The Better Way Plan Represents Republican ObamaCare Repeal and Replacement Plan
We explain the House GOP Better Way Plan (the House Republicans’ ObamaCare replacement plan) and how it could change ObamaCare.
We are looking at this plan because it is the most detailed of all the similar past Republican repeal and replacement plans for ObamaCare (AKA the Affordable Care Act or ACA). Thus, you could say, we are going to explain and examine the general Republican ObamaCare repeal and replacement plan and its pros and cons by reviewing the House GOP Better Way plan.
TIP: Trump has selected Tom Price as health secretary. That means the most likely replacement plan will be Tom Price’s fully fleshed out actual legislation. Price’s plan is very similar to the GOP Better Way plan, and a final law might have elements of each. We will be doing a review of the Price plan soon.
Why are we looking at this plan? This plan, in part or in full, is most likely going the replace ObamaCare because of the way politics and the legislative branch (Congress) works paired with the current Republican control of the Presidency, Senate, and House. As eluded to above, the Better Way Plan is very similar to other Republican plans (including the Burr, Hatch, and Upton plan the listed below) and Trump’s plan. It is likely that Trump’s final plan will include most, if not all, of the House GOP plan’s ideas (especially considering Trump’s plan as stated on his website does just this). Remember, Trump doesn’t write or pass legislation, Congress does. As you’ll note from the citations below, ideas like block-granting Medicaid aren’t new ideas; these ideas are part of the longstanding Republican health care reform playbook.
An Introduction to the Republican’s ObamaCare Repeal and Replace Plan
The House Better Way Plan does a few key controversial things that everyone should know. Aside from those key items, it is a mostly solid Republican plan that replaces parts of ObamaCare that people don’t like and adds in things Republicans like such as selling insurance across state lines.
Given this, let’s start with the pros and cons of the controversial parts of the House Better Way ObamaCare replacement plan.
- ObamaCare will be repealed and replaced, but it isn’t clear how much of ObamaCare is at risk. Instead, we see loose language such as page 5 of the full Better Way plan. Looking at past GOP plans and Trump’s statements, it is almost certain the provisions that are working will be kept, but no details are known at this point. The House plan and the others I’ve seen are still in bullet-point fact-sheet form, not in the form of an official bill. See Bernie Sander’s Plan for an example of official legislation. Learn more about the effects of repeal and why we can’t be sure that a full repeal will take place.
- Paul Ryan has said he wants to privatize Medicare. The House Better Way Plan and other GOP plans have hinted that this is on the agenda for the first 100 days of Trump’s official plan. The GOP thinks that the market will do a better job at keeping Medicare affordable. Democrats have expressed concern that it won’t, and instead will turn our seniors into commodities in the same way Part C and Part D have done since W. Bush’s reforms. The GOP plan also includes rolling back the $800 billion in savings cut from Medicare waste, fraud, abuse, and Part C funding by the ACA. Something needs to be done about Medicare moving forward, and this is true even though the ACA and other legislation helped ensure Medicare’s solvency. The question isn’t “should something be done,” the question is whether or not privatizing Medicare is that something? It could help curb government spending, but does it help ALL seniors afford their care? See: What’s in Store for Medicare? Pros and cons of current proposals to change it (2012).
- Republicans want to Block Grant Medicaid. The GOP thinks that states will do a better job at directing Medicaid than the Federal Government, Democrats are concerned that some states will use this to deprive single poor adults of proper care (like Republican states have done under the ACA by refusing Medicaid expansion). See: Block grant pros and cons Conservatives call for innovation; others call for caution (2011).
- Republicans want to remove the preexisting conditions clause and insert a “continuous coverage clause.” There will be a one-time open enrollment and then people will have to keep health insurance for life, or they will be charged higher rates for life. This is the way that initial enrollment works for Medicare for seniors now. It may help keep costs down, but Democrats are concerned that this will hurt the majority of Americans who cannot or will not keep coverage for life. Losing coverage could occur for many reasons such as having one short period in your entire life where you can’t afford the bills. This provision may be a way to decrease costs for higher-income Americans by putting harsh restrictions on lower-income Americans. See Opponents Float Another ‘Replacement,’ but Most Americans Want to Keep, Fix ACA (2014). See an explainer of the GOP’s “Continuous Coverage Exclusion” For Pre-Existing Conditions.
- Republicans want to the restart sick-pools AKA high-risk pools, which the ACA eliminated by insuring everyone regardless of pre-existing conditions. They were state-based insurance pools covering those who are currently sick or who had been sick in the past. They were traditionally the only way that people with pre-existing conditions could be insured and were often either prohibitively expensive or provided inadequate coverage. This might keep costs down for those who are healthy and do not have any family members with health issues. However, it means that many people who need care would be unable to afford it. They would be forced into state-based sick or high-risk pools, which will result in rising rates of health-related bankruptcies, which produce widespread stress and cost the whole social system money. If protective regulation or funding is cut, the result is likely to be sub-par care or a lack of care for our sickest people and those with chronic health issues. See an article about high-risk pools and preexisting conditions before and after the ACA to better understand what we would be going back to with high-risk pools: Pre-Existing Condition Insurance Plan (Updated).
- Republicans want to let insurers charge more due to health status, gender, and age; Republicans want to deregulate ObamaCare’s ratios for what people can be charged on factors like age and health status. They do not propose that all people who have been sick will be barred from buying coverage. However, this provision would allow insurers to vary their pricing more than they could in the past. This could keep costs down for the healthy shopper but would mean higher rates for everyone who has ever been sick, suffers from chronic illness or has a dependent with medical issues.
- Republicans want to remove the mandate to have coverage. This is good for those who don’t want coverage, but it may increase costs for those who need it. Insurers might lose customers by people electing to opt-out. Few healthy, unemployed or poorly paid individuals will want to pay for health insurance given all the other bills they face. The average person will likely opt-out of coverage and wait until they get sick to think about enrolling. Unfortunately, the sick will not be able to obtain coverage when they need it. They will risk medical bankruptcy and will only be able to be insured in a high-risk pool, if at all. This is a very, very tricky thing to get around without frustrating large swaths of the American public. An opt-out with no basic catastrophic option could very well undo any good the plan hopes to accomplish. Further, it will increase the number of people who are uninsured and so increase the amount of uncompensated care and number of bankruptcies. See: History of the Individual Health Insurance Mandate, 1989-2010 Republican Origins of Democratic Health Care Provision for an interesting look at why Heritage Foundation Republicans invented the mandate as an alternative to single payer insurance.
TIP: According to our feedback from the tens of millions who access our site, people don’t like the mandate, costs, or the employer family glitch. These are ObamaCare’s “sticking points.” The problem with the GOP plan is that it replaces the mandate and costs with an opt-out, deregulation for insurers, and restrictions for shoppers. It does not give us a plan to decrease the number of uninsured individuals while addressing these problems. Changes being considered for Medicaid and Medicare also pose grave concerns. It is probable that the uninsured rate under the Republican plan would increase beyond pre-ACA levels. See the uninsured rate over time.
A Detailed Review of the House GOP Plan
Below we present a summary of the plan verbatim as found on abetterway.speaker.gov.
We are commenting on the full plan but presenting the trimmed down points of the snapshot. The full plan provides more detail in a 37-page list of well-constructed bullet-points but is not actual legislation ready to be enacted by Congress, so there is room for improvement and insight. Our notes will be in red, the GOP’s plan is in black.
NOTE: Nothing is written in stone yet. Some items that look good on paper could be structured poorly or include pork, others that look troublesome could be improved. It is critical what the actual legislation looks like by the time it gets the final vote, and we are a long way from that.
NOTE: Saying “ObamaCare isn’t working and must be repealed “isn’t “a fact” or “a plan.” It is “a talking point.” This might be fine for prime time news, but it’s not going to solve America’s healthcare issues. Those who want success regardless of party need to look very carefully at which parts are working well as well as the parts that need change. Who cares if Heritage and Cato or Obama and Clinton came up with the idea? What we care about is keeping costs down and coverage up. It is from this angle that the notes below are given. The analysis will aim to be critical in terms of thinking, but not a political ideology.
MORE CHOICES AND LOWER COSTS. Our health care system is too bureaucratic and too expensive. It didn’t work before Obamacare, and it most certainly doesn’t work now. Instead of the old, top-down way of doing things, we need to open up the system to innovation and competition. These reforms provide you with the freedom and the flexibility to pick the plan that meets your needs—not Washington’s mandates.
- Make support for health insurance portable. For people without access to employer coverage, Medicare, or Medicaid, our plan offers a refundable tax credit to help buy health insurance in the individual market. This is support you can use as you move from job to job, and into your retirement years. In fact, the credit is age-adjusted, so it grows as you get older.
- Expand patient-centered health care. Our plan empowers you to choose the care that’s best for you—and your budget—by expanding the use of health savings accounts.
- Preserve employer-based insurance. For the 155 million Americans who get health care through work, our plan caps the open-ended tax break on employer-based premiums. This will help keep premiums low, and is a far cry from Obamacare’s controversial “Cadillac tax” that the law’s architects admit is a tax on workers.
- Allow sales across state lines. Our plan allows you to purchase a plan licensed in another state, a step towards making the insurance market more competitive, and giving you the power to shop broadly for more affordable policies.
- Allow small businesses and individuals to band together. Instead of hitting them with even more mandates, our plan allows small businesses and individuals to band together through new pooling mechanisms to increase their purchasing power so they can negotiate with insurers for lower prices.
- Back wellness programs. Rather than tie up wellness programs in red tape, our plan makes sure employers are able to reward employees for making healthy choices. This will encourage personal responsibility, and save both businesses and workers valuable health care dollars.
- Enact real medical liability reform. Instead of preserving a status quo that costs our health care system as much as $300 billion each year, our plan establishes reasonable limits and ensures plaintiffs can recover full medical costs.
Proposed GOP tax credits are less generous than ObamaCare’s credits and are dependent on age and income. They aren’t detailed in this plan, but they are in the Hatch plan below and others. I’m sure they aren’t highlighting them because they are less generous. Provisions include, for example, being capped at 300% FPL instead of 400% as it is currently.
The Credits and breaks get a little more impressive if you have an HSA, as HSAs are tax-free in and tax-free out and are expanded under the plan (Health Savings Account (HSA)).
Lower income people won’t see much improvement if they can’t afford to fund an HSA, but a little assistance is offered out of the gate on some plans. For example $1,300 might be given toward an HSA as a starter package in the first year, but the HSA deductible would probably be higher than that. There would be no provision for replacing the money in the HSA, and it is unlikely to be affordable for those who need it. If this provision isn’t structured carefully, lower-income Americans could end up in a sticky situation. Well-compensated people would likely be better off under an assistance plan like this, in the same way that they benefit from IRAs and 401ks, which help those who make more money save more.
On a positive note, the Republican plan eliminates an unpopular provision of current law by replacing the “Cadillac tax” with limits on deductions for high-end health plans, which is a reasonable alternative that trades federal revenue for less bureaucracy.
The rest of the provisions concern selling across state lines, small business group buying, wellness programs, and medical liability reform. These appear to be positive moves forward.
OPINION: A smart HSA-based plan could potentially fix many of our healthcare woes, yet a poorly structured plan that only expands limits for high earners doesn’t do much except save high-earners tax money while starving the state of revenue. Thus, the GOP is either about to save healthcare with their HSAs or break the system and potentially Trump’s reputation along with it. I’m not sure people grasp the implications of this, but I’m not surprised. I can rarely convince the average struggling shopper to use the current HSA system, which is already very attractive from a tax standpoint, and I’m in contact with about 1/10th of the American public through this site. I could write much more about ideas, attitudes, and logistics related to the ACA and HSAs, but I certainly can’t get into it all here. I’m tempted as all the plans I’ve seen miss opportunities to address customer needs, healthcare as an industry, public spending, and the economy as a whole.
REAL PROTECTIONS AND PEACE OF MIND. We need to have commonsense protections for people who need care the most. These reforms will make sure you never have to worry about being turned away or having your coverage taken away—regardless of age, income, medical conditions, or circumstances.
- Protect patients with pre-existing conditions. Our plan ensures every American, regardless of their health status, has the comfort of knowing you can never be denied coverage.
- Protect coverage for young people. Our plan allows dependents up to age 26 to stay on their parents’ plan, helping younger Americans receive health care and stabilizing the market.
- Prohibit sudden cancellations. Our plan prohibits insurers from turning away patients when you renew your plan simply because you may be sick.
- Establish continuous coverage protections. Our plan institutes new patient protections so that individuals are not charged more than standard rates—even if you’re dealing with a serious medical issue. This encourages Americans to enroll in coverage and stay enrolled.
- Bring younger and healthier people into the system. Our plan gives states more flexibility so we can encourage young people to buy—and keep—insurance, helping to lower costs for everyone.
- Create one-time open enrollment. Our plan provides a one-time open enrollment period for individuals to join the health care market if they are uninsured, regardless of how healthy they are. • Bring Medicaid into the 21st century. Instead of shackling states with more mandates, our plan empowers states to design Medicaid programs that best meet their needs, which will help reduce costs and improve care for our most vulnerable citizens.
- Codify permanent protections for life and conscience. Our plan permanently enacts the Weldon Amendment to give all doctors, nurses, hospitals, and providers the freedom to exercise their conscience. • Real enforcement of the Hyde Amendment. Our plan protects federal taxpayer dollars from being used for abortion or abortion services and ensures the Hyde Amendment is actually applied.
The way Republicans treat pre-existing conditions in the full plan is very worrisome. The GOP must know this, as they don’t explain it at all in their bullet-point list. See page 20 for the REAL plan.
Pre-existing conditions must be addressed in any repeal and replace plan, but the way these plans are structured does not address the issue, it creates a loophole that makes it look as though it has been addressed.
The one-time open enrollment, high-risk pools, charging more based on health, and requiring “continuous coverage” are a recipe for increasing the uninsured rate, rates of medical bankruptcies, and costs for the medically needy and those with low incomes.
Attracting young people with low rates is smart, but a 5:1 ratio for older Americans, especially if a ratio for health is added to this, could price many out of the market. With the extra fee, their care is even more expensive. Now they have to use the high-risk pool and that creates a giant high-risk pool run by the government? How is that helping?
This section also turns Medicaid into a block grant and reinforces anti-abortion laws in healthcare. Block grants are complex. They could lead to better care in theory, but they have a real chance of backfiring in states that don’t manage their dollars efficiently. As noted above, current GOP-led states have millions of uninsured people who are denied coverage to due to cost. It is perhaps a little hopeful to think they won’t do this if given even more control over the program.
Republicans need to decide if they want to go down in history as the party that fixed healthcare, or the party that created the “continuous coverage clause,” finally figured out how to not have to pay for the sick and the poor, and attached America to poorly structured HSAs which allowed the rich to save even more and hurt everyone else. There are great elements in this plan, but I could see other elements making this much worse than ObamaCare. I think the reality of that would be a PR nightmare for Republicans.
LEAD THE WORLD IN CURES AND TREATMENTS. America is at the forefront of cutting-edge medical discoveries, and it is vital that we keep that edge. Right now, there are 10,000 known diseases, but we only have treatments for 500 of them. Our plan seeks to close this gap to help patients, lower costs, and solidify our status as the biomedical innovation capital of the world. These reforms build on the 21st Century Cures Act, bipartisan legislation that would accelerate the discovery, development, and delivery of life-saving treatments.
- Build a stronger NIH. Our plan provides NIH with a robust, steady level of discretionary funding while increasing accountability for taxpayers and supporting scientists working on cutting-edge research.
- Remove barriers to research collaboration. Our plan makes sure taxpayers are getting the most out of their investment by breaking down barriers to sharing and analyzing health data.
- Accelerate drug discovery and development. Our plan streamlines clinical trials and modernizes data-collection activities to improve how treatments are developed, tested, and ultimately approved by the FDA.
- Advance personalized medicine. Our plan makes sure that our regulatory system keeps pace with the state of science so that we can treat patients based on their genetic makeup.
- Improve the use of electronic health records. Our plan spurs innovation and improves partnerships between the technology and health care sectors
Essentially this section is all very smart and should be adopted with necessary additional considerations that would be contained in a true final bit of legislation of course. What Trump would lose by attaching his name to the last section, he would gain back in part by attaching his name to this section.
PROTECT AND PRESERVE MEDICARE. Today, more than 50 million seniors and individuals with disabilities rely on Medicare for access to health care. And millions more are counting on Medicare to provide health security when they reach retirement. Unfortunately, the program is on an unsustainable path, and Obamacare has made things worse. Our plan takes a three-step approach to save and strengthen the program:
- Provide immediate relief from Obamacare’s raid on Medicare. Our plan strengthens Medicare Advantage and repeals the most damaging Medicare provisions in Obamacare, including the unaccountable Independent Payment Advisory Board.
- Improve Medicare’s fiscal health. Our plan adopts bipartisan reforms that make Medicare more responsive to patients’ needs, while at the same time updating payment models that are outdated and inefficient.
- Preserve Medicare for future generations. Starting in 2024, our plan gives future beneficiaries the opportunity to choose from an array of competing private plans alongside traditional Medicare and helps seniors pay for or offset premium costs for the plan of their choice.
Medicare needs to be addressed in any plan, and this section addresses Medicare by privatizing it, which is a very risky move. There are several ways a market-based Medicare could work better than the current system, but also many ways it could turn Grandma into a commodity from which others profit. Consider, if my mother has a $500 a month Part C plan, and I can buy stock in her insurer via my HSA, then I can profit from her insurance dollars due to my high income while she struggles to pay a premium for a system she has been paying into her whole working life. This market system has pros and cons. One of the significant negatives is that my sweet old mother is making me money like a workhorse, one of the positives is that I’m making money tax free in my HSA like a boss. This is morally difficult to grapple with, and if we don’t structure the Medicaid, Medicare, HSA, high-risk protections, etc. correctly, then the plan is more Investment Banker than Pope Francis. I don’t think that repealing oversight and making our seniors buy even more private products is necessarily in their interests, but all health legislation is a compromise due to the checks and balances in our Government. There is a capitalist investor-based plan that works somewhere in here, but Im not confident I’m seeing it as I analyze the Better Way and other GOP plans. The public caught on to the ACA being industry friendly, how do you think they will feel about this plan?
The above is analysis and fact, below are some closing thoughts:
Republicans have suggested some common sense reforms. The section on transparency is excellent and the improvements to HSAs in the full plan are potentially as well. The willingness to keep the parts of the ACA that are working like quality over quantity show an inclination to compromise.
The proposed solution for dealing with preexisting conditions is a disaster for those whose family members have disabilities or long-standing medical concerns such as MS or cancer, and I sincerely hope they will revisit their logic.
Also, there needs to be concern over block grants for Medicaid and questions over privatizing Medicare.
The plan proposed GOP plan has both positive and potentially disastrous elements.
Trump and the GOP may want to consider a bipartisan think tank of people who have studied health care, but don’t have special interests or partisan goals.
NOTE: The Better Way Plan represents the sentiment found in all the plans below. We stuck mostly to the House GOP Better Way plan in the above analysis, but have drawn details from Donald J. Trump’s Healthcare Reform to Make America Great Again plan, Burr, Hatch, Upton’s Obamacare Replacement Plan, Rep. Tom Price’s plan, Sen. Ted Cruz’s plan, Gov. Scott Walker’s Plan, the American Enterprise Institute’s plan, and the Foundation for Research on Equal Opportunity’s plan. The plans are very similar; we’ve researched them all even though elements found in Donald J. Trump’s plan should be taken the most seriously. this page is based on ideas from all the plans.
TIP: Have questions or comments on the plan or our analysis? Just ask below and I’ll answer.