A first look at Senate Republicans’ new alternative to Obamacare

Obamacare proponents often mock the law’s detractors by saying they have no alternative plan. Never mind that this isn’t true: Congressional Republicans have introduced several comprehensive health-reform laws, including a couple by members of Georgia’s delegation. What they have not done is coalesce behind a single plan as “the” GOP alternative to Obamacare.

Whether they will coalesce behind the latest plan, it is too early to say. But the plan introduced Monday by Sens. Tom Coburn of Oklahoma, Richard Burr of North Carolina and Orrin Hatch of Utah is an attempt to repeal Obamacare and replace it with a law that maintains some of the current law’s most popular parts while discarding some of its most market-distorting, price-increasing parts.

Here are some of the highlights:

• It repeals both the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act — the twin laws passed so the Senate could get around the filibuster without 60 votes after Sen. Edward Kennedy did and was replaced by Republican Sen. Scott Brown — except for their provisions regarding Medicare. The bill’s authors explain, “Medicare reforms should be considered in the context of reforms to improve Medicare and prevent its insolvency” and point to past reforms of Medicare they each have proposed.
• It would then reinstate a handful of policies included in Obamacare: prohibiting insurers from imposing lifetime benefit limits for consumers; allowing parents to keep children on their plan up to age 26; and ensuring “guaranteed renewal,” under which insurers cannot drop a policy holder because of his/her health condition.
• It makes a significant change to “community rating,” a limit on the ratio of prices insurers can charge the oldest consumers vs. the youngest, the sickest vs. the healthiest, and so on. Rather than Obamacare’s 3:1 ratio, the senators propose a 5:1 ratio — and allowing states to opt-out of the ratio to impose higher or lower ratios.
• The senators also propose requiring insurers to accept applicants with pre-existing conditions if those applicants have had continuous coverage for at least 18 months prior. This incentivizes people to buy insurance without mandating they do so. The senators propose a one-time open-enrollment period during which uninsured people with pre-existing conditions could buy insurance even if they didn’t have it before; after that, it would be up to them to risk being unable to buy insurance in the future, or maintaining continuous coverage.
• The bill would introduce tax credits to help individuals buy coverage if they earn up to 300 percent of the federal poverty level (Obamacare offers exchange subsidies up to 400 percent of FPL).
• Speaking of exchanges, they would no longer be required — or subsidized — by the federal government. But nor would they be prohibited.
• The feds would subsidize revamped versions of the high-risk pools they have used in the past to insure those with the very costliest illnesses. Small businesses would be allowed to join up with other small businesses, and states with other states, to create larger, interstate risk pools — providing more competition and keeping costs down.
• The bill would reform Medicaid. Among other things, it would give states more flexibility to use federal funds as they see fit.
• The bill would also require more price transparency by insurers and providers, something that is sorely lacking in our not-free-market health system.

There are other aspects, available in more detail here.

While the bill goes some way toward equalizing the tax treatment of health plans between those insured by large employers and everyone else, it doesn’t go as far as previous proposals. Is that because the backlash to Obamacare has made Republicans reluctant to propose anything too sweeping? Maybe. It does in some ways take us closer to that, and thus represents one big step in the right direction, even if it doesn’t take all the right steps.

This proposal mirrors some parts of the earlier GOP alternatives, but not all of them. It will take some time to digest it all — there are no estimates yet for the bill’s cost or effect on deficits and the uninsured population — but it strikes me as very likely to offer an improvement over Obamacare.

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