Editor’s note: On Tuesday, President Donald Trump said, shortly after his Justice Department announced it views Obamacare as unconstitutional, “The Republican Party will soon be known as the party of health care. You watch.” But that met with sneering from some. CNN, for instance, published an article headlined “Trump says GOP will be the party of health care but provides no plan.”
In fact, though, conservatives have been working on this issue—and do have a plan. We’re reprinting an article we originally published last fall to highlight the Health Care Choices Proposal.
A proposal to repeal Obamacare entitlements and replace them with grants to states would reduce premiums for individual coverage by as much as 32 percent, according to an analysis by the Center for Health and Economy.
The Health Care Choices Proposal also would modestly reduce the deficit, increase the number of people with private health insurance, and cut Medicaid spending, according to Center for Health and Economy.
The proposal, the product of national and state think tanks, policy analysts, and others in the conservative community, embarks on a new path to empower consumers and return authority to the states to provide people with better and more affordable health coverage options.
The Center for Health and Economy developed the study, at the commissioning of The Heritage Foundation, by applying its independent model to the published Health Care Choices Proposal.
Unlike previous Obamacare replacement proposals, which the Congressional Budget Office forecasts would increase the number of uninsured by 20 million or more, coverage would dip by less than 1 million under the proposal in 2028, and enrollment would hold steady earlier.
The proposal’s consumer-centered policies also would induce changes in consumer behavior that would reduce health care consumption and lead to greater medical productivity, the study found.
The plan calls for repeal of the Obamacare Medicaid expansion and entitlements to premium subsidies, to be replaced with grants to states to assist the sick and needy.
Unlike current law, where federal spending increases dollar for dollar with premium hikes and Medicaid spending is unlimited, states would receive fixed amounts of federal money, which they would use to develop consumer-centered approaches to make health insurance affordable regardless of income or health status.
The proposal would free states from Obamacare regulations that dictate the kinds of products consumers can buy. States no longer would have to require insurers to charge unfairly high premiums to young adults or group all customers into a single risk pool.
Instead, states would use a portion of their grant to establish high-risk pools, re-insurance, or similar arrangements to protect those with burdensome medical care costs without saddling the healthy with unaffordable premiums. These reforms are the major reasons premiums would drop by 15 percent-32 percent, according to the Center for Health and Economy.
New choices for consumers would increase private coverage and reduce reliance on Medicaid. The proposal would allow people who qualify for subsidies to apply the assistance to the arrangement of their choice, such as short-term limited duration policies and direct primary care. Those changes would reduce Medicaid enrollment and increase the number of people with individual insurance.
The net result, according to the study, would be that 245.6 million nonelderly people would be insured in 2028, compared with 246.4 million under current law, a reduction of fewer than 1 million covered.
Congressional Republicans, who abandoned efforts to repeal and replace Obamacare more than a year ago, are weeks away from a midterm election in which voters have identified health care as their top concern. Democrats have put Republicans on the defensive by accusing them of wanting to scuttle federal pre-existing condition regulations.
Candidates looking for a plan to regain voter trust on health care need look no further than the Health Care Choices Proposal, which will reduce costs, increase choices, empower consumers, and protect the sick without making coverage unaffordable for people who don’t qualify for government subsidies.
Here’s the Conservative Plan to improve Health Care: We’ve got this plan see, but we’re were not going to tell you about it until 2021.
Get it done before the election.
Please stop referring to Obamacare as Healthcare, when it deals primarily with financing healthcare or what many call “Insurance”
There is a major problem in the cost of healthcare, and Americans want solutions to the constant rising cost of healthcare insurance and healthcare.
1. The Federal government does not belong in insurance at all inside of the States. Federal involvement is Constitutionally limited to Federal lands and interstate matters, not infringing on matters wholly located inside a State.
Prior to Obamacare most Americans were unhappy with some aspect of healthcare insurance, like EOBs that were hard to understand, slowness of paying claims both to providers and reimbursement to covered insureds, and unexpected claims coverage. Sure, some Americans were stuck without healthcare insurance because of conditions that existed prior to application, but is it fair to pay for something under insurance that has already occurred? That would be like covering a car wreck after it has happened.
Nobody wants to be sick or injured or to have one of their family needing but unable to pay for treatments because those treatments are expensive.
Insurance purports to cover unexpected illness or injury, but amounts varied widely and in many cases some treatments were not covered. And there was no easy way to change things or correct mistakes. Worse, carriers were allowed just to drop people or cancel insurance coverage. Unless there was fraud, that never should have happened. Every insurer should be on the hook with accepted applicants, until and unless the state regulator says they’re not. And if pooled coverage is required because some particular company goes under, so be it. That already exists in most states.
States were supposed to regulate insurance carriers, but policies that are named-peril only create a problem for insureds, and worse, changing employers always created the opening for conditions that existed prior to job change and were covered became pre-existing conditions with a new insurance carrier and not covered. This was a tremendous source of unhappiness with insurance.
2. Pre-existing conditions are a result of employer-based insurance and Americans’ electing not to pay for coverage over a lifetime. Professor Gruber noted this, as he opined that Obamacare advocates should trick people into believing they’d pay less if insurance were mandatory over a lifetime.
==> If insurance policies were owned by the covered patient and/or family, then the pre-existing conditions created by job change would simply disappear. Sure, the competition among businesses in the 1940s did lead to adoption of healthcare or healthcare insurance benefits to attract employees, but the government mandate that employers must do so is anti-competitive.
Employers often negotiate with insurance carriers and then offer a package of coverages from different carriers that employees may select from, but those policies and then “owned” by the employer, not the employee or his family.
-> If people owned insurance policies from birth, then there would hardly be any pre-existing conditions at all.
This applies to life insurance and disability insurance policies provided through employers, too.
==> Allow employers to negotiate on behalf of employees and their families, and then let the employee elect one or more of those negotiated policies, with payroll deductions as a feature, but the policy would be owned and controlled by the insured employee.
All-peril policies exist for homeowners, and even with specific exclusions, insurance carriers have figured out how to price these, and we Americans have come to accept them. While named-peril policies are still popular for businesses and people who want the lowest cost insurance, Obamacare killed this type of policy for all Americans.
Obamacare also mandated that a company with 50 employees would have to dedicate a 2% of its staff to creating and managing a healthcare insurance plan as well as funding it.
This was intrusion on a massive level into personal freedom, especially of small businesses that do not cross state lines. Besides being un-Constitutional, it was just stupid and costly. What makes employers the best way to coerce people into having insurance? Employer policies account for only 180M of the 300M+ population.
==> Let the free market inside each state dictate the competitive solutions for that state. If interstate policies were to exist, Federal regulations would apply.
The proposed employee-owned policies can still be negotiated by the employers, although the threshold for requiring such negotiated policies should be raised from 50 to over 250-500 employees in order to minimize impact on employers. Employers want to compete with each other for employees and would likely voluntarily help their workers.
Smaller employers are free to do negotiate, too, but not required to. Administration of insurance claims and issues, similarly, can be pushed out of the employer’s domain, but they can engage if they want to especially in the event that negotiated carriers are not fulfilling their duties and obligations.
Groups that are large and have similarly situated employees or other members are easier for insurance actuaries to analyze and for carriers to underwrite.
A 50-person company statistically has more variability in its claim performance, meaning the carrier has to charge more to make sure the costs are all covered. In addition, companies with widely differing environments, job risks and perils, and geographically heterogeneous healthcare services available and living conditions so vastly varied, a carrier will have to analyze risks for all the sub-groups and synthesize a single policy that covers adequately all the presented perils.
Group insurance that is based on a particular company with a specific set of job types, job conditions, geographic coverage, and so on will cost more or less than a similar-sized group in a different company Employees by job description and location will present different risks to the insurer. That’s basic actuarial science.
It would be fairer if a software programmer in one company is rated for a policy with an insurer, and if he changes to the same job at a different company in a nearby location, the rate should be very similar, if not identical. Changing job locations the insured’s rating should change only by the geographic factors. But changing job description at the same company may change rating but only by the job factors.
Clearly, changing jobs by description and location would result in a rating that incorporates both geographic and job description factors.
Why are the location and job factors under discussion? Because they help determine losses or risks that insurance carriers face, and thus, the premium costs.
If an insurance company rated employees at a company and gave premium rates for each group by location, it would be simple to outboard the employee from a group policy, allowing the insured to own the policy, rather than the employer. This is key to mobility of employees. If insurer A covers an employee and the employee moves to company Y from company X, the policy would travel with the employee without break in coverage. If the job description remained unchanged and the geographic factors were nil, the premium could remain unchanged and no pre-existing conditions would come into play.
States laws need to enable this kind of pricing of insurance premiums. If an employee moves from Company X to Company Y and all other factors are the same, the premium remains unchanged, and the employee simply notifies the carrier A of the employer change.
If location is changed, then rates may change. But if it’s out of state, Federal rules would come into play.
If job description changed, then rates may also change.
But if employers are subsidizing policies, the calculation becomes much more complicated. COBRA sets rates for laid off employees that exclude any company subsidy. That additional cost has to be covered somehow.
First, employers must reveal the subsidy to its employees, and the carrier must disclose the difference between individual, not group, premium for an employee. The employee will then know if he breaks out on his own, how much in subsidy he will lose and the potential for rate rise due to small group versus large group rates.
Right now, if an insured makes a claim, he pays not only the co-pay but also a deductible. We won’t go into these factors from the insurance company’s point of view, except to say they reduce the cost of claims to the insurance carrier.
Second, where does the insured get the money from to pay deductibles and co-pays? Out of his pocket. But everyone should eligible to set up savings plans to sock money away to cover co-pays and deductibles. Some employers offer flex plans that can be used to pay out of pocket costs like these.
But employees can or should be able to set up savings plan to cover these costs. By savings a few bucks each paycheck, when the eventual office visit or hospital admission does occur, the savings account should have something in it, hopefully enough to cover them entirely. It’s like self-insurance for co-pays and deductibles.
If that savings account were allowed to grow with interest or by some other investment tax-free under state and Federal laws, then over a long period the account could build up to large amounts needed for pregnancy, pre-natal care, childbirth, neo-natal care, and so on; or later for major surgery, like gall bladder, cataract surgery or cancer treatment.
Third, besides the employee’s own money, the company should be allowed to donate its flex dollar money, instead of forcing employees to spend it by December or lose it.
Health Savings Accounts already exist, but they require the employee be covered with a less than full coverage policy, what is called a High Cost Insurance Policy. This Federal regulation needs to be relaxed to allow all Americans to have HSAs.
Let’s be honest about the cost of healthcare. At every age we can figure the actuarial cost of healthcare. A newborn cost a certain amount, per-schoolers cost less but not much, pre-teens tend to cost more and over a period of 20 years the cost of healthcare on average drops to its lowest point around age 26. Obamacare architects picked age 26 to force insurers to cover family members because after that age, cost rises.
For females average costs are higher during child-bearing years than for males, but Obamacare prohibits differentiating between sexes. After child-bearing years, the costs for males and females are very similar on average, until end-of-life costs start to kick in. For females and males the retirement years have enormously higher cost, but the female costs rise more slowly and they last longer, since male longevity is shorter than for females.
Why is the time value of costs important? Because actuaries can construct a saving and investment strategy that builds an individual savings account model for the times withdrawals or payouts are needed. Over a lifetime the savings balance and the yields can come closer to what is needed for deductibles and co-pays than a tax on workers’ pay can provide.
If a person is allowed to put money tax-free into an account that represents a small percentage of earnings or funds received and that balance is allowed to grow tax-free, the account will grow in value hopefully large enough to cover costs of healthcare and eventually eldercare with any remaining funds after death available for similar coverage to family members.
Note that a “family” account could also be constructed for pooled savings and growth, but we’ll need strict rules that outline access in the expected cases of divorce, death and other division of funds. Perhaps per stirpes may be the standard or division along contribution proportions and longevity may be used to modify an equal control and access policy.
The idea should provide that an account may grow large enough to pay for full coverage out of its yield and is important to weaning normal people off of medicare, medicaid and other government-subsidized insurance programs.
Now, having addressed the bulk of Americans, who obtain insurance through their employers, we need to consider all other Americans.
Once the HSA that is employee-owned is implemented and made tax-free to fund, tax-free on its earnings yield, and tax-free for withdrawals to pay for treatments of medical, dental, vision, mental health and related issues, the addition of eldercare, disability, and burial costs is not much of a stretch.
Expanding HSA to coverage of family members, of all ages, is also fairly obvious and easy, although insurance carriers may have their own requirements based solely on numbers and ages, with the ability of a carrier to divorce a family member into his own policy if the member is of the age of majority and becomes employed. The carrier could also just re-rate the member in his new policy according to his job and location.
-> But, the big problem is those without employers who are not covered under a family policy. Self-employed people deserve to have access to insurance, and they do, although they may not get the best negotiated rates employed people get. Sure, they could work for a short period of time for an employer, get covered, and then take that personal policy with its negotiated rates to work for himself.
But the “pre-existing” problem rears its ugly head for all uninsured insurance-seekers.
A thorough discussion is difficult, but basically let us remember that insurance is designed for unexpected events. After an event has occurred, the insurance company takes steps to minimize its costs, hopefully while restoring the healthy condition of its covered insured member. It is this mechanism of minimizing costs that first upset so many people.
Of course, insurance companies try to do things to keep their insureds healthy, but they must be cost-effective, or else they wouldn’t do it. Mandating a cornucopia of “free” benefits without cost-justifying them is plain stupid.
A covered person, having filed a claim, actuarially will file more. This usually leads carriers to raise premiums because the probability of additional claims is higher. This is logical, albeit discomfiting and more costly. In fact, the premium rise typically is related to the expected additional cost.
Bearing in mind that the costs are minimized (usually by pre-negotiating treatment costs with medical providers), the rise in premium cost after filing a claim is sufficient to cover the expected cost. This means costs are known for treatments of known conditions. While costs may increase or decrease over time due to advancements in technology or treatments, an actuary can compile a table of diagnosed conditions and treatments with their costs and efficacies.
This process of statistically rating the occurrence of conditions, whether diseases or accidents, and determining expected costs of treatments by negotiating with providers is exactly what underwriters and actuaries do at insurance companies. When every possible condition is de jure covered and insurers are on the hook for follow up visits to restore a patient, insurance premiums will be high.
If an applicant for insurance can identify any pre-existing conditions, the insurer can inform him of the premium addition necessary to cover that or those conditions.
A strategy for dealing with pre-existing conditions for those entering the insurance market for the first time would be to exclude pre-existing conditions in the normal policy but cover them with a supplemental endorsement at a currently known cost.
The applicant can compare coverage costs among competitive treatment plans from competing carriers that cover the pre-existing conditions so that the applicant can win the lowest cost for effective treatments. No, it doesn’t mean that those with pre-existing conditions pay the same rate as healthy applicants.
But it also does not mean those with pre-existing conditions pay more than the expected negotiated cost to be treated. And, healthy covered people don’t subsidize those with pre-existing conditions.
But, you might ask, what about babies and children and those who never had insurance?
a. If you never had insurance, maybe you made a life choice that had consequences.
b. If you had insurance that you owned but elected to drop it, then that had a consequence.
c. Pre-natal, neo-natal, infants and children (and spouses) should be covered completely under a family policy. So, no problem there.
d. Changing from single to family coverage should not be difficult, nor should it bring up pre-existing conditions in and of itself. The newly added family members would have to be disclosed and their conditions, but with coverage as for a never-covered person. Of course, the new spouse or new child may have had coverage previously, which makes migration easier.
e. HSA also plays a role here. Premium add-ons can be paid from the HSA. Or, the applicant can simply elect to pay for treatment directly from his HSA rather than have the insurance carrier pay it by a special endorsement.
f. Mulligans – Do-overs could be mandated, but regulations need to be carefully crafted. If an insured got an all-peril with named exclusions but did not choose either needed special endorsements or a large enough amount of coverage, rules could be crafted that allow the insured to go back and add after the fact what he needs with an appropriate amount of back premiums with financial (interest) costs added. The only questions will be how far back should make-up payments be collected and what are allowable financial costs of paying late? Or, as a matter of policy, rules can prohibit do-overs, but that would imply that changes in circumstance, like getting married or having children, etc. out of consideration, which would not be good policy.
Finally, let’s get real about healthcare costs. They are out of control. And since insurance is just paying, not deciding treatments, they can control costs only by short-changing providers or negotiating upfront, but pharmacy costs have just ballooned beyond belief.
If companies are making “too much” money on a product, competitors will lick their chops and taking some of the market share away from the overpriced dominant player. If company C is making 20% on a drug or treatment, and company D thinks it can offer a better treatment or drug but charge only 70 or 80% of C’s price and still make 20%, because they’re more efficient, then shouldn’t we applaud competition for lowering prices?
No, the FDA holds drugs hostage until they’re proven “safe and effective” according to some standard protocol that few competitors can hope to compete under. So, Food and Drug Administration (FDA) needs a make-over. Why? Simply because FDA allowed a drug to be dispensed doesn’t mean it is safe.
Think back to how many times a drug was recalled and taken off shelves. Think of all the ambulance chasing lawyers on TV telling you to call them to sue some manufacturer over unforeseen damaging results attributable to their product or treatment.
Maybe the FDA should just collect reports and order government-controlled pharmacies to comply with their orders. Oh, wait, that’s all they do now.
Why can’t pharmaceutical companies offer a full disclosure to patients and doctors, just as they start to do on commercial ads for Otezla and Trulicity and plenty of other drugs we see on TV. But, let the consumers decide.
Actually, it’s doctors who “decide” by prescribing a treatment plan. If doctors base their recommendations on who was the last good-looking pharma rep that visited the office about their drug, then that’s not medicine – that’s lazy corrupt practice.
If they go to their doctor, discuss it, and decide the statistics work for them, then let them go to the pharmacy and buy the drug and just put those ambulance chasers out of business – unless there is fraud. The whole “fitness for merchantability” is way overblown and a huge money sink for drug companies, who have to self-insure at our expense.
Besides allowing earlier release of drugs at the drug-makers’ peril but with fully informed disclosures, what else keeps drug prices high? Lack of competition.
If you can remember when Glaxo was just Glaxo, and Kline was just Kline, and Smith was just Smith, you probably know what has happened in the pharmaceutical industry: mergers and consolidations. Sure, other buyouts and gobbling up of competitors have occurred on a massive scale. Eliminating competition isn’t usually not about gaining efficiencies, but rather about silencing alternatives.
Patents are one way to do that and mergers are the other. Both result in limited supply of alternatives in the marketplace, which leads to higher prices. We should consider ways to make the market for drugs far more competitive so that prices fall on their own.
Drug prices won’t fall if years and millions are needed to get past FDA and product liability laws remain lucrative for lawyers and mergers continue to eliminate competition.