Thursday, March 20, 2014

Republican Establishment Proposal Leaves Obamacare Head in Body Politic

When a federal government program is firmly established, it’s near impossible to get rid of it.   It’s like a tick.  Once it gets under your skin, you have to take care to completely remove it.   If the head snaps off and you ignore it, the body politic can be infected. 

Fannie Mae, a New Deal program, is a perfect example of how good intentions can cause havoc on our economy.  This once government sponsored entity is now owned by the taxpayers because of mismanagement and malfeasance.  Congress has made proposals to wind it down, but chances are Fannie Mae and Freddie Mac will never go away.

So it will be with Obamacare.  Even with all the disasters that heralded this Democratic Party nightmare and the unpopularity amongst the citizenry, the Republican establish is doing its best to salvage this failed government program.  The John Locke Foundation reported the following:

Moreover, on the eve of the president's latest State of the Union Address, three Senate Republicans released an Obamacare alternative proposal.  The Patient Choice, Affordability, Responsibility, and Empowerment Act (CARE) sponsored by Republican Senators Richard Burr (NC), Tom Coburn (OK), and Orrin Hatch (UT) seeks to execute the same goals as Obamacare: lower health care costs, fix the pre-existing condition dilemma, and reduce the number of uninsured Americans.  A key difference, however, is that the CARE Act operates on incentives, not mandates.  Carrots, not sticks.  It does this by injecting consumer-driven principles and patient choice into the health care delivery system.
Listed below are just a few of the many consumer-driven, semi market-oriented provisions of the CARE Act:

CARE Act would repeal Obamacare exchanges and extirpate both the employer and individual mandates. Health insurance plans would not be required to include the 10 essential health benefits like current health insurance exchange plans.
 A tax-credit would be distributed to individual policyholders and employees of businesses with less than 100 workers who make an income of less than 300% FPL ($35,010 for an individual).  The tax-credit would be distributed directly to the consumer -- not the insurance company.
If an individual did not enroll in a health plan, that person could be auto-enrolled in a high-deductible plan where the premium matches the tax-credit amount.  If so desired, that person could still opt out of coverage.  
A one-time open enrollment period would allow the uninsured and those with pre-existing conditions to purchase coverage without insurers being able to adjust rates according to one's health status.
Policyholders who maintained continuous coverage for at least 18 months would be allowed to switch plans and not be denied or burdened with skyrocketing premiums due to a change in health status.  

 Here are three more components to this CARE Act as reported by The John Locke Foundation:

Medicaid Reform: States would be given broader flexibility to redesign their Medicaid programs.  If this were to occur, it would be wise for North Carolina to risk-adjust Medicaid patients or enforce per-capita block grants to ensure better budget predictability.  Furthermore, the proposal offers Medicaid recipients the option to access private coverage with a refundable tax-credit (these would be available to individuals with incomes up to three times the poverty level, around $35,000) when purchasing private coverage.  In addition, the CARE Act would bring back Health Opportunity Accounts (HOAs) that made an appearance back in 2005 under the Deficit Reduction Act.  With a high-deductible health plan, the state and federal governments could contribute an annual $2,500 into each Medicaid patient's HOA.  This model of health care financing is more compatible with consumer-driven health care.     

Age-Rating Ratio: Under Obamacare, a high-risk, older individual cannot be charged more than three times the amount of a low-risk, young policyholder.  As a result, the "young invincible population" is burdened with higher premiums to subsidize the cost of the high-risk population on the exchanges.  The CARE Act would initially ease this price control from a 3:1 age-rating ratio to a 5:1 ratio.  Power would be decentralized to states to manipulate community rating standards.

Capping the Tax-Exclusion: Removing this exclusion for employer sponsored health insurance is probably the most controversial component

 What these politicians don’t seem to realize is they are the problem.  The health care industry is overregulated, over mandated, and overtaxed.  The third party payer system has completely distorted the market.  Yet, with the aforementioned proposals, as you can probably see, Obamacare is going to be with us for some time in one form or another.

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