The New Republican Replacement for Obamacare (updated)

AHCRAlogo

The Republican “replace” portion of the party’s years-long repeal and replace positioning against the Affordable Care Act has finally arrived. It’s from the House Republican Study Committee, chaired by Rep. Steve Scalise, R-La, and you can find the portal for various links providing (a little bit) more information here.

From that homepage, here all bullet points for the American Health Care Reform Act (AHCRA):

  • Fully repeals President Obama’s health care law, eliminating billions in taxes and thousands of pages of unworkable regulations and mandates that are driving up health care costs.
  • Spurs competition to lower health care costs by allowing Americans to purchase health insurance across state lines and enabling small businesses to pool together and get the same buying power as large corporations.
  • Reforms medical malpractice laws in a commonsense way that limits trial lawyer fees and non-economic damages while maintaining strong protections for patients.
  • Provides tax reform that allows families and individuals to deduct health care costs, just like companies, leveling the playing field and providing all Americans with a standard deduction for health insurance.
  • Expands access to Health Savings Accounts (HSAs), increasing the amount of pre-tax dollars individuals can deposit into portable savings accounts to be used for health care expenses.
  • Safeguards individuals with pre-existing conditions from being discriminated against purchasing health insurance by bolstering state-based high risk pools and extending HIPAA guaranteed availability protections.
  • Protects the unborn by ensuring no federal funding of abortions.

Most of these ideas have been around the the health care reform block once or twice. For the sake of brevity here are some links that have critically addressed some of these policies:

  1. Selling insurance across state lines.
  2. Reforming medical malpractice (i.e., tort reform): See here, here, and here.
  3. On Health Savings Accouts: Read me here.
  4. On expanding HIPAA; see here. State-based high risk pools; see Austin Frakt’s summary of his research here.

Probably the newest wrinkle here is on the tax side. They propose replacing the tax preference for employer-provided health insurance with a uniform standard deduction for health insurance (SDHI), which is also applicable to an individual’s payroll taxes (hat tip to Allan Joseph). The details for the SDHI can be found here (PDF). That this proposal only addresses affordability through a deduction, rather than something like a refundable credit, is pretty disappointing.

As it turns out, the Congressional Budget Office simulated the effects of a similar proposal in the Bush administration’s FY2008 budget. That policy, which also called for scrapping the employer exclusion in favor a standardized deduction against your earnings and payroll taxes, would have reduced the (then) uninsured population by 6.7 million in 2010. By contrast, the CBO estimates the ACA will reduce the uninsured population by 14 million next year (and by 27 million after 2017).

Why the disparity? The CBO explains (my emphasis in bold):

Compared with people who would be uninsured in 2010 under current law, those gaining insurance coverage under the President’s proposal would have higher income, on average. The reason is that the value of the new deduction would be greater for people with higher marginal tax rates, which are associated with higher incomes. Nonetheless, most newly insured people would come from lower-middle- and middle-income households, mostly because the uninsured population as a group has relatively low income compared with the population as a whole. The uninsured people who would acquire insurance coverage under the proposal would also have better health status, on average, than the uninsured population at large because premiums in the nongroup market are generally lower for people with lower expected health costs, so the proposed deduction would represent a larger percentage subsidy of premiums for people with lower expected costs.

Now the AHCRA would set the deduction cap higher than the proposal they examined in 2007, but the basic dynamic would still exist under the Republican’s alternative framework. This reinforces Austin Frakt and Aaron Carroll’s response, primarily that it would “make insurance cheaper and easier to get if you are healthy.” Moreover, as Larry Levitt notes, this is the opposite direction that the ACA takes; which is a direct subsidy model that overwhelmingly targets the non-healthy and non-wealthy.

You’ll also notice that there is no provision for individual’s under 26 to remain on a parent’s policy. There are no annual or lifetime caps on policy payouts. Et cetera. Et cetera. Some of the most popular provisions aren’t included. Remember that the counter-factual is more folks (millions more) getting guaranteed coverage through Medicaid and subsidized insurance on the exchanges. The AHCRA is not guaranteed coverage. It’s less coverage than what people would be getting next year under existing law. The AHCRA isn’t a principled stand against spending federal tax dollars on the purchase of health insurance. It’s a principled stand against spending federal tax dollars on the purchase of health insurance for the poor and chronically ill. Republicans are certainly welcome to try selling that to the public.

Advertisements

7 responses to “The New Republican Replacement for Obamacare (updated)

  1. Pingback: GOP hits rock bottom on food stamps | The McLean Parlor·

  2. Pingback: GOP hits rock bottom on food stamps | Punditocracy·

  3. Pingback: On Obamacare, Republicans, and the American Public | The McLean Parlor·

  4. Pingback: On Obamacare, Republicans, and the American Public | Punditocracy·

  5. Pingback: How the government shutdown is a teachable moment for Republicans | The McLean Parlor·

  6. Pingback: How the government shutdown is a teachable moment for Republicans | Punditocracy·

  7. Pingback: Obligatory end of the year post | Punditocracy·

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s