James Capretta praises the Burr-Coburn-Hatch plan’s approach to pre-existing conditions:
The plan would solve the pre-existing problem, which is real but not nearly as widespread as the president would like Americans to believe it is, in a manner that is something like the opposite of the Obamacare approach. The irony of Obamacare is that it makes insurance less desirable as a product by requiring insurers to sell it to anyone who comes in the door, regardless of their health status. This means consumers have far less incentive to get coverage when they are healthy because they know they can sign up when they are sick without penalty. The Obamacare solution is to try to compel enrollment through the individual mandate tax.
The Burr-Coburn-Hatch approach makes insurance attractive by attaching a new and unambiguous right to continuous insurance enrollment: anyone who stays insured will be allowed to move between insurance platforms without facing higher premiums based on their health status.
Scott Lemieux calls that proposal “horrible” and yet another Republican kick at the working poor, noting that not everyone who faces a lapse in their health insurance does so voluntarily:
The plan would protect people who have been continuously insured for 18 months. But if you’ve never had health insurance? You’re out of luck. If you’ve lost health insurance at some point in the last year and a half or haven’t had it at all because you’ve lost your job? You’re out of luck.
The plan would offer a narrow one-time only enrollment period for those with pre-existing conditions, but anyone who missed that narrow window would not be guaranteed the ability to purchase insurance that contained the continuous coverage protections. This change is a classic illustration of Republican priorities: more protection for corporate interests, much less protection for consumers.
Olga Khazan points out that this provision serves the same purpose as the Obamacare mandate:
People might be more amenable to this setup, though, than they are to Obamacare’s tax penalty. Unlike under Obamacare, there would be no penalty for people who go without health insurance by choice—as long as they stick with that choice forever. But since few people are likely to want to make that bargain with their brittle, 62-year-old future selves, getting coverage and keeping it going would likely be a popular option, just like it has been under Obamacare. So what does the GOP proposal tell us about mandates? Whether you go about it the Obamacare way, or the GOP “CARE” way, there has to be some strategy for getting people to sign up for health insurance before they get sick.
Ramesh considers how the proposal shifts the focus slightly from employer-based to individual coverage:
The tax code has for decades favored employer coverage over individual coverage, which has had all sorts of negative effects on health markets. The plan partly remedies the problem by giving people without access to employer plans a tax credit to buy coverage on the individual market. This credit is means-tested, though, phasing out rapidly as people’s incomes rise. [Yuval] Levin thinks that’s a mistake:
“I also think a flat, universal tax benefit for coverage would be better in many respects, as noted here. And that means I think the phasing out of the credit at 300 percent of poverty is not ideal, as it does not extend the tax benefit to much of the middle class.”
Avik Roy, also writing in favor of the plan, thinks the plan’s means-testing is appropriate: It limits the budget impact of the tax credit, targets its help at those who most need it, and may not lead to as much political pressure for expansion. If the case for flatness were purely a matter of simplicity and political appeal, then I think that Roy’s counter-arguments would make it a close question. But the other problem with the phase-out of benefits is that it raises implicit marginal tax rates: The more you work, or the more raises and promotions you get, the fewer benefits you get, and thus your incentive to make the extra income goes down. For me, that consideration leads to Levin’s side of the argument.
But this change could disrupt the insurance market just as much as Obamacare has:
The great unknown of the GOP’s plan … is what it would do to the employer-based insurance market, which is how the vast majority of Americans receive coverage. To pay for its reforms, the GOP proposal would cap the currently unlimited tax exclusion for employer-provided health coverage at 65 percent of the average insurance plan’s cost.
Nobody knows exactly what that would do to the employer-based insurance universe, and the Congressional Budget Office hasn’t yet analyzed the new proposal. But analysts seem to agree that it would force some Americans to pay higher taxes by capping the tax benefits of employer-based insurance. If your plan is average, you’d pay taxes on 35 percent of its cost. [health law professor Tim] Jost said it could lead to “the biggest tax increase on the middle class” in decades.
It could also encourage employers to cut health benefits for millions of their workers, now that the tax upside of providing it is gone.
Edwin Park is against the plan’s block-granting of Medicaid. He says it wouldn’t cover the states’ needs and would likely lead to higher premiums:
In place of the Medicaid expansion and premium credits, the plan would establish a new tax credit that would be the same dollar amount for everyone below 200 percent of the poverty line (and would phase out between 200 and 300 percent of the poverty line). That means that people with incomes between 300 percent and 400 percent of the poverty line, who are eligible for the ACA’s premium credits, would receive no help. Legal immigrants would be ineligible for the plan’s tax credit. (In contrast, legal immigrants are eligible for the ACA’s premium tax credits.)
In addition, the tax credit wouldn’t be based on the actual cost of decent-quality coverage or fully account for differences in people’s premiums based on their age. Nor would the plan offer any help with plan deductibles, co-payments, and co-insurance to replace the ACA’s cost-sharing reductions. The plan would also repeal the ACA’s requirement that insurers spend at least 80 percent of their premiums on health services rather than overhead and profit. Individuals would likely pay higher premiums for less coverage.
Earlier Dish on the GOP plan here.
The Dish 