The Kline-Ryan-Upton Republican Off-Ramp from Obamacare
Tomorrow is the day the Supreme Court hears oral arguments in King vs. Burwell, and all the talk is about what Congress will do if the Supreme Court directs the Administration to obey the law by not paying subsidies in the majority of states, which have declined to establish their own Obamacare exchanges and defaulted to the federal one.
The Wall Street Journal ran an op-ed (available by subscription) by John Kline, Paul Ryan, and Fred Upton, who chair committees of jurisdiction in the House of Representatives that will be tasked with proposing a Congressional response to this decision. Here’s what they write:
Let people buy insurance across state lines. Stop frivolous lawsuits by enacting medical-liability reform. Let small businesses band together so they get a fair deal from insurance companies.
There’s a lot more, but these three items are unexciting. This blog has published a range of views on the question of buying health insurance “across state lines”. My colleague Devon Herrick supports the policy. I am extremely skeptical. (I am not the only conservative critic: See Dean Clancy at The Federalist.)
With respect to medical-malpractice reform, I’ve never found authority for Congress to step into the mix. And the trend to reform in states is well underway.
The final proposal, about small businesses banding together to buy health insurance, is usually referred to as “association health plans.” First, I am not aware of any law in any state that prevents small businesses from “banding together” to buy health insurance any more than there are laws preventing them from banding together to buy office furniture or computer software.
Second, the “original sin” of American health insurance is the discrimination in the tax code against individually owned benefits and in favor of employer-based benefits. (To their credit, the three Republican leaders recognize this). Suppose the tax code stated that you would not get a mortgage-interest tax deduction for your own home, but the one your employer chose for you? Would the solution be to allow “small businesses to band together so that they get a fair deal from residential realtors”?
I regret to conclude that Congressional Republicans are still catching and presenting red herrings as trophy fish in their health-reform proposals.
The last article I read about mandates in Health Affairs said that mandates for maternity, mental illness, contraception, etc added less than 10% to health insurance premiums.
Whereas the mandate for guaranteed issue added almost 30% to premiums.
Therefore, I would predict that if all states maintain guaranteed issue, then there will be no great variation in state premiums.
The Republicans calling for cross-state purchases are kind of living in 2005– when a young man in a guaranteed issue state like New York could in theory go to a full-underwriting state like Arizona and save a bundle.
Might not be true today.
Even some of the cost of the benefit mandates are really caused by age-banding. For example, mandating maternity coverage for 60-years old women appears ridiculous. However, an actuary would estimate a zero or very low risk of her getting pregnant, so it is not really a big deal. It is a big deal when you squeeze her into an artificially narrow age band with younger women who have a maternity mandate.
I agree with John here, at least up until the analogy with mortgage interest deductions. Presumably they’re less bad than a subsidy for employer-paid mortgages, but still an unfair and unjustified giveaway.
Thank you. I did not mean to endorse the mortgage-interest deduction for individuals, which I do not.
The three proposals show how uniformed our elected leaders are….unfortunately they are still under the assumption that group health is cheaper than individual…the affordable care act leveled the playing feild and made small group and individual policies pretty much the same…getting benifits through an employer sponcered plan is one of the worst things an employee can do…..employees are having money deducted out of there checks for “benefits” Ha. Last time I looked up the word benifit in the dictionary it did not say something you paid for! Employees are paying for benefits in which they have no choice in the design or ownership to take the plans with them if they leave,the employer.
The Affordable care act is the catalyst for the end of employer based health insurance and if the politicians pull there heads out and stop listening to the insurance company lobbiests and quit trying to save employer sponcered plans from there ultimate demise the public will much better off….
Insurers have to consider groups as part of one risk pool
Does this not already combine small employers who participate in SHOP?
Don Levit
OBAMACARE IS A DISASTER FOR FAR TOO MANY PEOPLE…IT WAS WRITTEN BY POLICY MAKERS, ECONOMISTS, LAWYERS AND POLITICIANS MUCH MORE THAN HEALTHCARE EXPERTS..AND FUNNELS HUGE AMTS OF $$$ INTO SOCIAL IMPROVEMENT PROGRAMS AND WEALTH REDISTRIBUTION GOALS AT THE EXPENSE OF THE HEALTHCARE OF MILLIONS OF ORDINARY AMERICANS…IT IS A DISASTER AND MANY HOSPITALS AND PATIENTS ARE SUFFERING AS A RESULT!!!
Thank you for your comment, but there is no need to shout.
Does getting critical illness and or
accident insurance exempt one from the tax
penalty for not having insurance?
How does one avoid this penalty?
Thank you. No: They do not exempt you from the penalty. The way people tend to exempt themselves from the penalty is to assert “hardship” which makes it politically to tough for the Administration to collect.