The next Republican presidential debate is just two weeks away. Health care reform will no doubt be front and center, thanks in large part to the release of Wisconsin Gov. Scott Walker’s alternative to ObamaCare.
Pundits have called Walker’s plan the first “serious” health reform plan from the crowd of candidates for the GOP nomination. But it has a lot in common with previous Republican plans to repeal and replace ObamaCare — especially the one introduced earlier this year by House Dr. Tom Price, R-Ga., chairman of the House Budget Committee.
Both Walker and Price prove the GOP has serious ideas about health reform — ideas that can undo the cost-inflating damage ObamaCare has done to our nation’s medical system and bring about the affordable, quality care that Americans yearn for.
Both plans address ObamaCare’s biggest failure — its one-size-fits-all approach to regulating health insurance.
Among ObamaCare’s chief goals was guaranteeing access to coverage for all patients, regardless of health status or history. Unfortunately, it did so in the most expensive way possible, by forcing insurers to accept everyone and forbidding them from charging one beneficiary any more than three times what they charge anyone else.
Of course, older folks often have more health problems than young people. So they’re more expensive to cover. To cover their costs, insurers have had to raise rates for young people. Premiums in Blue Cross and Blue Shield-affiliated plans are projected to increase 54% in Minnesota, 36% in Tennessee and 31% in Oklahoma.
Rising premiums are keeping people out of the insurance pool. Six-in-10 uninsured adults cite the high cost of coverage as the main reason they’re without coverage.
Fewer people in the insurance pool means that those who remain are likely to be sicker — and costlier to cover. That could drive rates even higher.
Both Price and Walker would tackle this “adverse selection” problem by providing states with money to create “high risk” pools that would operate outside the conventional insurance market. Those with pre-existing conditions who could not find affordable insurance could obtain subsidized coverage through the state-run pool.
Taking high-cost patients out of the conventional insurance market would allow insurers to reduce premiums for the majority of patients, who don’t have pre-existing conditions.
Price and Walker would arm patients with age-based tax credits — vs. income-based — to help cover the cost of this newly affordable coverage.
Parents would get $900 annually for each insured child. Adults up to 35 would enjoy a $1,200 credit.
Those ages 35-49 would receive $2,100; those 50-64 would get $3,000.
To help Americans pay for routine out-of-pocket expenses, Walker and Price would give a one-time, $1,000 refundable tax credit for individuals and families who establish tax-advantaged Health Savings Accounts.
And they’d raise the cap on how much people can deposit annually into these accounts tax-free.
In Walker’s case, those limits would jump to $6,250 for individuals and $12,500 for families.
Price would hike them to the level of the maximum IRA contribution.
These straightforward tax reforms would simplify the finances of health coverage and empower Americans to take control of their health care.
They’d also equalize the tax treatment of health insurance. Businesses have long been able to pay for coverage for their workers using untaxed dollars. Individuals would now enjoy a similar privilege.
Walker’s plan would give individuals these tax credits directly. Price’s, by contrast, would give them to insurers. The former is a superior approach, as it could let consumers put any portion of the tax credit that they do not use on coverage into an HSA.
Both plans would also create a national market for health insurance by allowing consumers to shop for coverage issued in any state.
Such a move would increase competition among insurers — and thus drive down costs for consumers.
These plans have set the stage for harnessing the power of the market to control health costs and improve the quality of care. As the presidential race builds up, these plans will be tweaked and adjusted. Others will recommend their own plans, too.
Already Sen. Marco Rubio, R-Fla., has suggested similar reforms to Price’s and Walker’s.
Here’s to hoping these plans get ample air time at the next GOP debate.