The plan would do two important things: (1) abolish the individual and employer mandates to purchase health insurance and (2) give everyone purchasing insurance in the individual market a fixed sum refundable tax credit to buy health insurance of their own choosing.
“With a universal tax credit, it doesn’t matter where you work or what your employer offers you. It doesn’t matter what your income is. It doesn’t matter if you qualify for Medicaid. You get the same subsidy regardless of all of the above. That means that we could turn all of the exchanges over to EHealth, which has been operating an online private exchange for a decade and has insured more than 4 million people.”
Under the Ryan/Kline/Upton plan, people will be able to choose a health plan based on their needs rather than a plan based on the government’s needs. Women will not have to purchase coverage for prostate cancer. Men will not have to purchase coverage for mammograms and Pap smears. Teetotalers will not have to purchase coverage for alcohol and substance abuse.
Everyone will be able to purchase insurance that meets their needs in a more sensible and economical way. For example, under Obamacare apparently healthy women with no symptoms are entitled to a free mammogram – despite the increasing controversy over the wisdom of these tests. However, a woman with symptoms, who really needs a mammogram, may have to pay the full cost out of her own pocket.
Under the Republican plan, insurers would be able to offer less expensive coverage that more sensibly meets real patient needs.
Making the Republican plan better. I would give the plan a third cheer if it included two additional reforms.
First, we need to completely change the incentives insurers face. Under Obamacare, we are witnessing a race to the bottom, as insurers choose narrow networks that exclude the best doctors and the best hospitals and foist the cost of expensive drugs off onto the sickest enrollees. The answer to this is health status insurance and I have written about it elsewhere.
Second, Obamacare is shredding the health care safety net by taking funds away from safety net hospitals, even as their burden is increasing. To rectify that, we need to return some portion of unclaimed credits to the communities where the uninsured live. Money needs to follow people. If everyone in Dallas turns down the Republican tax credit, the funds need to flow to safety net institutions. If everyone decides to obtain private insurance, the money should subsidize private insurance instead.