Shortly after President Obama signed the Affordable Care Act into law nearly four years ago, I ran into a senior executive of one of Utah’s health insurance companies. We spoke of the tremendous uncertainty Obamacare had introduced into the health insurance marketplace, and I wondered aloud how this man’s company would survive. He paused before responding, and then said, in essence: We are on our way out of business; the only question is how long we can hold on.
One week ago, Moody’s rating agency downgraded its outlook for the entire health insurance industry from “stable” to “negative”, citing (1) “the unstable and evolving regulatory environment”, (2) the poor health insurance enrollment rates for young, healthy Americans expected to carry much of the cost burden for the elderly and ill, and (3) the catastrophic roll-out of the health insurance exchanges, which still cannot properly route enrollment and payment information to the health insurance companies. Moody’s warned that if these issues are not repaired, and soon, the whole health care system could be in jeopardy. Obamacare has placed the insurance companies we rely on, and the entire U.S. economy itself, in a very precarious situation.
Republicans have argued for the past three years that Obamacare should be repealed and replaced, but have offered precious few specifics about what such a replacement would look like. Finally, gratefully, with the introduction this week of the Patient Care Act by Sens. Orrin Hatch, R-Utah, Richard Burr, R-N.C., and Tom Coburn, R-Okla., Republicans have a blueprint to replace Obamacare, repair the damage it has caused, and stabilize the health care insurance marketplace, all while improving health insurance access for Americans. Here are some of the details.
First, the Patient Care Act retains some of the more popular parts of the Obamacare legislation, including the ability to stay on a parent’s insurance until age 26 and the elimination of lifetime insurance caps. But it eliminates the most punitive aspects of the law, including the individual mandate and the employer mandate.
Second, the Patient Care Act removes the completely unrealistic requirement for insurance companies to issue insurance policies to anyone who wants one, regardless of their preexisting medical conditions. (This “guaranteed issue” requirement of ObamaCare ensures the eventual collapse of health insurance companies because people, if they know they cannot be turned down because of preexisting conditions, will only buy “insurance” when they are sick).
Third, the Patient Care Act introduces the “continuous coverage” rule, which would allow anyone with a health insurance plan to move between insurance platforms (i.e., from an employer sponsored plan to the individual insurance market) without facing higher premiums based on their individual health status. This will greatly improve health insurance portability.
Fourth, the Patient Care Act would prohibit the federal government from creating national minimum standards for insurance, returning regulatory power back to the states and preventing future mass cancellations of health insurance policies.
Finally, the Patient Care Act would roll back the expansion of Medicaid from 133 percent of the federal poverty level to 100 percent, and it would allow Medicaid recipients to opt out of the Medicaid program altogether and receive an equivalent subsidy to purchase health care insurance in the private marketplace. While the Patient Care Act would still make some federal tax credits available for the working poor to purchase health insurance, the cost of these tax credits would be substantially less than the existing Obamacare subsidies.
While I have no hope that this president will allow Congress to alter, in any way, his signature “accomplishment”, the Patient Care Act is an excellent platform for the 2014 election cycle and a serious, thoughtful framework for future health insurance reforms.
Dan Liljenquist is a former state senator and U.S. Senate candidate.