Timothy Jost on the Republican plan to replace to ACA

I’d love to go ahead the just repost his entire piece here, but I doubt the NEJM would like that. Instead, I really, really encourage you to go read it and then come back here:

By voting repeatedly to repeal the Affordable Care Act (ACA) over the past 4 years, Republicans have risked being identified as a party without a positive health policy agenda. On January 27, 2014, however, three Republican senators — Orrin Hatch (UT), Tom Coburn (OK), and Richard Burr (NC) — unveiled a proposal that would not only repeal the ACA, but also replace it with comprehensive legislation based on Republican health policy principles.1 Although the proposal recycles long-standing Republican prescriptions, it also offers new ideas.

The proposal would not entirely repeal the ACA. Republicans seem to be coming to terms with the fact that the ACA has permanently changed the health policy landscape. The proposal would, for example, retain the ACA’s Medicare provisions in recognition, no doubt, of the difficulty of rolling back all the ACA’s provider-payment changes or reopening the doughnut hole in Part D coverage of prescription drugs but also apparently in order to use the ACA’s $700 billion in Medicare payment cuts to finance Republican initiatives. The proposed legislation would retain popular ACA insurance reforms, including the ban on lifetime insurance limits, required coverage for children up to 26 years of age on their parents’ policies, mandated disclosure of insurance benefits and limitations, and a ban on canceling an enrollee’s insurance policy except in the case of fraud. It would retain limits on age rating of insurance premiums, but insurers could charge five times as much for an older as for a younger enrollee, as opposed to the three-to-one ratio limit in the ACA.

I only have time for some high level thoughts this morning, but here they are:

They go with a tax credit, much like the ACA, to help people buy insurance. That’s fine. But it would be set against the cost of high-deductible coverage, which would drive most of the poorer Americans into coverage where they would still have significant out-of-pocket costs. That’s not as fine.

They keep people who maintain “continuous coverage” protected from medical underwriting. In other words, they get the community ratings that makes coverage affordable for people who are sick. But I still don’t understand what they would do for people who get sick, lose their jobs, and can then no longer afford their insurance.

They completely eliminate the limits on out-of-pocket costs. This could be a real issue if you get really sick.

They are pushing for Medicaid to be a block grant program. We have talked about our concerns with this many times. They also want to bring back Medicaid health opportunity accounts. Jost points to South Carolina, where they failed miserably. I think supporters would likely redirect him back to the Healthy Indiana Program, where far more people signed up.

Finally, there is the cap on the health insurance tax exclusion. I think most economists, including those here, would support this. Currently this exclusion favors the rich and distorts the market. But this would be even more disruptive to the employer-based market than the ACA, and I can’t see them keeping this in the proposal as is.

There’s more in Jost’s piece. Go read it!


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