THE BLOG

Here's How Health Insurers Dream of Replacing Obamacare

02/09/2015 12:36 pm ET | Updated Apr 11, 2015
Mark Wilson via Getty Images

We got a glimpse last week of what would happen to our health care system if Republicans increase their control of Congress and win the White House in 2016.

Gone would be the part of Obamacare that Americans tell pollsters they don't like: the requirement that they enroll in some kind of health plan or pay a penalty that grows more severe every year. In addition, the GOP would get rid of the provision mandating that employers with more than 50 workers offer subsidized coverage.

But the GOP would also eliminate the existing parts of the law protecting us from insurance company practices that used to keep millions of us in the ranks of the uninsured and underinsured -- and just an illness or accident away from financial ruin.

Of course the sponsors of the Republican alternative -- called the Patient Choice, Affordability, Responsibility and Empowerment Act -- or Patient CARE -- don't spin it that way. In fact, the language they use makes their plan sound like a simple, common sense, no-brainer alternative to the Affordable Care Act (aka Obamacare.)

"We can lower costs and expand access to quality coverage and care by empowering individuals and their families to make their own health care decisions, rather than having the federal government make those decisions for them," said Sen. Richard M. Burr (R-North Carolina), one of the three authors of the plan. The others are Sen. Orrin Hatch, (R-Utah), who now chairs the Senate Finance Committee, and Fred Upton (R-Michigan.), the chairman of the House Energy and Commerce Committee Chairman.

As always, though, the devil is in the details. The reality is that the GOP plan would take us back to the days when insurers could sell junk policies, charge older folks more than they can today and calculate premiums based on a person's health status. This means that a breast cancer survivor or a diabetic or someone recovering from a heart attack -- or even a young person born with a disability or congenital disease -- would have to pay a fortune for decent coverage if, God forbid, they let their existing policy lapse for two months or longer.

The Republican sponsors say their plan would restore freedom of choice they claim was taken away by Obamacare. There is some truth to that. The Affordable Care Act requires health insurance policies to cover 10 essential benefits, ranging from preventive care to prescription drugs and a stay in the hospital. People no longer have the freedom to buy policies so skimpy they have to pay almost all of their medical bills out of their own pockets. The Patient CARE Act would restore that freedom. And it would also restore to insurance companies the freedom to set annual limits on coverage.

The health insurance exchanges would disappear in most if not all states because the federal funding to help run them would evaporate under the GOP plan. One of the benefits of the exchanges is the ability it gives us to shop online for coverage and compare features and costs of one plan versus another. Health insurance agents and brokers would probably love to see those features disappear, but their gain would be our loss.

To increase competition, the GOP lawmakers say they would allow insurers to sell coverage across state lines. They made no mention of the fact that health insurance is regulated largely at the state level and that federal law doesn't bar insurers from crossing state lines today.

The Medicaid expansion under Obamacare would also go away, as would the federal subsidies available to help low-income families and individuals pay their premiums and cover some of their out-of-pocket expenses. Under the GOP plan, the states would receive block grants from the federal government to help finance their Medicaid programs, meaning the feds would have far less say as to how the states provide coverage to the poor.

The GOP plan would also provide aid only to people making up to three times the federal poverty level -- and in the form of refundable tax credits -- as opposed to four times the poverty level via federal subsidies under Obamacare.

As a result, many -- probably millions -- of low- to moderate-income people who were able to buy coverage as a result of Obamacare would once again find the cost of health insurance prohibitively expensive.

Many folks in their 40s, 50s and early 60s would also be dumped back into the ranks of the uninsured or underinsured. Against the wishes of insurance industry lobbyists, Congress restricted insurers' ability to charge older folks more than three times as much as younger people for the exact same coverage when it passed Obamacare. The industry wanted to be able to charge them at least five times as much. The GOP plan would grant that wish.

It's important to note that the Patient CARE Act is not really a piece of legislation. If it were a bill instead of just a "vision," as Burr, Hatch and Upton refer to their ideas, the Congressional Budget Office would have to assess the effect it would have on the budget and our health care system. That would not be pretty. So don't expect the Patient CARE Act to become a bill anytime soon.