By Jonathan Easley - 01/27/14 08:45 PM EST
Three senior Senate Republicans on Monday proposed an alternative to ObamaCare that would replace “job-crushing” federal mandates with a voluntary system led by the states.
The legislative blueprint from Sens. Richard Burr (N.C.), Tom Coburn (Okla.) and Orrin Hatch (Utah) would eliminate all of the healthcare law’s federal rules, including the unpopular requirement to purchase insurance under the threat of penalty.
The CARE Act would require insurers to offer policies to anyone who has proof of “continuous coverage,” along with protections for those who lose their health plans for any reason. But those with pre-existing conditions who fail to maintain continuous coverage at any time could be denied coverage.
The Republican senators said the proposal was only a first step toward finding a “way out” of what they deem a disastrous federal system.
“Our health care system wasn’t working well before ObamaCare and it is worse after Obama-Care,” Coburn said in a statement. “Americans deserve a real alternative, and a way out. I’m pleased to take this important step with my colleagues.”
The senators said they plan to work with their colleagues and health industry experts to further refine the proposal, with the goal of “building consensus and introducing legislation.”
As it now stands, the GOP proposal leaves only a handful of the Affordable Care Act’s most popular provisions intact.
It would prohibit insurance companies from imposing lifetime limits on the benefits that a consumer receives and, like ObamaCare, would require pricing transparency from hospitals and insurers.
The plan would also continue to allow dependents to stay on their parents’ insurance coverage until they are the age of 26, but in a departure from President Obama’s overhaul, that requirement and others like it would be voluntary for states.
And while the Republican alternative offers a host of tax credits and subsidies, they are scaled back considerably from the financial aid available under the healthcare law.
“They tried to keep a flavor of the most popular parts of ObamaCare in the proposal, but it really demonstrates how hard it is to pull the pieces out and still have something that holds together,” Linda Blumberg, a senior fellow at The Urban Institute’s Health Policy Center, told The Hill.
Liberal groups attacked the GOP blueprint and decried the plan to scale back the rules for people with pre-existing conditions.
“Making it legal again for big insurance to discriminate against and deny coverage to 89 million Americans with pre-existing conditions is not an alternative — it’s a joke,” Americans United for Change said in a statement. “A sick one at that.”
The release of the bill reflects a larger election-year shift for Republicans, who had long been focused on a “repeal and replace” mantra for ObamaCare that was light on specifics.
Now that the Affordable Care Act is in effect, Republicans are focused on showing voters that they have a viable plan for helping people obtain insurance coverage if they manage to win back Congress and the White House.
The Republican Study Committee is pushing Speaker John Boehner (R-Ohio) to embrace an ObamaCare alternative that they released year, and a handful of other reform proposals have been offered up by Reps. Paul Ryan (R-Wis.) and Tom Price (R-Ga.), among others.
A vote in the House on an ObamaCare replacement bill could help GOP lawmakers on the campaign trail by shielding them from Democratic attacks that they “don’t have a plan” to help the uninsured.
But the Senate proposal also highlights the turmoil that would result from a new healthcare overhaul, now that 3 million people have signed up for ObamaCare and millions more have obtained coverage through Medicaid.
The CARE Act would reform, but not expand, Medicaid, forcing an untold number of people back into the private markets. The reforms would give states more flexibility on how to run the entitlement program, and would allow beneficiaries the option to use a tax credit to instead buy coverage in the private market.
Aides said they didn’t expect Obama to sign such a bill into law, even if Republicans control the House and Senate in 2014. But they said the public appetite for an ObamaCare alternative is bound to grow over time.
The bill is a “stepping stone for a legislative vehicle,” GOP aides said, and one that the senators hope will be improved by suggestions from other Republican senators.
The CARE Act includes many reforms that have long been popular in conservative circles, such as medical malpractice reform aimed at addressing “junk lawsuits and defensive medicine” and an expansion of tax-free health savings accounts.
It addresses the tax advantage those who obtain coverage through their employer have over those who purchase through the private market. The employer tax exclusion — one of the largest expenditures in the tax code — would be reduced to 65 percent of the average cost of a plan.
The federal savings from that cap would be used to offer tax credits to individuals with annual incomes up to 300 percent of the federal poverty level, and to offer targeted tax incentives for those who don’t receive employer-sponsored plans.
Blumberg told The Hill the employer tax exclusion reform is one of the most disruptive aspects of the proposal.
— This story was first posted at 1:52 p.m. and was updated at 8:45 p.m..