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  • Health Care Reform: The House Republican Alternative

    House Minority Leader John Boehner and his House Republican colleagues have just unveiled a 230 page “Amendment in the Nature of a Substitute” to House Speaker Nancy Pelosi’s massive 2032 page health care bill (H.R. 3962). Voting on the substitute and the main bill in the U.S. House of Representatives could begin as early as Saturday, November 7, 2009.

    In contrast to H.R. 3962, the Congressional Budget Office (CBO) finds that the Substitute would reduce average health insurance premiums ( by 7 to 10 percent in the small group market and 5 to 8 percent in the individual market) and would reduce the federal deficit by $68 billion over ten years.

    A Targeted Approach
    In style and substance the “Republican Alternative” is a dramatic contrast to the House Democratic leadership approach to health care. It is incremental as opposed to comprehensive. Instead of pursuing a “Big Bang” solution to the various problems of the health care system, embodied in a bill designed to overhaul the entire health care sector of the economy, it is a targeted, step by step, approach to resolving specific health care issues while minimizing disruption of existing health insurance arrangements.

    In a conspicuous contrast to H.R. 3962, the Substitute addresses the medical liability problem, provides for real restrictions on taxpayer funding of abortion, and amends current law to enhance the flexibility of health savings accounts.

    Insurance Market Reform
    In the course of the national debate, the White House and the congressional leadership evolved their rhetoric, calling for health insurance reform rather than health care reform. In fact, the central problems facing ordinary Americans are often rooted in the discrete problems of state health insurance markets, including access to coverage for those who are sick ( Pre-existing conditions” ) and the need for more rational pooling arrangements to spread health care costs. Under Section 101 of the Substitute, states would be required to address these specific problems, and would be given specialized funding ($25 billion) for the creation of high risk pools or risk reinsurance programs to guarantee access to coverage for those suffering with pre-existing medical conditions. The Substitute would also guarantee portability of insurance coverage and protection for pre-existing conditions, prevent unjust cancellation of insurance, while eliminating annual or lifetime caps on insurance coverage.

    Enlisting the Creativity of Federalism
    Under Section 111 of the Substitute, states would get special funding ( $50 billion) to adopt reforms to expand coverage and reduce the numbers of the uninsured, as well as control health care costs. States could pursue a variety of market reforms and adopt new information systems that would facilitate an ease of access to coverage (allowing auto enrollment in employer coverage with a right to op out) and providing comparative information on health plan choices. As a condition for getting federal funding, the states would have to agree to meet federals goals to reduce the numbers of the uninsured and to slow the growth in health care costs within the private sector. In sharp contrast to the House leadership bill, for example, the Substitute does not crowd-out existing private health insurance through an expansion of public programs, including welfare programs like Medicaid. In the main House bill (H.R. 3962) Medicaid expansion would impose an unfunded mandate on the states, and eligibility for Medicaid would be increased up the income scale to 150 percent of the federal poverty line ($33,000 for a family of four), a provision that would guarantee a crowd out of private health coverage.

    Promoting Competition
    There are 1300 health insurance companies in the United States, but there is often little competition within the states. State health insurance markets are often artificially high priced, driven by special interest and provider driven mandates and excessive regulations. The result: millions of Americans are price out of the health insurance markets, and choice and competition are undercut by state policy. Under Section 221 of the Substitute, Americans will henceforth be able to buy health insurance anywhere in the United States. Health insurance, like most other goods and services, will be available through interstate commerce, but the Substitute provides that policyholders will still enjoy the consumer protection and anti-fraud and abuse laws of the state in which the policyholder resides. This is a large and consequential change. According to researchers at the University of Minnesota, millions of Americans could secure affordable coverage as a result of the intensity of such competition. In every other sector of the economy, Americans can get what they want, and pay what they want to pay, for goods and services anywhere in the country. They should be able to do the same in health care.

    Next Steps
    While the Substitute makes significant and consequential changes in the health insurance market- focusing on the persistent problem of pre-existing condition exclusions and portability issues- it falls short in dealing with the most significant problem in health care policy: the federal tax treatment of health insurance. Major legislation to effect such tax changes, expanding coverage for millions of Americans, has already been introduced by Rep. Tom Price (R-GA), Rep. Paul Ryan (R-WI), Rep. Devin Nunez (R-CA) and Rep. John Shadegg(R-AZ).

    If there is one area where there is an overwhelming consensus among economists, liberals and conservatives alike, it is that complete reform of private health insurance markets requires reform of the federal tax treatment of health insurance. If Americans cannot get health coverage through the job, then they get no tax break at all on the purchase of their health insurance, forcing them to pay as much as 50 percent more for the same package of benefits they would have paid for if they had gotten their health insurance at the place of work. This unfair tax policy not only undermines the access of millions of Americans to affordable health care, but it also fuels higher health care costs. By reforming the tax treatment of health insurance and providing for individual tax relief, Congress would take a huge step toward expanding private health coverage for millions of Americans, giving individuals choice of coverage, leveling the playing field, promoting personal ownership and portability of health insurance policies, while reducing the burden on taxpayers who today provide free care to the uninsured in the most expense place on the planet: the hospital emergency room.

    Posted in Obamacare [slideshow_deploy]

    15 Responses to Health Care Reform: The House Republican Alternative

    1. Jim Morrison, Scotts says:

      Good analysis, Mr. Chairman

    2. Paul Dibble Ada, MI says:

      While I agree with some aspects of the Substitute bill, Republicans continue to see the government as a large part of the solution, making the difference between them and Democrats one of degree not substance. Their provision to eliminate the lifetime cap on insurance benefits is a good example. While it seems great that the government should just wave its magic wand and make those caps disappear, the provision fails to recognize the economic reason for the caps. The current health care "crisis" is an industry's "rational" response to current incentives, etc. Intrusive government regulations and out-of-date tax incentives are major factors. Republicans continue to propose more government–we need less.

    3. George Danz, Suffolk says:

      I like the GOP plan much more than the Pelosi plan which in my opinion is a plan for the end of the USA as we know it.

      Still, I really believe that the Constitution does not provide for the Federal meddling in state and personal affairs like this subject (refer 10th Amendment to the Constitution).

      We should continue to progress towards abiding by the Constitution. Those legislators who digress should be voted out of office or maybe tarred and feathered if they won't leave peacibly. I jest a bit, but I think you get my drift.

      The GOP plan should fix the tax issues of health care as your article points out near the end.

    4. Dave, Fairfax, VA says:

      This 'alternative' was too long in coming. Heritage and others have been talking about the elements of this approach for months and the Republicans have just now presented a comprehensive alternative to the crap that the Democratic "leadership" has been pushing. Why did it take so long? The Republicans need to get their collective stuff together quicker. As it is they are now playing catch-up. You would think they could take a lesson from Madison. If you walk into a meeting with a plan on paper ready to go, that plan becomes the starting point for negotiations. It appears that neither party has read much history. They certainly haven't read the Constitution. It is all very scary and very frustrating.

    5. Les, Rock Hill, SC says:

      Now this is what I have been waiting for. This plan will lower cost, make medical insurance available to people with diabetes and other conditions that provided the proper care can be controlled and lived with. The government has no reason to be in the health insurance business. All this Obamacare plan is is an attempt to kill off the middle class and small businesses. Social engineering, the democrat party needs to change its name to the "New Bolshevik Party"! What they are trying to do is what happened in Russia in the early 20th century without the bloodshed. A revolution! The reengineering of the American government. If you happen to be in the elite ruling class its not too bad but if you find yourself in the lesser educated working class being assigned to a collective farm where you work daylight to dark and never produce enough to satisfy the elites. Never earn enough to get ahead and never see a chance of improving your position its not such a good thing.

    6. Bobbie Jay says:

      Republican plan is reasonable, rational, practical and efficient.

      NO PART OF ABORTION APPLIED. Pregnancy, for the most part, is a result of a personal act and should be expensed by these persons.

      Democrats belittle the people, have no faith in people to have the dignity to take on their responsibility of their own human existence for themselves and families.

      DEMOCRAT GIVEAWAYS CREATE CRISIS FOR GOVERNMENT TO TAKE AWAY FREEDOM FROM ALL.

    7. Randy McLendon, Engl says:

      Thanks. Helpful synopsis.

    8. Perspective, Palo Al says:

      30 years working in Health Care and 18 years as a consumer with disabled kids….

      And you have hit the problems on the head, with solutions that will work to help fix the problems.

      A little late, given all the power the RNC squandered while in full control of all branches, but better than never.

      A little concerned about the pre-existing coverage…I like the concept of giving it back to the States to be smart about it, but I hope that nobody goes the route of rewarding NOT having insurance until you have a problem, then giving you cheap insurance once you have a problem..this would encourage people to not insure themselves until they have a problem.

      Lastly…is there a way to build in an incentive for people to buy their own health insurance? I recall when California required showing liability insurance in order to renew our Driver's license and how the numbers of insured suddenly soared, and competition got fierce with lower rates here.

      What about linking proof of health insurance coverage to a privilege like obtaining a driver's license or getting a welfare check? This would mean that the 10 million or so who are already eligible, but just haven't signed up, for Medicaid etc would have to sign up. That would lower by about 10 million that famous "uninsured" number. It would also mean all those 20-somethings who want to drive their cars that they can afford would have to spend the $100/month for health insurance that they don't think they need in order to drive.

      Just like the number magically dropping from 47 million uninsured to 30 million uninsured once the Dems figured out that 17 million of that number were not citizens, the number would magically drop to 10-12 million once all the folks who can actually afford insurance are incentivized to buy it, and all the folks who are already eligible for govt programs are incentivized to register BEFORE they land in the hospital.

      Thank you..keep up the work. Keep shouting from the rooftops.

      And next time you are in power, don't lose your conservative-libertarian ways.

    9. Pingback: Health Care Reform: The House Republican Alternative « Conservative Thoughts and Profundity

    10. Leon, Durango, CO says:

      Break my heart again! The Mad Demolition Plutocrats have proved how Influenced they are. They would love to go along with the Communist rewrite of American Law. But folks, this is criminal. The style of government contemplated in Nancy's Bill is Constitutionally unlawful. So Demo-crats seriously want totalitarian government, they proved it by refusing the Republican Alternative.

      I think these Law makers are actually Infiltraitors serving foreign interests like Obama.

      Just for fun I dashed off Articles for Obama’s Impeachment, appropriate to release it here as House 111 wrecks American Health Care by essentially a Communist take over of Cold War proportions. Come on Ann Coulter, flesh it out.

      ARTICLE 1 : Acts of Treason, against the Constitution, False Swearing a Senate Oath, and Conspiracy to serve a Foreign Interest in Congress.

      ARTICLE 2 : Acts of Treason, against the Constitution, Fixing Elections, Buying Elections, Creating Organizations for the purpose of Election Fraud (ACORN), Fixing Elections by Intimidation, unlawful attacks on opponents of election, fixing the electoral process while infiltrating the United States Government in the Interest of Foreign Powers.

      ARTICLE 3 : Abuse Of Power, against the Constitution, the establishment of Foreign Interest mandated but unlawful and not republican and representative government styles: of Communism, Socialism, Humanism (Czars), in abrogation of lawful Constitutional mandated government. Creating abusive and Unconstitutional Laws, crafting criminality into Law.

      ARTICLE 4 : Conspiracy, against the Constitution and the People of the United States, unlawful infiltration, cause of unlawful Communism to arise, Nationalization of means, unlawful Socialism and totalitarian government, and fulfill the Plans Of A Foreign Interest.

      ARTICLE 5 : Conspiracy, Racketeering, Influence and corruption, unlawful payments, unlawful favors, vote buying; Conspiracy to change America by intimidation, coercion, usurping, re-writing Laws, Texts, Curriculum, against the Constitution in conspiracy and collusion with Foreign Interests, Long Standing Enmity against the Constitution. False Oath Taking.

      ARTICLE 6 : Treason, infiltrating and operating in public office, including President, against the Constitution, against the Interest of the People and in the Interest Of Foreign Powers of long standing enmity.

      IMPEACH ALL OF THEM!

    11. Wildcat from Dallast says:

      I agree with the comment by Dave from Fairfax that House Minority Leader John Boehner took too long to get the Republican plan to the House floor which made it simply far too late to have the desired positive impact. However, you may recall that Speaker Pelosi and her clan of donkey busters are on record (from very early on during this agonizing process) as stating they refused any input from the Republicans, would not allow them access to their efforts, and would not let them meet with them in any forum concerning negotiating any aspect of “their bill on health care reform”. I’m sure Heritage and/or Fox News has the tape of that gaff. I do not fully agree with Paul from Ada about Government still being (conceptually) a large part of the solution based on what he read. It goes back to what President Reagan related when he clearly stated that Government is the problem. So, in order to fix certain parts of the “Government” induced problem(s) one must use the Government system to remove their artificial regulations which would be a step in the right direction. There are two easy examples where the federal government can have a positively immediate effect on both health care and the economy. First is to return to that brief period during the latter part of WWII when wages were frozen and employers started offering benefits (including health insurance at no cost to the employees) as they wrote off that cost as one of their costs of doing business. *They could allow individuals who pay taxes and fully pay for their health insurance (including major medical, long term care insurance, Medicare Supplement insurance, dental insurance and accident insurance) the same tax free benefit by letting them write their premiums off of their gross income. The next item would be to stimulate competition by allowing citizens to purchase health insurance products from across State lines.

      The high risk insurance pools by most states aren’t exactly great. They have a tendency to be rather expensive, have lower benefit amounts as well as lower percentages of coverage after the deductible and only provided a modicum of financial relief from a medical bill that appears huge and had a much lower lifetime cap, usually about $500,000 when the routine standard was $2,000,000 and exceptionally good ones were $5,000,000.

      I think it may not be constitutional for the federal government to require its citizens to have health insurance and then create and impose legislation forcing the preponderance of the citizens to enroll in their contrived (as well as ill conceived) universal government run health insurance plan. The liberals concept of universal health care appears to be in contravention with my life, liberties and pursuit of happiness; how about yours?

    12. Pingback: The Republican Health Plan | PowerTowneDistro.com

    13. Pingback: Pelosi & Reid: putting the “dic” in “ridiculous” « Ending Apathy

    14. Percy says:

      It is noted that emergency room treatment is vastly more expensive than seeing a private physician (I have heard that it is eight times more expensive), but no one has explained why this is so. I do not question this, but why is it so? What makes it so much more exepensive? Why is lowering this cost not a target of reform? Trying to keep people from using emergency rooms for non-emergemcies is not an answer; it avoids the problem rather than solving it. This makes no sense to me. Anyone have an anwer?

    15. Percy says:

      Let me begin to try to answer my own question (that is, why are emergency room visits so costly), lest we get non-answer answers.

      Hospitals have an amazing array of expensive devices and costly specialists who can be and often are brought into the loop in treating the emergency room patient, among other obvious uses for these. Sometimes that's truly needed and effective; sometimes not. If the patient is insured, the more they are used and brought into the loop, the bigger the bill, the greater the payment from the insurance companies. The hospital covers up this income generation motive by complaining about potential liability, lawsuits, etc., and the mysterious nature of what is wrong with emergency room patients if they do not do everything they can imagine to get at what brought the patient into the emergemcy room in the first place. (I personally speculate that the greater reason is that they do this is managerial decisions higher up the food chain at the hospital, top-down, to generate more profits because that's simpler and makes more sense.) Some of that is a combination of medical analysis to try to solve the patient's problem and the rest is to ward off real legal risk, but we don't know how much of it this is or how to separate the two.

      The "costs" billed by the hospital for its emergency room services are almost certainly an inflated rate for each part of the services rendered (band aids, aspirin, needles, etc.) because the insurance companies have in effect "negotiated" with this hopsital and all others in its system (and those not in it, too, I guess, though I really do not understnd how the "in-network" and "out-of network" systems work or are set up) a significantly lower rate of reimbursement for what is billed by the hospital. Since I do not know what these rates are, but am sure they are ubiquitous, I will use a blind guess of 40% of what is billed as the reimbursement rate. From this comes the bulk of the emergency room cost recoveries and profits from running emergency rooms. So the hospital jacks up the initial cost to get what it needs out of the 40% reimbursement rate from insurnace companies.

      This leaves the uninsured paying the equivalent of the hospsital's "rack rate," as in hotel room rates, instead of a discounted rate that would be the equivalent of what the uninsured patient would have paid if he/she had been insured and the insurance company had paid at its 40% reimbursement rate. Ditto for the "out-of-network" insured patient, who will bear all of what the hospital charges at its rack rate and, upon submitting the charges to his/her insurance company, will get only, say, 70% of what the insurance company would have paid to that hospital would have been paid by that insurance company had it been an "in-service" hospital — a heavy hammer blow to the patient.

      So: the costs charged by the hospital are not "real" in the sense that they reflect a kind of honest cost-plus billing method. Instead they may start there, but then those rates are doubled or worse to get what the hospital needs out of the insurance companies, thereby artificially raising the price to the uninsured and out-of-network patients.

      Some of the uninsured, even if chased, will not or will not be able to pay, so that, too, has to be taken into acocunt by the hospital. Add in junk lawsuits, to use shorthand for legal costs and risk, and hospital greed, and we may approach an answer to why emergency room visit costs are so high.

      If that is the case, though, why does no one suggest attacking and controlling those elements other than junk lawsuit cost (which at least the Republican proposals do), which admittedly ought to be curtailed by federal law (but with some senstitiy to the disincentive that removing legal threat would have on prevention of sloppy medical errors)?

      What to do about these things? Well, here are some ideas that mysteriously don't seem to come up. For example, why not force insurance companies to pay what they are charged rather than discounting those bills by "negotiation" and spending a fortune fighting over the amounts and propriety of such charges? That is, do what the rest of us do: pay your bills!

      Why not force hospitals to keep honest books (under heavy legal penalty, like public companies) at the individual hospital level, require hospital by hospital audits and reports from accounting firms, and compel them to observe some sort of limitation or ceiling on their cost-plus basis for charging (based on some geographic or other grouping of fees charged by others — e.g., all hospitals in Manhattan or whatever)? Then collect and publish these rates on the internet and let the patients take it from there?

      As to the uninsured, why not permit hospitals to turn them away if they choose (eventually an incentive, like the need for basic shelter, to get insurance one way or another without need for a giant bureaucracy and new taxes to get there)? And why not force hospitals in a locality to pool uninsured visit risk where no payments are received (pro rata based on number of those -patients served)?

      Wouldn't these steps slash emergency room visit costs so that theywouldn't be so high? Unless there's something wrong with this sort of approach — and I'm all ears if there is — we are all being conned by what's being put out there by the politicians, people who could, but for finaicial reasons of their own, who do not come up with solutions to the real problem: emergency room costs.

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