The Republican Party in the House of Representatives has offered an alternative to the Democratic health care financing reform bill. This posting contains links to the bill and to CBO scoring of it, and a very preliminary analysis of the bill.
Here is the Common Sense Health Care Reform and Affordability Act unveiled by Minority Leader John Boehner (R-OH) and the House Republicans late last night. Here is theNovember 4, 2009, CBO report scoring the bill. For purposes of comparison, here is the House Democratic bill, the Affordable Health Choices Act of 2009 (H.R. 3962) and the October 29, 2009, CBO report scoring that bill.
I have not yet read the Republican bill nor have I found any written summary of its provisions outside of the CBO report. With those qualifications in mind, here is a preliminary comparison of the two bills on several measures:
COVERING THE UNINSURED
According to the CBO reports, the House Democratic bill would extend health insurance to 36 million Americans who are currently uninsured. The Republican bill would extend health insurance to only 3 million uninsured Americans. Under the Democratic plan 97% of persons in this country (excluding illegal immigrants) would have health insurance; under the Republican plan 83% of persons lawfully in this country would be covered – the same percentage that are covered today.
INDIVIDUAL AND EMPLOYER MANDATES
The Democratic bills require individuals to purchase health insurance, and the House Democratic bill requires large employers to "play or pay" – that is, to provide insurance to pay a fee to help employees purchase insurance. The House Republican bill does not appear to include any provisions mandating health insurance coverage.
ELIMINATION OF EXCLUSIONS FOR PREXISTING CONDITIONS AND LIFETIME LIMITS
The Democratic bills prohibit insurance companies from denying coverage or charging customers more on account of preexisting conditions. On Monday the Wall Steet Journal reported that the Republican plan would not prohibit insurance companies from excluding coverage for preexisting conditions, but Rep. Boehner responded at that point that the news media was reacting to an incomplete draft of the Republican bill and not to the final bill itself. Yesterday Rep. Boehner released a statement regarding the bill in which he said:
Not only does the GOP plan lower health care costs, but it also increases access to quality care – including for those with pre-existing conditions – at a price our country can afford.
I have not yet been able to determine whether the Rep. Boehner means that the Republican bill eliminates exclusions for preexisting conditions or whether he simply means that the Republican bill will lower health care costs for everyone, "including for those with preexisting conditions."
I have also not found any information about lifetime coverage limits under the Republican bill.
AGE AND GENDER RATINGS
The Democratic bills abolish insurance ratings on account of gender and place a maximum limit on the amount of difference that may be charged on account age. Again, I do not know whether the Republican bill addresses these issues, or whether it simply places no limitations on the premiums that women and older people may be charged for health insurance.
REGULATION OF THE MARKET FOR HEALTH INSURANCE
One of the core features of the Democratic bills is to create an "Exchange" or "Gateway" by means of which individuals may purchase standardized health insurance policies. At present, the individual market is fragmented and inefficient. The "exchanges" would pool the purchasing power of individuals throughout the nation, state, or region, depending on how broad the boundaries of the market are drawn. In addition, under the Democratic proposals insurance policies would have to meet certain criteria to be sold on the Exchange – in addition to covering preexisting conditions and abolishing lifetime limits for coverage, there would be requirements that the policies would be comprehensive (covering physician and hospital expenses) and that the policies would cover a certain percentage of customers' health care expenses.
The Republican bill apparently does not create insurance exchanges. I infer this because the CBO report of the Democratic bill states that law would add 21 million people to insurance rolls through the Exchanges, while the CBO report for the Republican bill contains no category listing enrollment through exchanges. The CBO report does state that the Republican bill creates "association health plans" and "individual membership associations." From the names it would seem that these entities are not regulated markets but rather group insurance programs – perhaps similar to the "co-ops" proposed by Senator Conrad and included in the Senate Finance Committee bill.
I have also found nothing in news reports or the Minority Leader's website indicating that the proposed legislation would regulate the content of health insurance policies.
SUBSIDIES TO HELP PEOPLE PURCHASE INSURANCE
The Democratic bills provide substantial amounts assisting low income persons to purchase health insurance – the CBO estimates that the law would provide on average $60 billion per year in subsidies to purchase insurance through the Exchange. The Republican bill provides relatively small subsidies for "reinsurance and high risk pools" at a cost of $4 billion annually, and an expansion of health savings accounts that would cost the government $1 billion annually in lost revenues.
MEDICAID AND CHIP
Under the Democratic bills Medicaid and CHIP would be expanded to everyone earning below 150% of the Federal Poverty Level, at a cost averaging $40 billion per year. The Republican bill expects to spend $1 billion less per year on Medicaid and CHIP.
COST TO THE FEDERAL GOVERNMENT
The House Democratic bill spends more, taxes more, and saves more than the House Republican bill, but the net effect is about the same. As noted above, the Democratic bill spends about $60 billion more per year on Medicaid and CHIP and $50 billion per year on subsidies to help people purchase health insurance. It pays for this by raising taxes on persons earning more than $1 million per year and by reducing payments to non-physicians under Medicare. The Democratic bill actually has a stronger effect on reducing the national deficit than the Republican bill does. The CBO estimates that the House Democratic bill will reduce the deficit by about $104 billion over ten years and that the House Republican bill would reduce the deficit by $68 billion over ten years.
COST OF HEALTH CARE
Before comparing the Democratic and Republican health care bills, remember that if we do nothing the cost of health care is expected to double over the next ten years – just as it has over the past ten years. Spending on health care will rise from $7,00 to $14,000 per person per year, and overall spending on health care will rise from 16% to 20% of Gross Domestic Product.
It is not possible to directly compare the effect of the Democratic and Republican bills on the cost of health care because the CBO used different frames of reference for each bill. The CBO estimated the effect of the Republican bill on health insurance premiums, and it estimated the effect of the Democratic bill on overall health care spending. The November 4 CBO scoring of the Republican bill states that after ten years the law would reduce the cost of health insurance premiums by about 10% compared to what premiums would be if we did nothing, but it makes no estimate of what our nation's total expenditures on health care will be if the Republican bill is adopted. The October 29 CBO scoring of the Democratic bill estimates that under the Democratic bill after ten years total health care expenditures will be 2% higher than they would be if the bill were not enacted.
In my opinion, the measure that the CBO applied to the Democratic bill is the more important consideration. If total health care spending goes up, it really won't matter very much if Republicans succeed in making the cost of health insurance premiums go down – particularly if the cost of health insurance goes down because sick people can no longer acquire or afford health insurance. Similarly, it is wonderful that the Democratic bill will deliver high quality health insurance coverage to nearly every person, but if health care costs continue on their upward trajectory – if health insurance premiums and health care costs double or (under the Republican bill) increase by 90% over the course of the next ten years – it will place health insurance out of reach of the average person and will make it difficult or impossible for even the national government to pay for our health care needs.
Visit Professor Huhn's website on health care financing reform for links to information about proposed legislation, studies and reports, public agencies, and private organizations concerned with this issue.
