Obamacare is dying, and the Senate Healthcare Bill was dead before it even went to vote. The failure of the Senate Healthcare Bill is a blessing in disguise for Republicans, however. Right now there is strong consideration and pressure from the White House to simply repeal Obamacare and handle the rest later. In my opinion, this is the best idea if not just simply repealing Obamacare and stopping there. However, Sen. Rand Paul (R-KY) has a very interesting plan that we should all look closely at and consider.
As with the Senate Bill, the individual and employer mandates would be terminated. The employer mandate was of the worst pieces of Obamacare as it directly—and negatively—affected businesses, particularly small businesses. For those who don’t know, the employer mandate required businesses with 50 or more employees to offer insurance to said employees and also dictated any employee working over 30 hours be offered insurance. I think the detrimental nature of such mandates is quite self-explanatory.
With regard to the protection of those with pre-existing conditions—the major talking point for liberals—the proposal offers a two year open-enrollment period for those with such conditions; in other words, everyone has two years to purchase insurance regardless of your health. This is important because it reinforces the idea of getting insurance before something bad happens. With Obamacare, there was no incentive to purchase insurance before one got sick: insurance companies were not allowed to deny people with pre-existing conditions and could only charge up to 3x that of a healthy person. Basically, Obamacare allowed individuals to wait to get sick, then get insurance to “cover” the cost of their expenses. The concept of insurance is to be proactive, not reactive. In theory, yes, an individual could still wait to get sick, then get insurance during the two year period, but if someone does wait, they risk having a very high premium since the cost cap would be removed. Additionally, Sen. Paul’s plan restores the HIPPA pre-existing conditions protection. What this means is that those who have a pre-existing condition are still guaranteed insurance if they are within the group market. I will discuss the “group market” later.
The proposal also suggests an expansion of Health Savings Accounts (HSA). Perhaps the most important part of this is the tax credit for HSA contributions. What this means is essentially, people will be able to save for health insurance if they are unable to purchase it initially, or even use such funds to help pay for premiums. Individuals will also be given the option of a tax credit of up to $5,000 per taxpayer. Essentially, should the taxpayer accept, he or she would be able to save up to $5,000 in their HSA with no tax taken out. If the payer does not accept the credit, or contributes more than $5,000 to the HSA, the contributions are tax-preferred. There would also be no maximum for the amount of the annual contribution to HSA.
Perhaps the most distinguished part of Sen. Paul’s proposal is the “Pool Reform”. In the proposal, Sen. Paul would establish Independent Health Pools (IHPs). These IHPs allow individuals to group together to buy insurance. But what exactly does this mean? Before I get too far into it, allow me to illustrate a picture. When someone receives insurance through their work, the business is operating on a group insurance policy; the company has negotiated a cost with the insurance provider that employees will pay, and any employee who fulfills the necessary criteria has the ability to access the health insurance. Essentially, everyone working for the company, is paying for everyone else in the company. What Sen. Paul is proposing is the expansion of this ability to use group insurance: he is suggesting any organization, for-profit or non-profit, can pool together to obtain insurance. Here’s an example. If your employer does not offer insurance to its employees, but you belong to a church, your church, under Sen. Paul’s healthcare plan, would qualify as an IHP, should they want to provide insurance for its members. Similar to the business example I gave, every member would be given equal opportunity to purchase insurance through the church. The church would have to negotiate a plan with an insurance company, but once the plan is set, all members of the church must be offered insurance as long as they fit the criteria—under Sen. Paul’s plan, however, no one can be excluded based on health status. This last line ties back to my mention before of those with pre-existing conditions being unable to be denied health insurance when in the group market; the IHPs are the group market.
Furthermore, the proposal would effectively remove federal control from healthcare and give it to the states in terms of buying and selling insurance. The proposal would allow insurers who are licensed to sell policies in one state to offer such policies to those in any other state. The catch with this is that both the primary and secondary states must have an independent review process for individuals who have individual health insurance, and the mechanism by which the review is conducted must be acceptable, or else the insurer cannot proceed with offering policies in the secondary state. Should someone buy insurance from an out-of-state insurer, the primary state (the one where the insurer is based) has the sole jurisdiction to enforce its coverage laws. In other words, the primary state must enforce its coverage laws on its own state and any secondary state that said insurance is being offered and bought. The secondary state also has the ability to notify the primary state if the insurer fails to comply with the primary state’s coverage laws.
Similar to the IHPs, Association Health Plans (AHPs) would be established. This would work very similarly to IHPs, however, AHPs apply to small businesses. Sen. Paul’s proposal recognizes that AHPs do currently exist, but are very difficult to effectively form and function; therefore, his proposal cuts many of the regulations that prevent many AHPs from forming.
As a final note, Sen. Paul’s plan gives the states the ability to alter Medicaid coverage rules without interference from the federal government. This would be a big win for conservatism: smaller federal government and a larger emphasis on states’ rights.
In closing, Sen. Paul’s plan is quite brilliant. It offers the freedom of a free market while simultaneously providing the opportunity for anyone—pre-existing condition or not—to obtain insurance without forcing anyone to buy insurance. And I’d like to reiterate a point that many conservatives have been making: it doesn’t matter the number of people insured if the healthcare itself is trash. That’s the problem with socialized and single-payer medicine: everyone is insured—and assured—to get the same poor healthcare.
I’d classify this piece as an “in-depth outline” but there are a few parts I left out, so if you’d like to read more about Sen. Paul’s proposal, you can find it here.