WASHINGTON, June 6, 2015 — Last week, Republicans released a plan to repeal the Affordable Care Act (ACA or Obamacare). The Republican plan comes at a critical time, since, within the next few weeks, the Supreme Court will announce their decision in King v. Burwell, which will likely gut the ACA.
Is the Republican plan a good alternative?
A common critique of the ACA is that it requires everyone to buy a health insurance plan that the government considers acceptable, rather than letting people chose for themselves. The ACA is ultimately an attempt to push the country into a single payer system, which eliminates competition and the benefits that competition brings.
The ACA provides generous taxpayer-funded subsidies to more than 10 million Americans at a cost of about $2.5 billion per month. To pay for this, millions of Americans are paying higher premiums than they used to pay, although in many cases their employers pay much of that premium increase.
Additionally and more disturbingly, under ACA, consumers must pay more medical expenses out-of-pocket; deductibles have increased significantly, which has been a surprise for many as it was not openly discussed in public by the Obama administration or Congress. This hidden catch has resulted in many Americans’ choosing to skip ordered medical tests and some prescription drugs as well.
Adding to the problem: The economy continues to experience sluggish growth, which has averaged just above 2 percent in the years since the ACA was passed. Employers continue to be reluctant to hire new employees, since the employer mandate partially kicked in this year and the rest of the mandate takes effect next year. The mandate would be eliminated under the proposed Republican plan.
The patient-centered, free-market Republican plan, while admittedly far from perfect, does provide a sensible alternative to the failed ACA. This plan is welcome, since the Obama administration admits it does not have an alternative plan available if the Supreme Court ruling is unfavorable.
The Republican plan encourages competition in the health care market by allowing Americans to purchase health insurance from providers outside of their state. It also permits small businesses to join together for purposes of negotiating better rates with insurance carriers, a notable innovation that would provide a considerable assist to smaller companies.
The Republican plan would also have a positive impact on those veterans who have been forced to receive their medical care through the grossly inefficient Veterans Administration, by providing more health care options to them.
In addition to encouraging competition, the Republican plan concentrates on reducing long-term health costs. This would be accomplished in two ways.
In order to provide better, more cost-effective treatments, new technologies would be incorporated into medical treatments. At the same time, research on finding cures for devastating and expensive illnesses would be accelerated.
The Republican bill provides a “Medical Breakthrough Fund” of $15 billion to encourage pharmaceutical companies and research facilities to find cures for the top five causes of death in the U.S. Just these five—cancer, diabetes, Alzheimer’s, heart disease and strokes—claim more than 1.5 million American lives annually.
Noting that the projected cost to Medicaid and Medicare for treating Alzheimer’s patients will amount to more than $500 billion per year within 30 years, the bill authorizes a CV-Prize of $1 billion to the first entity that “creates an FDA-approved cure or vaccine for Alzheimer’s.” This provision makes ample use of “free-market principles to spur private investment.”
The Republican bill also confronts the persistent problem of the high medical malpractice insurance premiums that needlessly create substantial overhead costs for practicing physicians. Insurance companies say that up to 50 percent of their payouts for claims go to attorneys and other legal related expenses. This bill attempts to minimize those costs, something that the current ACA failed to fully address.
The rest of the bill strengthens anti-trust laws to insure competition and eliminates subsidies by replacing them with tax credits. Philosophically, tax credits are more acceptable than government subsidies, because a subsidy means individuals are given someone else’s money to pay for healthcare, while a tax credit means that they can keep the money they earned to pay for healthcare themselves.
The bill would take effect on Jan. 1, 2016.
The elimination of the employer mandate will help relieve a crippling burden on small businesses, enabling them at last to grow and add new jobs. The added competition in the insurance market would result in more customer-centered plans in the marketplace, putting downward pressure on premiums.
The Republican bill is good. But it could be better. It should also include a provision that seeks to vastly increase the supply of doctors and other medical professionals, which would really show how the free market could solve most the nation’s persistent health care problems.
More doctors and more competition in the provision of medical services would vastly improve the quality of care for the average American citizen and would put immense downward pressure on the price of that coverage as well.