By Jonathan Easley - 01/30/14 10:06 AM EST
An analysis from a think tank formed by conservative economist Douglas Holtz-Eakin finds the Senate GOP alternative to ObamaCare would lower premium prices and save $1.4 trillion while covering roughly the same number of people.
The Center for Health & Economy (H&E) formed by Holtz-Eakin, who served as GOP 2008 presidential candidate Sen. John McCain's economist, looked at the legislative blueprint put forth Tuesday by Republican Sens. Richard Burr (N.C.), Tom Coburn (Okla.) and Orrin Hatch (Utah).
H&E assumed the full repeal of ObamaCare, and that the Patient Choice, Affordability, Responsibility and Empowerment (CARE) Act would be implemented in 2017.
It found that the GOP proposal would lower premiums by 2 percent to 11 percent for single policies by 2023, primarily because of its pledges to end junk lawsuits” and “defensive medicine.”
It also said the government would spend less because of the fewer number of people covered by Medicaid.
H&E found that the more widely available tax credits and subsidies in the CARE Act would provoke a “significant increase in individual market participation,” but that enrollment under these plans would be offset by the large reduction in those eligible for Medicaid under ObamaCare.
Consumers would have about the same access to providers under both laws, H&E found.
The GOP senators offered the CARE Act this week. It would go after both popular and unpopular provisions in the healthcare law.
It would weaken one of ObamaCare’s most popular provisions by giving insurers an opening to discriminate against people with pre-existing conditions.
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 would be susceptible to underwriting fees that could make the cost of purchasing insurance prohibitive.
The 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.
And experts warn that the most disruptive aspect of the Republican proposal is how 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.
But the GOP proposal leaves some 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 that would be available to more people, they are scaled back considerably from the financial aid available under the healthcare law.
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.