Are Republican Healthcare Plans Good for Americans?

It’s 2017 and the Republicans have control of all legislative branches of government, are able to scrap the six year effort at healthcare reform we know as Obamacare (PPACA), and can start from scratch with a Republican version of healthcare reform. Leading the charge are Representative Paul Ryan (R-WI) with his A Better Way healthcare plan  and Rep. Tom Price (a medical doctor and soon-to-be Secretary of HHS) with his Empowering Patients First Act of 2015.  The two plans have common Republican elements and because Tom Price’s plan reads like a medical doctor’s bill of rights (and no “empowering patients” that I can find),  I will stick to Paul Ryan’s A Better Way for clues pointing to likely future Republican healthcare plans.

As expected from a political document created to justify a new direction in healthcare policy, the 37 pages of A Better Way are largely filled with Republican propaganda and is riddled with inaccurate statements, half-truths, selective text to justify Republican positions, language that misrepresents, and downright lies. I will ignore the manipulative use of data and Republican rhetoric for now so that I can extract the basic Republican healthcare reform ideas contained within the document. I will also note how it differs from Obamacare (PPACA) (the Democrats healthcare reform law).

Key Republican Health Insurance Reform Features

The Republicans can move away from Obamacare (PPACA) in one of two directions; namely, toward single payer, Medicare 4 All type health coverage for all Americans (universal care) or they can fragment the already fragmented healthcare system into ever smaller plans managed and controlled by private, for-profit health insurance companies. They have chosen the path that enriches those businesses that profit from healthcare as shown in the figure below.

Republican healthcare plans vs ObamacareIn the figure above, the segment of the market labeled “non-group” includes employer plans that are fully insured by insurance companies (not self-insured). The Medicare Advantage (MA) plans under Obamacare (PPACA) will be submerged into the “privatized” Medicare proposed and only Veterans, Indian, and military health services will remain under as government programs for now. Medicaid and high risk pools (for people who use costly healthcare services) will be offloaded to individual states through block grants. States will be able to use these defined-contributions as they see fit.

In the figure above, I show the “non-group” shrinking in the Republican plan because Americans will no longer be mandated to buy insurance (and the healthiest will not). The premiums for those who remain in this Republican Health Insurance Marketplace will go up as a result unless the insurance companies can unload the sickest onto the “high risk pools” being created.  Under the Republican healthcare plans, the insurance companies will have more power to manipulate the composition of their risk pools than was possible under Obamacare (PPACA).    The Republican plans move to a health insurance system where private, for-profit insurance companies will enjoy increased business and higher profits than existed under Obamacare (PPACA).
The Republican healthcare plans have several key mechanisms to achieve the health insurance system shown on the left in the figure above; namely,

  1. Obamacare will be repealed and replaced. Republicans want to take out  the Good, the Bad, and the Ugly including the Independent Payment Advisory Board (IPAB) and the Center for Medicare and Medicaid Innovation (CMMI) that are responsible for Medicare cost reductions (largely through provider payment reform) and quality improvement initiatives.
  2. Elimination of government mandates concerning health insurance coverage. The Republican healthcare plans will not require insurance companies to provide minimum Essential Health Benefits (EHBs) or a minimum actuarial value for insurance products as Obamacare (PPACA) had done. Insurance companies will be able to again sell “crappy” coverage.  In addition, the Republican plans will let insurers charge more based on individual health status (pre-existing conditions), gender, and age (Obamacare allows 3x and Republican healthcare plans allow 5x more). Pre-existing condition protections will be replaced with a much weaker “continuous coverage” protection.
  3. Health Savings Accounts to pay for extra healthcare costs. These healthcare accounts have been dubbed the rich man’s “extra 401K retirement fund” because the majority of Americans simply do not have the spare cash to fund them let alone let them accumulate to cover the increased healthcare costs that will come under the Republican healthcare plans. This is a taxpayer-subsidized benefit only for the wealthiest Americans.
  4. Elimination of Individual and Employer Mandate. Republican healthcare plans rest on the premise that individual freedom from the onerous burden of health insurance takes precedence over a civic responsibility to share insurance risk with fellow Americans. The single payer, “Medicare 4 All” type plan shown on the right in the figure above is at the opposite end and calls for 100% shared risk.
  5. Privatization of Medicare.   The Republican healthcare plans phase out traditional (original) and replace it with insurance sold by private health insurance companies. It would require elderly Americans to shop for health insurance yearly like the non-group Americans have done from 2014-2017 under the Obamacare’s Health Insurance Exchanges (which are scheduled for elimination under current Republican actions) Medicare beneficiaries will be given “premium support” (also called “vouchers”) to pay for health insurance and the unchecked healthcare cost inflation will now be the individual’s problem. Privatization of Medicare off-loads federal government responsibilities for defined benefit guarantees and healthcare cost inflation onto individual Americans.
  6. Block Grants for Medicaid and High Risk Pools.   Block grants cap federal funding and turn control (and responsibility) for the healthcare needs of Americans who fall into these groups over to states—some states will be very stingy with benefits. The burden of healthcare cost inflation will be unloaded onto the individual states.

Under the Republican healthcare plans, the individual American in the non-group marketplace gains  “the freedom to pick a plan that best fits his or her unique health care needs” at the cost of many consumer protections and affordability measures built into Obamacare (PPACA). In other words, if these Americans chose (or can afford) to buy health insurance, there will now be more plan choices that sport cheaper premiums with coverage below Essential Health Benefits (EHBs) and favor the maximization of insurance company’s profits. Government subsidies for lower income Americans will be available, but are expected to be less generous than Obamacare (PPACA) subsidies.  Under the Republican healthcare plans, it is every man for himself (Republicans call it choice).

All Americans will be paying more out-of-pocket (premiums and cost share) for health care once the Republican healthcare plans roll out and insurance companies can again charge more for pre-existing conditions, gender, and age. Americans will be feeding the health insurance company profit machine to greater levels and paying for increased administrative costs (from further fragmentation of the risk pool).  Could you imagine the savings in administrative costs if 50,000 employer-sponsored plans combined into one payer system!  The taxpayer will also be on the hook to cover unreimbursed hospital costs from the expected increase in the levels of uninsured who will not be able to afford the higher costs (premiums and cost share). We will likely see higher rates of medical bankruptcies under the Republican healthcare plans.

Summary–Republican Healthcare Plans

In their proposed healthcare plans, Republicans do not see access to comprehensive health care as a human right that all Americans are entitled to enjoy. Government involvement in healthcare is seen as an “intrusion” rather than necessary regulation for protecting the rights of Americans against those who are primarily focused on gaining financially from healthcare.  The proposed plans move our government from a position (Obamacare) that championed comprehensive health care for ALL American people to one that lets individuals fend for themselves in a healthcare marketplace that operates to increase profits and income for healthcare businesses.To reduce opposition for their proposed healthcare plans, the Republicans divide the American people into separate interest groups: the healthier young against the sicker elderly and the rich against the poor.

Just as private employers have unburdened themselves of employee benefit obligations to save money (like defined benefit pensions and healthcare) over the years, the Republicans wish to unload the government’s historic obligations to provide healthcare coverage for its most vulnerable citizens. The Republican healthcare plans take aim at the elderly and disabled under traditional Medicare by taking the only program that has the power to contain healthcare costs and improve quality of care for ALL Americans.  They hand health care over to private health insurance businesses for maximization of profit and income where the potential for influence peddling can score big contributions.

Don’t sit back and let the Republicans create replacement healthcare reform legislation that is aimed at enriching private for-profit healthcare businesses at the expense of the financial and physical well-being of the American population as a whole. It is time for us to ask for Affordable Health Care and Beyond for ALL Americans like found by going to the right (Medicare 4 All) rather than to the left in the figure above.

As the Republicans rapidly move to erase all traces of Obamacare (PPACA) and forward their political agenda, the impact on the lives of individual Americans that will result from these actions are very much of secondary concern. It is important that individual Americans make clear to their elected officials that they will not stand for actions that TAKE AWAY healthcare benefits and affordability measures..

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