The constant refrain from the GOP in the last two election cycles was to “repeal and replace” Obamacare.
Nearly four years after the Affordable Care Act’s passage, three Republican senators — Utah’s Orrin Hatch, North Carolina’s Richard Burr and Oklahoma’s Tom Coburn — have done the most convincing job yet of filling in the “replace” part of the equation.
The Patient CARE Act — CARE is an acronym for Choice, Affordability, Responsibility and Empowerment — is similar to Obamacare in broad strokes (though not as similar as an earlier alternative). That points to the reality that Obamacare, while hailed as a monumental reform and derided as a massive government intrusion, only changed so much in the American health care system while keeping in place the fundamentals of the U.S.’s private health insurance market.
The Patient CARE Act’s primary mechanism for expanding insurance coverage? Tax credits for those with lower incomes — except that the credits would flow directly to the consumer rather than to the insurance company.
The act would also retain Obamacare’s provisions that allow young people to stay on their parents’ insurance until they’re 26 and bar insurance companies from placing lifetime limits on the amount they’ll pay out for consumers’ health care.
The proposal has some guarantees as well for patients with pre-existing health conditions: As long as they’ve remained insured, no insurer could deny them coverage for a pre-existing condition. The authors say the prospect someone could be denied coverage for a pre-existing condition if he or she didn’t remain insured acts as an incentive to have health insurance.
Gone would be the individual and the employer mandates. Gone would be healthcare.gov and the publicly funded, state-run, online health insurance exchanges. Gone would be the Medicaid expansion, replaced by tax credits for those making 300 percent of the federal poverty level ($34,470 for an individual) or less and a major Medicaid restructuring that caps funding to the states — potentially leaving state budgets entirely on the hook for major expenses.
Even a less ambitious law that expands coverage through a tax credit program needs a way to pay for itself.
To that end, the GOP alternative would keep in place changes to Medicare — including reduced payments to hospitals — projected to reduce future spending by more than $700 billion. Those changes attracted GOP ire during the campaign season as Romney and others accused Obamacare of cutting retiree benefits.
And the act would end a longstanding tax exemption on health benefits for employees who get insurance through their jobs. Thirty-five percent of an employee’s health plan costs would be taxable — meaning a noticeable hit to the paycheck.
Insurers need a way to make ends meet, too, without the customer base guaranteed by the individual mandate. For them, the Patient CARE Act would insert the pre-existing condition loophole and end the mandates on what private insurance plans need to cover; the Patient CARE Act would mean the end of preventive care provided without copays.
In a question-and-answer document Burr, Coburn and Hatch have distributed, they pledge to avoid a key Obamacare pitfall: “We want individuals who like their plan to be able to keep it.”
But by repealing Obamacare and its mandates that insurers cover basic services, Burr, Coburn and Hatch would risk falling into the exact same pitfall.
It’s helpful for the sake of debate and for Republicans’ political purposes to be able to point to an Obamacare alternative (though Republicans might have trouble convincing Americans they’re not proposing a tax hike by limiting the health benefits tax exemption). But it wouldn’t be helpful for the insurance market to again be upended, especially for an inferior alternative.
Instead, Republicans would be wise to adopt the thinking of Douglas Holtz-Eakin, a Republican economist and former director of the Congressional Budget Office who’s ready for his party to move beyond its “repeal Obamacare” dogma. Holtz-Eakin recently founded a health policy-focused think tank, which looked at the Patient CARE Act’s projected impact.
“I think the Affordable Care Act is the beginning of health reform,” he told The Washington Post, “not the end.”