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January 7 2017

It's Time To Replace ObamaCare — What Will The GOP Choose?

The Hill
Hadley Heath

This week the Republican Study Committee reintroduced legislation called the American Health Care Reform Act (AHCRA). The bill first debuted in 2013, but with Republicans now in control of the House, Senate, and White House, the likelihood of ObamaCare repeal and replacement — and public interest in conservative replacement plans — is at an all-time high.

Some Americans, especially those harmed by the Affordable Care Act (ACA) through premium spikes or cancelled plans, may ask why the GOP wants to replace the law at all. Why can’t we simply repeal it and go back to the system we had before?

It boils down to this: The system before ObamaCare was distorted by other outdated laws, leaving some Americans with poor and limited insurance options.  We needed healthcare reform in 2009 — just not the healthcare reform that we got.

Before the ACA, too many Americans felt trapped in jobs because their employer provided their health insurance benefits. Some without employer-provided insurance had trouble finding affordable options, so they went uninsured or underinsured and risked bankruptcy. Others were over-insured and consumed more health services than they needed.

All of these problems needed solving before the ACA, and Republicans will still need to address them should the ACA be repealed.  Importantly, Republicans should also work to craft a policy that responsibly transitions those Americans who’ve come to depend on ACA plans to the new system.

How will they do it? The specifics vary from plan to plan, but nearly all replacement plans include a universally available tax deduction (as in the AHCRA) or tax credit for health insurance. This policy is an attempt to level the playing field for people who do not currently enjoy employer-based health insurance benefits.  

Since the WWII era, our policies have favored employer-centric health insurance by providing an unlimited tax exclusion for these on-the-job benefits. Meanwhile, folks without benefits have been paying for health insurance with post-tax dollars.

We would all be better off with a level playing field. For one thing, this would reduce “job lock” in an ever uber-ized gig economy. Gone are the days when people worked 30 years in the same full-time job with great benefits. Today, no one should feel trapped in a particular job simply because insurance is too hard to get elsewhere.

For another thing, by making it more attractive for people to buy insurance on their own (instead of through employer-centric groups), we could greatly increase the number of buyers — decision makers — in the health insurance market, which would spur competition.

In other words, rather than selling to your boss, health insurance companies would have to sell their policies directly to you, meaning they’d have to compete to offer you the plan that suits your family best at the best price.

Some Republicans want to take other steps that they hope would make insurance markets more competitive, including allowing the sale of insurance across state lines and allowing small businesses to pool together to negotiate rates. But the most important step conservatives can take to make insurance plans more competitive is to repeal the ACA’s harmful and unnecessary regulations.

Before the ACA, state insurance commissions determined what plans were acceptable to be sold in their states, and what coverage plans had to provide.

The ACA added a federal layer of regulation in an attempt to standardize plans, but it went too far. The law took away popular, more basic (and affordable) insurance plans (which is why so of these plans were cancelled in 2014 as the ACA took effect).

The AHCRA, like some other conservative plans, proposes to address the problem of pre-existing conditions by reviving and expanding an older idea: state-based high-risk pools.

These pools offer targeted relief (subsidized coverage) to those who really need it.  This is a much better approach than the ACA’s requirement that insurance companies “take all comers,” which has sadly resulted in sicker pools and higher premiums for everyone.  

Whatever replacement Republicans ultimately put together, it should include the grandfathering of ACA plans and subsidies during a transition period. This will allow the new system to begin working alongside the old (ObamaCare), without ripping the carpet out from beneath anyone.

There are many proposals on the right, and they vary in important details, but the basic premise is the same from plan to plan: Conservatives want to replace the ACA with economically sound reforms that make the market for health insurance more competitive and free, which would lead to lower premiums, making it so that more Americans could afford to buy insurance.

Regardless our political leanings, we should all welcome these ideas into this critical debate.

Hadley Heath Manning is the director of health policy for the Independent Women's Forum, a non-partisan research and educational institution dedicated to improving the lives of Americans by increasing the number of women who value free markets and personal liberty. Her work has been featured in The Wall Street Journal, Forbes, POLITICO, Roll Call, Real Clear Policy, National Review Online, and Huffington Post, among others.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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