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The Republican Alternative to Obamacare

Stanley Feld M.D. FACP MACE

House Energy and Commerce Chairman Fred Upton along with Senate Finance Chairman Orin Hatch and Senator Richard Burr have outlined what is, at least for now, the Republican alternative to Obamacare.

The Obama administration insists that the Republicans do not have a viable alternative. I doubt that anyone in the administration has read the alternatives.

President Obama’s tactic is to marginalize any opposition even if he has not reviewed it.  

The Republicans have some good ideas. However, they do not address the basic problems in our healthcare system.

The implementation of their ideas will not repair our healthcare system.

 “Republicans have now really muddied the waters with a huge take it or leave it alternative that will have plenty of its own reasons to give voters pause.”

Obamacare has so many parts. Most of Obamacare’s parts could have been predicted to fail. It is clear that congress did not understand this destiny before passage.

Obamacare was destined to fail from the start. It is on the way toward failure today. It will also destroy the entire healthcare system.

The Republican alternative is called, "The Patient Choice, Affordability, Responsibility, and Empowerment Act." 

It's key provisions include:

A Full Repeal and Replacement of Obamacare

Eliminate Individual Mandate to Buy Health Insurance or an Employer Mandate to Offer Coverage

Consumer Protections – Republicans want to retain the popular consumer protections in Obamacare including no lifetime limits, coverage for children to age 26 on their parent's plan, and guaranteed renewability of coverage.

However, they propose to decrease the costs of healthcare insurance for younger consumers but want to increase the cost of healthcare insurance for older buyers.

The Republicans would create a new set of losers (older buyers) while increasing the incentive for younger people to buy insurance.

Republicans should be providing financial incentives for consumers to be responsible for their health and their own healthcare dollars. Consumers with chronic diseases should also be responsible for the control of their chronic disease.

 A Return to Pre-Existing Condition Limits.  This is a ridiculous provision. It guarantees the biggest villain in the healthcare system (the healthcare insurance industry) its control of premiums and profitability.

Default Enrollments – Republicans would allow states to create a default enrollment system for those eligible for tax credits as a means to reduce the number who would otherwise remain uninsured.

A complex agency would be needed to administer a complicated process.

High Risk Pools for the Uninsured – High-risk insurance pools did not work previously because of healthcare insurance companys’ control of the premiums for the sickest people and their high risk of disease.

 Affordable Insurance Policies – This is also a pipe dream. America’s population is becoming more obese. Obesity generates more illness and higher risk. As long as the healthcare insurance industry is calculating and is in control of the actuary risk, healthcare insurance will not be affordable. The problem is how the insurance industry is allowed to do its accounting.  

The Republicans are proposing the elimination of benefit mandates and downsizing guaranteed insurability with their "continuous coverage" provision.  

This proposal is ridiculous. As long as consumers are not responsible for their health and their healthcare dollars and the healthcare insurance industry controls  price,  the healthcare system will be increasingly more expensive and dysfunctional.

Tax Credits to Buy Coverage – Tax credits are an unearned entitlement. Unearned entitlements do not work. Tax credits would be available for those in the individual health insurance market, those working for businesses with fewer than 100 employees, and those working for larger employers that do not offer coverage.

Tax Credits Only Up to 300% of Poverty – A system of tax credits leads to an agency that must be connected to another government agency, which leads to a larger government bureaucracy. In turn the bureaucracy leads to fraud and abuse

Flat Amount Tax Credits By Age – The goal of this proposal is to eliminate federal and state exchanges. Obamacare’s state and federal exchanges have not worked no matter how the administration spins the truth.

It would be easy to just give everyone a tax credit by age. A new bureaucracy would not be needed.

However, control of price and actuarial risk is still determined by the healthcare insurance industry. Consumers are not empowered. The healthcare insurance industry is empowered. Only at the time consumers are stimulated to control their health and healthcare dollars will the system work. Tax credits and price controls do not work.
 No Limits on the Kind of Insurance Policies That Could Be Offered – This is not a bad idea.

Capping the Tax Exclusion on Employer-Provided Health Insurance – The entire tax benefit for the employer and the individual should be equalized. Benefits should not be exclusive. Healthcare insurance premiums should be paid for with pre-tax dollars by all. The individual market should not pay for premiums with after tax dollars and the group market pay for premiums with pre-tax dollars. The present system is a hidden tax on consumers buying insurance in the individual market.
Moving Toward Defined Contribution Health Insurance – This is a stab in the dark by Republicans. It would penalize consumers and it would benefit employers. Employer want to avoid providing the same level of healthcare coverage for all their employees
Medical Malpractice Reform – This is a sensible reform. It is estimated that is would lower healthcare cost between $300 and $750 billion dollars a year if all costs were included.

If malpractice reform took the right form to protect consumers and physicians, the abuse in the malpractice system by lawyers and the insurance industry would be eliminated.

Both the Democrats and the Republican have protected the lawyers and the insurance industry in the past. Past behavior is a predictor of future behavior.    

Repealing the Medicaid Expansion – Medicaid should be eliminated and replaced by an all-inclusive healthcare system.

The poor should have the same insurance coverage as the rest of society. The immediate response is the nation couldn’t afford it. Yet President Obama is expanding Medicaid as access to care is being restricted. Therefore formulas that try to control costs fail because the development of severe illness is more expensive than consumers of healthcare learning how to control their disease. A consumer having healthcare insurance coverage does not make those consumers well.  

 Empower Poorer Consumers by Giving Them Mainstream Health Plans

Republicans do not offer a plan of action within this category. It sounds good but feels as if it is an empty promise. Actually it is an important factor in repairing the healthcare system. I will explain in the next blog.

The solution to the healthcare system’s dysfunction must be a simple solution.

The Republican solutions are almost as complex as Obamacare. It does not decrease governmental bureaucracy nor does it avoid the potential for fraud and abuse.

The Republican solutions promote continued control over consumers and their freedoms.

The Republican solutions do not get to the main problem in the healthcare system.

The healthcare system must be set up so consumers are motivated to have incentive to be responsible for their own health and healthcare dollars.

The alternative to Obamacare should exclude the government from making consumers dependent on the government. 

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone

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