A Practical Plan For Replacing Obamacare
By Scott Gottlieb
(Forbes) – About 40% of the silver health plans sold in the Obamacare exchanges now offer very narrow networks of providers. The ubiquity of these stripped down plans — dubbed “Exclusive Provider Organizations” under the new jargon of Obamacare – are just one of the scheme’s many arduous inventions.
Before Obamacare, insurance networks typically covered an entire state. Under Obamacare, insurers are able to bid to offer coverage mostly on a county-by-county basis. It means that health plans only need to fashion doctor networks as wide as the county that they’re bidding to offer coverage in. In many cases, the result is that you’ll have to get all your care inside a single local health system.
People who need to go outside their network for special care are often saddled with the entire bill. There’s no co-insurance, meaning the health plan wont pick up part of the costs. Moreover, whatever you spend out of your pocket won’t count against your out of pocket limits or your deductible. You’re completely on your own.
Obamacare made these narrow networks a necessity; they were the only way to pay for all of Obamacare’s politically minded, mandated benefits. In a new survey of more than 1,000 Obamacare silver plan almost half of all plans offered doctor networks that included fewer than 25% of the providers in a person’s local area, and in most cases, little access to providers outside that immediate county.
This is what happens when health plans are designed in Washington, to meet the cultural goals of their political architects. Obamacare mandates a largely uniform structure and set of benefits and insurance design across the entire country. It leaves consumers with very little real choice of the health benefits they want.
To address the law’s shortcomings, Wisconsin Governor Scott Walker became the first 2016 Republican Presidential candidate this year to put forward a detailed proposal for replacing Obamacare with a plan designed to expand, and not limit choice and competition. I helped advise the Walker Campaign on some parts of their proposal.
It sets out to reform the market for insurance that existed prior to Obamacare by giving people new places to pool risk and shop for coverage while enabling them to benefit from tax credits that are rich enough to pay for basic coverage. The Walker Plan reverts regulation of insurance back to the states, enabling a much wider range of networks, coverage, and plan design. Consumers will get a real choice again.
The Walker Plan would eliminate the disadvantage that consumers face when they buy coverage outside a workplace, by giving people who don’t have employer sponsored coverage a tax credit to help offset the costs of buying their own insurance. The credit is tied to their age, and therefore some measure of their medical risks (and the cost of covering them). For example, consumers who are between the ages of 50-64 would get an annual credit of $3,000. For those aged 35-49, the total credit is $2,100. (A complete breakdown of the credits can be found in the plan).
The credits are priced to provide enough money to cover most of the cost of a basic health plan for everyone. Estimates made for similar plans that provided the same level of support found that the proposals will cover more people than Obamacare.
Since everyone gets the same credit, there’s no need for intrusive IRS oversight or claw back provisions. Under Obamacare, the IRS will reclaim the subsidies if people earned more money than their subsidy calculations entitled them to. Under the Walker Plan, the credit to buy insurance is paid to consumers, not insurers. People will own it and they can spend it on any suitable coverage they choose, regardless of which qualified insurance pool they choose to enter.
Consumers also couldn’t be dropped from coverage if they got sick, or face higher premiums because of a pre-existing health problem. So long as they maintain continuous and credible coverage, they can’t be canceled or see their premiums adjusted higher, even if they get sick and decide to change health plans.
The Walker Plan also tackles other dysfunctions in our healthcare system. This includes the protracted problems of poor service in the Medicaid program, as well as the market for coverage people need to help defray the cost long-term services and supports for seniors who develop chronic or disabling medical problems.
To address the cost of long-term care, the Walker Plan would create incentives for more private-market competition among carriers to offer affordable Long-Term Care insurance. It would allow health plans to offer insurance products that reflect consumer demands for assistance at home. When the cost of insuring for long-term care and ordinary services are coordinated, the cost of each can be lowered.
To address the chronic problems of poor access and care offered by Medicaid, the Walker Plan would give states control over how resources are spent so that they can tailor programs to match their local populations. It would also re-organize Medicaid into three focused programs targeted to the needs of individual groups of people — acute care services for people with disabilities and lower-income seniors; long-term services and supports for people with disabilities and low-income seniors; and medical assistance for needy families or MANF as its come to be known.
For many other people now served by Medicaid, they would instead get the same tax credits as everyone else, so they can now purchase coverage in the private market and not be forced into Medicaid HMOs and poorly functioning Medicaid clinics.
The overly engineered, overly regulated market that Obamacare created resulted in restrictive health care plans that provide little choice, and coverage that is far too costly for what the plans offer. Even with big federal subsidies being paid to insurance companies to offset the costs of these plans, many consumers are still being priced out of the market. All of the federal rules end up driving up costs.
The individual insurance market never functioned well precisely because it left consumers facing higher costs. They never had the economic benefit of being able to spend pre-tax dollars on that coverage. This created an un-level playing field between those who got insurance at work, and those who couldn’t.
The Walker Plan will give everyone some assistance to buy health insurance, regardless of their income, and where they shop for coverage. It enables a market where plans can be priced to reflect the amount of coverage a person wants. People who want to trade narrower benefits for wider access to doctors can make that decision. States, not federal bureaucrats, will be in charge of setting the rules.
One of the noxious features of Obamacare was its forced march into a single, federally designed package of health benefits. This costly regulation produced the overly restrictive, costly, and narrow network plans that now predominate.
Liberals want to control healthcare choices because they see medical care as something innate to a person’s aspirations — a human right that should be guaranteed by the government. For these same reasons, conservatives believe that these personal choices should be left to empowered individuals to exercise.