Escaping Obamacare Purgatory

Published March 8, 2017

Mischaracterizing Republican proposals to repeal and replace the Affordable Care Act (ACA) is a blood sport Obamacare proponents play at patients’ expense. The game requires leaving out truths, which some would term a “sin of omission,” and introducing falsehood, a “sin of commission.”

Some players suggest Republican plans approach the demonic: “It’s the Republican Party, standing alone, who wants America to return to the medical underwriting circle of hell,” wrote the authors of an op-ed posted by on Feb. 15.

Underwriting, the process insurers use to evaluate whether it makes any financial sense for them to sell you their product, results in low premiums for some people and high premiums for others. Obamacare eliminated underwriting by requiring insurers to sell plans to everyone who asked and by making people who didn’t want insurance buy it anyway.

Replacing Obamacare with a Republican plan would more sustainably give patients financial assistance, expand treatment and insurance options, and establish safety nets for people with pre-existing conditions.

Contrary to ACA proponent claims, Republicans have long accepted there’s no way in hell to replace Obamacare with anything less than a substantive mechanism for helping people pay for health care and health insurance. As Heartland Institute Senior Fellow Peter Ferrara recently told Health Care News, “We are going to need to help pay for their health care some way. We cannot maintain the policy of, ‘If they can’t finance their health care, we are all going to just watch them die, or even send them off begging for charity.’ “

True to form, all proposed Republican plans to replace the ACA include alms for the poor. Most would chip in with refundable tax credits, meaning everyone who files taxes would receive the credit — including poor people with zero tax liability. For example, the World’s Greatest Healthcare Plan Act, introduced in 2016 by Sen. Bill Cassidy, Louisiana Republican, and Rep. Pete Sessions, Texas Republican, would award every adult a $2,500 refundable tax credit, period. For another example, the Empowering Patients First Act, championed by Health and Human Services Secretary Tom Price when he was in Congress, would grant each adult $1,200 — $3,000 based on their ages, regardless of income.

Sen. Rand Paul’s plan, the Obamacare Replacement Act, would give people a tax credit of up to $5,000 to place in their health savings accounts. Mr. Paul’s credit is not refundable, however, meaning only people who actually pay taxes would receive this assistance. Hard as it is for ACA proponents to believe, this probably has less to do with Mr. Paul hating poor people than with his complicated math: If the federal government takes zero dollars from you, the federal government owes you zero dollars.

Mr. Paul’s plan would help the poor in other ways, however, such as by incentivizing doctors to give away tens of thousands of dollars in care to the poor each year. The Obamacare Replacement Act would also let the poor buy insurance as groups unrelated to their employment. This is important because Obamacare’s subsidies are aimed at people in the individual market, i.e., people who do not have access to health insurance as part of their compensation for work. Mr. Paul’s plan would offer these individuals the chance to join virtually any number of diverse groups to share costs and risk.

Legalizing the sale of inexpensive insurance by passing any of the proposed Republican plans would free consumers to reject insurance products costing more than their value. In addition, insurers could customize insurance products for customers without requiring them to sell their products at a loss.

Consequently, in a free environment, patients will increasingly choose inexpensive insurance products designed to function like insurance in nonhealth care markets. People buy homeowners insurance in case disaster strikes, not to pay for replacing light bulbs or fixing leaky faucets. Similarly, patients fed up with Obamacare insurance prices will trade in their pricey plans, which cover 10 essential health benefits for which they may never need insurance, for cheap catastrophic coverage.

For routine health care services, free patients will take advantage of growing trends among health care providers offering patients substantial discounts, such as with direct-pay agreements costing $300 — $1,500 per year — far less than an Obamacare insurance premium or deductible. Demand for these plans will skyrocket if Republicans repeal Obamacare.

Nor will Republican replacement plans condemn people with pre-existing conditions to wander the shores of the underworld, as ACA proponents suggest. The most popular Republican proposals would divert additional tax dollars to help these patients pay for health care instead of distorting the entire insurance market with Obamacare mandates.

The Republicans propose federal assistance to pay for health care and insurance, better value for health care services, and additional help for so-called “uninsurables.” After eight years of Obamacare purgatory, most patients confess they’re ready for a change.

[Originally Published at the Washington Times]