree with Obama’s assessment. Support for Obamacare is the lowest it’s been since April 2012, according to a Washington Post-ABC poll that shows 54 percent oppose the law, up six percentage points from a year ago.
The Washington Post recently wrote that the disconnect “is driven by political independents as well as Republicans. Independents oppose the law 56 percent to 35 percent. But they also want a ruling in favor of subsidies by almost exactly the same margin.”
Attorney and healthcare lobbyist Ralph S. Tyler predicted in March that the Supreme Court will not strike down the state exchanges. “The Court is not going to blow up the ACA, create chaos in 34 states, and leave millions of people without insurance because of what is, at most, in artful or sloppy legislative drafting in a single provision of a lengthy and complex statute,” he wrote in his blog at The Hill.
“The consequences are too great and the argument for imposing those consequences was shown to be thin and inadequate.“
Scott could not disagree more.
Democrats have made it “more difficult to purchase, more expensive to purchase, and they increased the liability on the employers” for purchasing health insurance, he said.
“And those three things in and of themselves are contrary to the interest of the health insurance consumer.”