So much for the "party of 'no'." Rep. Paul Ryan (R-Wis.), along with Sen. Richard Burr (R-N.C.) and Rep. Devin Nunes (R-Calif.), this week offered the first, detailed health care reform bill in Congress- the Patients' Choice Act (S. 1099/H.R. 2520). To be fair, Barack Obama is awfully busy doing a campaign swing about health care reform and senate Democrats have their plates full threatening private opponents of their potential plans, so they can perhaps be forgiven for not actually offering any comprehensive plans, yet. Ryan, whose home state Barack Obama visited yesterday to deliver his platitudinous vision for health care reform, held a conference call on his own plan today- an alternative to what he calls the "false choice" Obama offers between his plan and the status quo. It was his second this week- the first one hosted by The Heritage Foundation, which invited participants via social networks, and claimed 1,300 attendees. "There are better ways to fix this problem," than the Democrats' proposal for a government-run insurance option, he said. "You can have universal access to affordable health care in American without the government running it. We do this in our bill with innovative reforms that get the market back involved...The nucleus of the system we propose is the patient and the doctor." Ryan's plan, which USA Today called "a serious proposal that merits serious consideration," would turn the health care market into a freer, more flexible one by delinking health care coverage from one's employment. Instead of, as Democrats have suggested, equalizing the health care tax structure by raising taxes on businesses, the Ryan plan would give the same tax break employers now receive to all individuals- $5,700 for a family and $2,300 for an individual, whether they're insured by their employer or not. This plan would use market forces and competition (along with encouraging price transparency and shopping around by consumers) to control costs. "Spending more money, as the president's proposing, is not the answer," Ryan said. "Let's look at what we're doing already...let's spend it more efficiently, more effectively." Here's USA Today's explanation, which is pretty straight-forward on the ups and downsides of this idea:
The government would essentially pay for the first $5,700 in coverage for a family through the credit, and the family would pay the rest out of pocket. With the average family plan costing $12,700 now, that is a major cost. An employer could contribute, but with workers having to pay tax on the benefit, the employer might as well convert it to pay. The upside is that having Americans pay for more of their medical needs with their own money would give people incentive to shop around when looking for insurance or having procedures done, putting pressure on providers to control costs. The downside is that millions of people who are now covered through their employers could be left on their own. The policy implications could be sweeping. And so might the political ones. On one level, this is just a group of staunch conservatives girding for a fight. Instead of having no plan, they have one that many Democrats, and potentially some moderate Republicans, see as a frontal assault on employer-sponsored health care.
Of course, the counter-argument is that the floated Democrat plan to offer a government insurance plan, and pay for it by getting rid of the tax exemption for employers is certainly an assault on employer-sponsored health care, in the service of eventually creating a government monopoly on health care. That's what Ryan predicts is the ultimate outcome of a government-run option, as Democrats envision it, and he uses a recent study from health care actuaries, The Lewin Group, to bolster his point. Lewin ran models based on the floated and leaked specifics, such that there are, of Democratic plans, and found their impact on the private insurance industry to be severe:
The Lewin Group crunched the numbers through their health care model and found that premiums for the public option plan would be 30 to 40 percent lower than private plans. Sounds great, right? But these lower premiums are essentially achieved by imposing price controls. The Lewin Group assumed that the public option plan will pay doctors and hospitals at the same rates they currently receive from Medicare. And Medicare reimbursements already run 71 percent and 81 percent below what private health plans pay hospitals and doctors, respectively. First, the somewhat good news. Lower public option premiums and an increase in Medicaid coverage would attract 28 million of the 48 million Americans who currently are not covered by health insurance. Now the bad news. The lower premiums would encourage employers to drop private health insurance and put their employees into the public plan. Overall, the Lewin Group estimates that if Medicare reimbursement rates are imposed, the number of Americans with private health insurance would decline by almost 120 million, leaving only 50 million Americans in the private insurance market.
Liberals note that the Kennedy plan proposes to pay participating doctors Medicare rates plus 10 percent. As Keith Hennesey put it, in his break-down of the draft bill:
The +10% is clearly intended to attract short-term legislative support from medical providers. I hope they are not so naive that they think that differential would last.
Lewin measured a Kennedy-like proposal, and still came up with a huge number leaving private insurance:
The Lewin Group looked at another scenario similar to the Kennedy proposal, where the public option plan reimbursements to doctors and hospitals were set at the midpoint between Medicare and private plans. In that scenario, the number of Americans covered by private insurance would only drop by 67 million, instead of 120 million.
Democrats who back such a plan have argued, "Hey, we can't help it if the public plan is so darn attractive, everyone wants in," but the claim is disingenuous. As Ryan puts it, the government "has so many built-in advantages over the private sector," which will be deployed against private companies while the government is simultaneously discouraging employer and individuals from buying insurance with the tax code. It's akin to hand-cuffing your opponent before playing a game of one-on-one, and then asking the audience to get really psyched about the competition. The Democrat plan hasn't yet been scored, but estimates are that it will cost between $1.2 and $1.5 trillion. Ryan worries that Democrats will wait until the last minute to offer a detailed plan, depriving Americans of the time to examine it. It would be a good tactical move, but wouldn't make for good policy. He cites lessons learned by Democrats during the 1993 debate, during which public opinion shifted after a bill was made available. "As a consequence, it kind of died under its own weight," he said. "That gave time for public opinion to shift." The upside of the Democrats' attempt to push the bill through on reconciliation is that they must show how they'll pay for the bill. When it is eventually scored by CBO, "we will see all the tax increases and all the Medicare cuts," Democrats are proposing, Ryan said. The GOP option, for its part, is written to be revenue-neutral and spending-netural, and shows a net tax cut for Americans, Ryan said. Ryan emphasized that he agrees with Obama's goals of increasing competition and lowering costs, but as is often the case with Obama, finds his rhetoric to be woefully mismatched with his proposals. "If the goal is what they state, they ought to do it through the 501 (c) 3 section of the tax code," he said. "If the goal is to set up a competition where the competition is stacked...then you want to put a public option in...That is just not what Americans want or deserve." More from the authors of the bill, here.
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