Unpacking the Republican Healthcare Backpack

Republican lawmakers have pledged to repeal and replace Obamacare with their own version of healthcare reform that is touted to be the cure-all for what ails the American healthcare system. In many ways, it does hold promise as more than a public band-aid, but the lack of agreement on many specifics within the Republican party make it anyone’s guess as to whether anything will truly come of this proposal.

Both left and right wing politicians have had their battles when it comes to understanding the wants and needs of the healthcare deprived public, but both have failed to fill the general population at large with overwhelmingly good feelings about any proposal brought forward to date. The Affordable Care Act has been embraced and adopted with a mixture of love and hate. It remains to be seen how the public will respond to the Republican proposal. Paul Ryan, Speaker of the House, refers to his plan, A Better Way, as a “healthcare backpack.” It’s time to unpack the backpack and see what might be included in the next battleground for healthcare politics.

Common Battleground – Affordability

Obama would be the first to argue in defense of Obamacare that affordable health coverage has been made available to anyone that wants to pay the premiums. Republicans would argue that the Affordable Care Act has stripped away many of the features that keep healthcare premiums down. Competition is limited, and Americans are not allowed to shop for coverage that is over state lines, primarily because states have not chosen to participate in this idea. Republicans would further argue that a good healthcare backpack should be filled with a lot of options that make it possible for any citizen to obtain affordable coverage.

Making Healthcare Coverage Portable

The Republican healthcare initiative has used the word “backpack” to demonstrate their desire to make plans portable for individuals. They envision healthcare plans that can be taken from job to job, into small businesses, home businesses or to college. These are plans that can be retained and used at retirement.

The cost and feasibility of this notion is unclear as they have failed to demonstrate any monetary figures with the proposal, but it is a unique idea. Increased premium competition will be necessary to make a program like this affordable. Individuals that had the ability to increase or decrease coverage as needed to suit needs at the time can make healthcare plans an affordable asset for everyone.

Are Republicans Attacking Employer-Provided Coverage?

Opponents of the Republican healthcare initiative say that the backpack idea is a direct attack on employer-sponsored healthcare plans. It’s true that many businesses get huge discounts from having high numbers of employees enroll in company health benefits. If employees don’t need employer-sponsored coverage because they can take their healthcare backpack with them, then this could leave employers with little incentive to offer coverage at all. About half of people with health insurance have coverage through work. Republicans argue that offering portable insurance doesn’t necessarily change the cost.

This idea of portable coverage could eliminate the “job lock” many feel when unwilling to leave jobs they dislike because it would mean losing great healthcare benefits. It would force insurers to offer more competitive rates to individuals rather than businesses. The backpack concept puts real power back into the hands of those who would purchase and use these plans.

Offering Wider Options for All

One of the main differences between the Republican healthcare initiative and the Affordable Care Act is the push to offer a wider selection of healthcare plan products at reasonable prices. The Affordable Care Act seems more about guaranteeing everyone coverage and hoping that the prices settle reasonably in the end.

Republicans want to see reasonable prices at the start, which consumers could use to make smart choices on products that serve their specific needs. Younger people will have fewer healthcare needs than older Americans. Shifting the burden to younger and healthier enrollees, and hoping that they’ll pick up the tab for insurance costs nationwide, has been a sore spot with Republicans under Obamacare.

Increasing Market Competition

The ACA does limit competition in the market with healthcare plans in several ways. If you’re living abroad, you’re unable to participate in marketplace coverage and would have to seek coverage through private means. For people living in the states, coverage is often restricted to where you live. Those in North Carolina, for instance, can’t dip into South Carolina for a plan due to restrictions imposed by state insurance departments. Many companies have found that the Obamacare restrictions and costs aren’t cost-effective, so they don’t offer plans through the marketplace at all.

All of these problems reduce options and competition that can bring about a better premium rate for individuals. Republicans want provide more choices and competitive rates for everyone. Democrats fear that opening up competition and eliminating protections for certain people will create a fallback in which millions of people become uninsured again.

Backing Away from “Coverage for All”

One of the popular features of Obamacare has been the ability of those with pre-existing conditions and poor medical history to get coverage. This is one battle that the Republicans fear the most, since removing guaranteed-issue coverage for these individuals could be politically costly. What they propose is to offer tax credits for everyone that can be used towards a healthcare policy that will cover pre-existing conditions. They are also willing to throw $25 billion dollars at the problem over the next 10 years to secure coverage for those with chronic health problems.

The more important part of their agenda is to remove the income eligibility requirements for tax credits offered to individuals and families who aren’t able to get healthcare coverage through an employer. As it stands, about 85 percent of people who sign up for marketplace plans qualify for subsidies to reduce the cost of monthly premiums. But there’s a gap in the system. People who earn too much for subsidies but don’t qualify for employer coverage or Medicaid fall into a grey area where they can’t afford health insurance at all. Republicans want to address this gap by offering cost assistance based on age rather than income, and assistance would be adjusted over time so that older people, who generally need more care, would have more help than younger people.

Furthermore, Republicans want to bring the age band rating back up to where it was before the ACA took effect. Right now, older people can pay about three times as much in premiums as younger people (a ratio of 3:1). This has always been deemed too slight of a ratio to really offset the cost of care for people with more medical problems since it raises premiums unnecessarily for young people – who then don’t sign up for insurance at all. Republicans are proposing to increase this ratio back to the pre-ACA rate of 5 to 1. This will make healthcare plans much more affordable for those that are at the peak of health while bringing down costs for people at the other end of the spectrum.

To encourage young consumers to maintain health insurance policies, Republicans also want to eliminate the practice of treating people who face unexpected illnesses or injuries as high risk applicants. As long as people maintain continuous coverage, they would not have to risk getting bumped off of plans or denied future coverage. If people allow their coverage to lapse, then they would be subject to the same scrutiny as new applicants in the future. Republicans consider this policy an incentive to get health insurance and keep it current.

Eliminating Healthcare Coverage Mandates

The conservative consensus is that individual and employer-sponsored mandates do more harm than good, so these mandates that require people to have health insurance would be eliminated under a Republican healthcare plan. Lots of people support this idea, but no one knows how to continue offering coverage to people with pre-existing conditions – as well as people who need greater medical care in general (“high-risk” individuals) – without forcing younger, healthier people to sign up.

The Republican healthcare initiative is focused more on creating an environment that makes healthcare plans affordable rather than penalizing individuals and American businesses when they refuse to participate in the national healthcare system.