Summary
So, what about those Republican health care plans?
Contrary to claims made by some Democratic detractors, detailed GOP proposals, and a bipartisan bill with several GOP cosponsors, do exist. And they’re scheduled to get attention at a half-day, televised "summit" meeting at Blair House on Feb. 25, with President Obama presiding and lawmakers from both parties attending.
Republican sponsors make fine-sounding claims for their legislation. In an e-mail to supporters, House Minority Leader John Boehner of Ohio said the leading Republican bill would "help lower health care premiums, cut the deficit, and expand coverage." Republican Rep. Paul Ryan of Wisconsin and Sen. Tom Coburn of Oklahoma have sponsored another bill that Ryan says "would get to universal coverage." And Republicans say this can be done without a tax increase or a "government takeover" or other pitfalls Republicans see in the Democratic bills. Republican Sen. Bob Bennett of Utah also has cosponsored a bipartisan measure that his Web site says "[b]reaks the link between employment and insurance, giving employees instead of employers the tax benefit."
In this article, we find some of those claims are justified, and some not. Boehner’s bill would indeed reduce premiums for most Americans, for example. But the nonpartisan Congressional Budget Office found it also would increase premiums for the less healthy, and still leave more than 50 million Americans without health insurance. And Ryan’s bill wouldn’t actually cover everybody; an aide concedes it would offer only universal "access." Bennett’s bill does change the tax laws, but his description of the bill glosses over the fact that it would create a disruptive change in how American workers get their insurance.
In our Analysis section we take a detailed look at the GOP alternatives and offer a side-by-side comparison with the Democratic bills passed by the Senate and House. President Obama has released a proposal that merges the House and Senate bills.
Analysis
The future of the House- and Senate-passed Democratic health care bills remains uncertain, and in recent weeks, President Barack Obama has reached out to Republicans for their input — while still not backing away from those Democratic bills. In fact, Obama released his own plan on Feb. 22, a proposal that favors the Senate bill but melds it with some House provisions and a few elements from the White House. Will GOP-backed ideas get a hearing at Obama’s health care summit later this week?
During the State of the Union address, Obama said he wanted "everyone to take another look at the plan we’ve proposed," adding: "But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know."
Rep. John Boehner of Ohio raised his hand and soon sent out a fundraising letter praising H.R. 4038, a bill he cosponsored. Republican Rep. Paul Ryan of Wisconsin also has a bill, H.R. 2520, which mirrors its Senate version, S. 1099, sponsored by Sen. Tom Coburn of Oklahoma. And Sens. Ron Wyden of Oregon, a Democrat, and Bob Bennett of Utah, a Republican, introduced a bipartisan bill a year ago that they’ve also pushed in previous years. None of these proposals has received much attention in Congress — the Wyden/Bennett bill (S. 391) was referred to committee last year, on Feb. 5; Ryan’s and Coburn’s bill got the same treatment on May 20; and Boehner’s H.R. 4038, which was introduced by Rep. Dave Camp of Michigan, was proposed as an amendment in the form of a substitute to the Democratic bill, failing by a 176-258 nearly party-line vote (one Republican voted against it).
But Republicans have been more vocal about these proposals, and they may push them at the Feb. 25 summit. Here’s a look at the pros and cons of the Republican proposals, and how they compare with each other and their Democratic counterparts:
There Are GOP Similarities to Democratic Plans. The Ryan/Coburn bill and the Wyden/Bennett bill, which has four other Republican cosponsors, both create state-based insurance exchanges that would sell coverage that meets certain standards, just like the Senate-passed Democratic bill. (The House-passed bill sets up a national exchange, instead of state-based exchanges.) Wyden/Bennett comes even closer to the Democratic plans by including an individual mandate to buy coverage (with a tax penalty for those who don’t) and employer requirements — the bill requires businesses to pay a certain amount per employee. Under that bill, most persons would end up getting their coverage through those state-based exchanges, according to a Congressional Budget Office analysis.
Both of these bills say plans sold through the exchanges will be required to provide benefits similar to those offered to members of Congress and federal employees, just like the Democratic bills. The proposals also subject insurance companies to new regulations, such as not allowing insurers to discriminate on the basis of health. Under the Ryan/Coburn bill, those regulations apply to plans in the exchanges. While there isn’t a mandate in that bill, it does allow states to set up auto-enrollment procedures to sign people up for exchange plans at emergency rooms or departments of motor vehicles, or through state income tax returns. Individuals can opt out.
Pros: The exchanges provide a new marketplace for the uninsured with a standard level of coverage and a prohibition on discriminating against the less healthy. The individual mandate in Wyden/Bennett provides new business for which insurance companies will compete, and it brings both healthy and less healthy persons into the insurance pool. The same goes for the Ryan/Coburn auto-enrollment if states enact such measures.
Cons: Plans offered through the exchange would be regulated by the government — to insure they meet minimum benefit standards. That’s the sort of regulation that Republicans criticized as a "government takeover" when Democrats proposed it. Some have questioned whether the individual mandate, while popular with the insurance industry and economists, is constitutional.
But the Differences Are Big, Too. Both the Ryan/Coburn and bipartisan bills would affect employer-sponsored coverage in a major way. They eliminate the exclusion of the value of health benefits from workers’ taxable income — in other words, workers will pay taxes on the value of their health care benefits. In lieu of the tax deal, the bills provide Americans with refundable tax credits or a standard tax deduction for the purchase of insurance. Changing the tax treatment of job-based coverage would bring in money for these bills — the government essentially gives up potential revenue now by not taxing those benefits — and it would likely change our system of primarily employer-sponsored coverage.
The Senate-passed Democratic bill limits spending on employer-based plans in a different way: It imposes an excise tax on insurers with high-priced, employer-based plans. A 40 percent tax would fall on the value of benefits that exceed $23,000 a year for a family and $8,500 for an individual, with higher thresholds for retirees and those with high-risk jobs. The nonpartisan Joint Committee on Taxation and Congressional Budget Office say the tax would cause businesses to choose less costly plans, which would cause employers to raise wages. The government makes money not so much from the tax, but from payroll and income taxes on those increased wages.
The upside? According to one analysis, a 2008 report by the Lewin Group, Wyden/Bennett would cover 94 percent of the uninsured.
Neither the CBO nor Lewin have published analyses on the Ryan/Coburn bill. Ryan claimed on "Fox News Sunday" on Jan. 31 that his legislation "would get to universal coverage." But when we asked his staff how that would happen, we were told that the bill merely "achieves universal access" to insurance. A private firm, HSI Network, however, estimated that the bill would cover 34 million of the uninsured over 10 years (about 62 percent of the uninsured, based on CBO projections for 2019). The Minnesota-based HSI is led by a health economist who helped write the health care plan of Republican Sen. John McCain of Arizona when he was running for president; the group also produced an analysis of McCain’s plan that said the senator’s plan would cover many more of the uninsured than other studies had found. Ryan’s office sent us the HSI study, but his office didn’t pay for it.
One more big move under these bills: They would substantially scale back the Medicaid program — Wyden/Bennett actually eliminates it, as well as the Children’s Health Insurance Program. In place of these popular government programs, the bills propose supplemental coverage and financial help for low-income families to be used to purchase private insurance.
Pros: The tax change brings in revenue (hundreds of billions a year), and makes insurance policies portable from job to job. Economists also have backed this idea for other reasons: the current tax set-up contributes to rising health care spending, since coverage is often more generous than people would obtain on their own; and wealthier folks get a greater tax benefit than those with lower incomes.
Cons: It’s a major change in how our employer-based health care system works, with some coming out ahead (those with not-so-great health care benefits) and others (those with high-cost plans) likely buying less generous policies. CBO says of the bipartisan measure: "Although employers would have the option of continuing to offer coverage to their workers, nearly all individuals who were not enrolled in Medicare would obtain their basic health insurance coverage through this new system." Nixing the income tax exclusion and offering credits was the approach that John McCain favored during his run for the White House in 2008, and it was criticized (falsely) as being the "largest middle-class tax increase in history" by the Obama campaign. We found that to be nowhere near true — but these new proposals would face the same tax-hike criticism. And would their tax credits be enough for families to buy their own coverage, or pay the added taxes? Experts said McCain’s credits would fall short of keeping up with rising premium costs over time, but this would be true mainly for those with higher incomes.
The Boehner Bill. House Minority Leader Boehner is a cosponsor and vocal proponent of this bill, which garnered a yes vote from all but one Republican in the House. In an e-mail to supporters, Boehner said it would "help lower health care premiums, cut the deficit, and expand coverage." Well, it would do the first two things, but expand coverage? Not by much. The nonpartisan Congressional Budget Office estimated that the bill would cover a mere 3 million of the 55 million uninsured in 2019.
On the pro side, it doesn’t cost much to do that. CBO said the bill would cost a net $8 billion over 10 years and reduce the deficit by $68 billion over a decade. As for lowering health care premiums, the CBO did say that the bill would do that, too, on average, compared with where premiums would be under current law. But it noted that its estimates were "subject to an unusually high degree of uncertainty" and that some premiums would go up while others would go down. "[S]ome provisions of the legislation would tend to decrease the premiums paid by all insurance enrollees, while other provisions would tend to increase the premiums paid by less healthy enrollees or would tend to increase the premiums paid by enrollees in some states relative to enrollees in other states," CBO said.
H.R. 4038 doesn’t have much in common with these other bills. Its main provisions are to require states to have purchasing pools for high-risk individuals or reinsurance programs to cover those who have a hard time getting coverage. States can get money to create these, and they’ll be offered incentive money to lower state premiums and lower the number of the uninsured. Companies can also sell insurance across state lines under this plan, and purchasing pools would be created for small employers to give them the kind of leverage large employers have in buying insurance. With a large pool of employees, with a range of health statuses, big firms normally get much better rates for insurance. These pools would help small firms’ purchasing power.
Pros: It’s cheap. And for healthy people with insurance, this plan lowers premiums on average. Small businesses that want to provide coverage also could benefit.
Cons: It barely makes a difference for the uninsured. Selling insurance across state lines is a controversial idea that some say will harm state regulations designed to give consumers adequate coverage and protect the less healthy. Republicans say it will save money by increasing competition.
Medical Malpractice Measures. Republicans like to tout the merits of tort litigation overhaul, and their bills certainly do more on this front than the Democrats’. The Boehner-backed proposal caps noneconomic damages, limits punitive damages and makes other changes to malpractice law. The Ryan/Coburn bill gives funding to states to set up review panels or health care tribunals to evaluate claims before they go to court. The panel or tribunal would determine liability and compensation, if any, and the parties could accept that ruling or say no thanks and go to court anyway. Wyden/Bennett provides funding to states that enact certain provisions, such as setting up the type of review panels Ryan and Coburn want.
Meanwhile, the Senate Democrats’ bill authorizes the federal government to give demonstration grants to states to develop alternatives to malpractice litigation — and it notes that it is the "sense of the Senate" that "states should be encouraged to develop and test alternatives to the existing civil litigation system." The House bill provides incentive payments to states that enact alternative liability laws; it says laws that impose caps on damages don’t qualify for such payments.
Pros: The CBO estimated that the Boehner-backed proposal would reduce government spending by about $41 billion over 10 years and increase revenues by $13 billion, an amount that would come from taxes on wages, as the cost of workers’ plans are reduced and wages are subsequently increased.
Cons: The savings are still nowhere close to the figures Republicans have boasted — Boehner said last fall that it could save more than $100 billion a year. CBO said malpractice measures "would reduce total national health care spending by about 0.5 percent (about $11 billion in 2009)."
Those Democratic Bills Again? Just in case you’ve forgotten all about what those Democratic bills did: Both the House- and Senate-passed bills set up insurance exchanges (the House’s is a national exchange) through which individuals and small businesses can purchase coverage. They both expand Medicaid and impose requirements on employers — the House version actually mandates that employers offer coverage or pay a penalty, while the Senate bill only imposes penalties if a firm’s workers get low-income premium credits.
Both bills provide subsidies or tax credits for households earning up to 400 percent of the federal poverty level, and they prohibit insurers from enacting lifetime spending limits and discriminating on the basis of preexisting conditions. The House bill calls for a surcharge on the wealthy, while the Senate brings in revenue by taxing insurers with high-priced, employer-based plans. The Senate bill would cover 31 million of the uninsured by 2019; the House version would cover 36 million, according to CBO.
Obama’s proposal mirrors the Senate bill in many ways, but also contains House provisions or compromises between the two pieces of legislation. Obama’s plan increases the threshold for the excise tax on high-cost plans and delays the start of that tax, increases assistance for low-income families, and provides additional Medicaid funding help to states. It does not include a so-called "public option."
Our chart below offers a bare-bones version of the main provisions of the bills.
–by Lori Robertson
Sources
Congressional Budget Office. Letter to John Boehner. 4 Nov 2009.
Congressional Budget Office. Letter to Ron Wyden. 1 May 2008.
Sheils, John and Randal Haught. "Comprehensive Health Reform Costs Less: A Comparison of Four Proposals." The Lewin Group. 17 Dec 2008.
Wyden, Ron. The Health Americans Act Section by Section Summary. wyden.senate.gov. accessed 16 Feb 2010.
U.S. Senate. "S. 391, Health Americans Act." (as introduced 5 Feb 2009.)
U.S. House. "H.R. 2520, Patients’ Choice Act." (as introduced 20 May 2009.)
U.S. House. "H.R. 4038, Common Sense Health Care Reform and Affordability Act." (as proposed 6 Nov 2009.)
U.S. Senate. "H.R. 3590, Patient Protection and Affordable Care Act." (as passed by Senate 24 Dec 2009.)
U.S. House. "H.R. 3962, Affordable Health Care for America Act." (as passed by the House 7 Nov 2009.)
Congressional Budget Office. Letter to Harry Reid. 19 Dec 2009.
Congressional Budget Office. Letter to John Dingell. 20 Nov 2009.
Congressional Budget Office. Letter to John Dingell. 6 Nov 2009.
Parente, Steve and Lisa Tomai. "The Impact of the 2009 The Patient’s Choice Act." HSI Network. 21 Jul 2009.
Side-by-Side Comparison of Major Health Care Reform Proposals. Kaiser Family Foundation. accessed 19 Feb 2010.
Health Care Solutions from Members of the RSC. rsc.tomprice.house.gov, updated late Nov 2009, accessed 19 Feb 2010.