A 500-word summary of the newest GOP replacement plan
Sen. Rand Paul (R-KY) is the latest legislator out with an Obamacare replacement plan — one that, unlike Cassidy-Collins, makes absolutely no peace-offering to the left.
Paul’s plan would repeal Obamacare entirely, and replace it with a system that is not very good for those who are sick and poor. There would be no more tax credits to make insurance more affordable, and the health law’s mandated benefits (which include things like mental health services and maternity care) would be rolled back as well. After a two-year transition period, the health care law provision that requires insurers to sell to all people, regardless of health status, would disappear. This means insurers could, in some circumstances, charge sicker people higher rates.
Individuals would be able to deduct their premiums in their tax filings. This would be a benefit primarily for higher-income people, while low-income Americans might not have much income to deduct against. Individuals would also be able to pay their premiums from a tax-advantaged Health Savings Account. Again, this is great if you’re someone who has money to put into an HSA. But if you don’t have anything to deposit, it will be awfully hard to take advantage of this tax preference.
Paul would allow individuals to band together and form “association health plans,” which are supposed to mimic employer-sponsored health plans. “If you buy insurance just as one or two people, you’re an insurance pool of two,” Paul said on a call with reporters Wednesday. If one of those two people gets sick, he argued, that’d be a big problem — the insurer would likely spike up the premiums to cover the bigger medical bills.
Paul argues if people band together and form these plans, the risk will be spread out across a larger group people. If one gets sick, no big deal — there are plenty of healthy people to help balance out the cost. Premiums would likely go down with fewer benefit mandates and more healthy people in the market.
But here’s the problem: Who is going to let a really sick person into their association plan in the first place? Presumably, if you want cheap insurance, you’d be wise to screen members to make sure they’re healthy — and there is nothing in the Paul plan that would prevent these association plans from doing that.
Paul got a question about this during the press call he hosted Wednesday. He said that it would be up to the states to decide how to cover these people.
“People who are very sick, with preexisting conditions, we’ll have to do something about them,” he said. “My personal feeling is to let the states have the power to decide how they want to do this. Some will have high-risk pools.”
The Paul bill, notably, does not provide any funding for high-risk pools, leaving it up to the states to find the money — and leaves no clear federal safety net for those with serious medical conditions.
Paul is not a fan of Cassidy-Collins
Here’s what he had to say about it:
I don’t think a lot of Republicans will want to keep the Obamacare taxes. I would suspect that keeping the Obamacare taxes will divide a lot of Republicans. “If you like Obamacare, you can keep it,” is not a ringing cry that Republicans will rally to. The vast majority of Republicans who voted for us were voting for people to repeal Obamacare, not keep it.
This isn’t especially surprising, given that we wouldn’t expect Paul to be a fan of keeping any Obamacare taxes. Still, it demonstrates the upward battle that Cassidy-Collins faces in getting Republicans to accept a plan that keeps those provisions in place.
Republicans are moving further apart on Obamacare replacements, not closer
One of the things I’ve noticed this week is a lot of different Republican health care plans getting tossed into the arena. You have Cassidy-Collins, this new Paul bill, and Trump still talking about covering everyone — plans which all diverge significantly from congressional leadership’s older plans.
This, as Yuval Levin points out, is some of the messiness associated with policymaking. During the original Obamacare debate, for example, there would be various other proposals hanging out on the fringe, like bills that created single-payer systems. This doesn’t mean that Republicans can’t coalesce around one of these plans, eventually. But it does show that legislators have specific ideas about what they want, and that those will need to be reconciled. This will likely make it very difficult to stick to the timeline that House Speaker Paul Ryan (R-WI) outlined this week, where Congress repeals and replaces Obamacare by March.
Kliff Notes: today’s two health policy must-reads
“Maybe on Obamacare, Republicans should just punt”: “There is little reason to believe that Republicans will end up with something this simple, but even if they do, it’s not like they will end up with some perfect free-market plan. By winning the presidential election, Republicans are now like the dog that caught the car.” — Matt Lewis, The Daily Beast
“Republican Senators’ plan should be called ‘Obamacare forever’”: “One reason [Cassidy-Collins] can't be seen as a legitimate choice is that the law keeps Obamacare's taxes and most of its spending in place (particularly, 95 percent of its subsidies) and keeps the federal exchange infrastructure intact. That means that even if lawmakers in one state choose not to continue participating in Obamacare, their residents will still have to be paying to support the program. It also means that for the sake of inertia if nothing else, many states will stay within Obamacare.” — Philip Klein, Washington Examiner
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