After campaigning for years on a plan of “repeal and replace Obamacare,” Republicans finally have the means within their grasp to make much of that possible. They control the presidency, the House, and the Senate. The filibuster still poses some potential threats to their plans, but it’s also within their means to abolish its widespread use in such a way that they could both repeal the Affordable Care Act and replace it with something of their own design.
What would that be? In contrast to what many say, there are Republican plans out there to consider.
Given that he is the Speaker of the House, Paul Ryan’s (R, Wisconsin) “A Better Way” plan is the most well known. It maintains the idea of guaranteed issue, requiring insurance companies to issue a health plan to any individual or group, regardless of health status or other factors. But the plan would allow insurers to charge new beneficiaries whatever they want if the individual did not have continued coverage. If they maintained continuous coverage, though, people in the same area couldn’t be charged more for preexisting conditions or claims history (otherwise known as community rating). If people lose their coverage because of financial hardship or loss of employment, they could also turn to high-risk pools, for which Ryan proposes $25 billion in funding.
Ryan’s plan would also make significant changes to the way insurance is regulated. The essential health benefits package would be removed, meaning that insurers could make plans much less comprehensive and cheaper. It would also allow insurance companies to charge older people 5 times as much as younger people, as opposed to the current 3:1 ratio. Subsidies, in the form of tax credits, would remain, but these would be based on age instead of income.
Finally, Ryan would like to change Medicaid to a block grant program, having states make the hard decisions on who to cover, what to cover, and how to save money. It’s expected that a block grant’s amount would rise more slowly than health care spending traditionally has, leading to further cuts down the line.
Given Rep Tom Price’s (R, Georgia) nomination by President-elect Trump to head the Department of Health and Human Services, his plan is also getting more notice. He has proposed a bill called the Empowering Patients First Act. It also keeps guaranteed issue, requires continuous coverage for community rating, has tax credits based on age, and relies on high-risk pools for coverage of those with chronic conditions who can’t afford insurance. It is much less generous in funding those pools, though, which will limit their ability to provide insurance affordably to those who are ill. Unlike Ryan, though, Price proposes repealing the Medicaid expansion with no replacement whatsoever. Poor people would be eligible for subsidies based on their age, but that would likely not be enough to afford private insurance.
Sen Orrin Hatch (R, Utah) and colleagues have proposed the Patient CARE Act, which is similar to Ryan’s with respect to Medicaid. It also keeps in place community rating as long as people maintain continuous coverage. It increases the age bands to a 5:1 ratio, and allows for much less comprehensive coverage. The CARE Act differs from Speaker Ryan’s plan in that it has higher subsidies for the poor and a form of a mandate: it automatically enrolls people into cheap plans covered by subsidies.
Sen Ted Cruz (R, Texas) has introduced the Health Care Choice Act. Interestingly, this proposal leaves the Medicaid expansion intact. It does, however, completely dismantle the insurance exchanges. There would no longer be a mandate, no guaranteed issue, no community rating, and no subsidies. He would also push for insurance to be sold across state lines, a proposal that often appeals to those on the campaign trail but is problematic and would likely fail to improve people’s ability to obtain care at a local level.
President-elect Trump also has a plan, although it’s much less comprehensive than most others. As of now, it’s a few paragraphs long and nods towards ideas seen in other plans, including increased use of health savings accounts, high-risk pools, selling insurance across state lines, and giving states more flexibility with Medicaid.
In contrast, 2 plans from conservative think tanks are very comprehensive. The first is the American Enterprise Institute’s Improving Health and Health Care: An Agenda for Reform. Like Ryan’s plan (and others), it would get rid of essential benefits to allow for more flexibility in what plans are offered. Like the Patient CARE Act, it would automatically enroll people in low-cost plans if they didn’t sign up on their own. It also moves Medicaid to a block-grant program. It would, however, retain much of the insurance exchanges as a means for people to buy plans.
Finally, Avik Roy, now of the Foundation for Research on Equal Opportunity, has a plan he calls Transcending Obamacare. It calls for the widest age bands of any plans (6:1), which would make insurance cheaper for the young and more expensive for the near-elderly. Unlike other plans, though, it keeps subsidies tied to income, not age. Instead of continuous coverage requirements, it proposes to induce healthy people to enter the market by holding open enrollment every two years instead of every year.
Similarities and Differences
It’s important to stress that there are many similarities in these plans. Most of them are based on the belief that requiring insurance to be comprehensive (essential benefits) makes insurance too expensive. Their architects argue that many people will want to buy less comprehensive catastrophic plans. These plans also embrace the notion that there should be more of a difference between the costs to a younger and older beneficiary. They all oppose the mandate in its current form as well.
Differences between them expose major areas of disagreement, though. How much should people get in subsidies to help them purchase insurance, and should those be tied to age or income? How much of a tax break should people get for buying health insurance? What should we do with Medicaid? Should people with preexisting conditions be charged more? Should there be a mandate in some form, and if so, what should it look like? And how will we pay for any of this?
Republicans have been discussing “replace” for 6 years. Come January, they may choose to move from the abstract to the specific. Merging these plans into a law will require much compromise, though, and hard choices.
About the author: Aaron E. Carroll, MD, MS, is a health services researcher and the Vice Chair for Health Policy and Outcomes Research in the Department of Pediatrics at Indiana University School of Medicine. He blogs about health policy at The Incidental Economist and tweets at @aaronecarroll.
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