When it became apparent March 24 that Paul Ryan’s American Health Care Act could not muster enough votes to pass the House, Republican leadership finally pulled the ill-conceived bill and will now start over. This is a good thing. The Republicans had eight years to design a viable health care alternative to Obama’s “Affordable” Care Act, but what they came up with was “Obamacare Lite.” It continued to mandate expensive coverage and favor the insurance companies and other lobbyists while doing little to make health care more affordable.
Donald Trump and the Republican Congress were elected in November largely on the promise of repealing and replacing Obamacare. Yes, the working poor and folks with pre-existing conditions now have coverage, but at the expense of everyone else. Those in the middle class have been hardest hit, with premiums more than doubling in many states and high deductibles making it almost impossible for ordinary people to see the doctor except in extreme emergencies. In fact, my facebook feed is full of GoFundMe accounts asking for help to cover illnesses and surgeries. This is not a solid health care plan. It’s as though we have no health insurance at all.
Meanwhile, Senator Rand Paul, a doctor by profession and free-market libertarian politically, has designed a simple four-page health care act that addresses all the fundamental issues in a way that provides coverage for those previously considered uninsurable and simultaneously reins in costs. It also encourages innovation and efficiency. Here are the basics of Paul’s plan:
- Flexibility of groups. Senator Paul’s plan allows people to create affinity organizations that offer group insurance policies to members. Employer-based insurance coverage is an archaic system that began as a product of the wage-and-price controls of the FDR years. Since employers were not allowed to give raises, they offered benefits instead. But there are many drawbacks to employer-based group insurance: self-employed individuals are locked out of group policies; small businesses don’t offer insurance; changing jobs wreaks havoc on continuity of care.
Senator Paul’s plan would allow the formation of affinity-based groups, which would be a huge boon for the growing mass of people who are self-employed or independent contractors. Paul’s plan would enable myriad groups to offer insurance to its members—churches, think tanks, clubs, professional organizations, alumni associations, or even neighborhoods.
- Competition across state lines. Senator Paul’s plan allows portability across state lines, which will encourage competition among insurance companies that will lead to lower costs.
- Choice of benefits and risk levels. The plan allows customers to choose their benefits and their risks, the way we currently decide how much coverage we want with our auto insurance and life insurance. Every family and individual is different. We have different incomes, different savings, different lifestyles, different genetic risks and pre-existing conditions. Some people want complete coverage with a small co-pay; others would rather insure themselves against catastrophic events or conditions and pay out-of-pocket for regular check ups and ordinary illnesses. Large families with injury- and illness-prone children might want to pay higher premiums with lower deductibles, while a healthy couple with healthier savings accounts might choose the lower premiums and higher deductibles.
Because my husband and I are freelance writers and self-employed, we don’t qualify for employer-based insurance so we had to enter the private insurance market. We found a top-quality company that offered us the choice of several plans and coverage options. We could have paid $1,200 a month with a low deductible or $600 a month with a $5,000 deductible. When we realized that we could save $7,200 per year in premiums by going with the higher deductible, the choice was obvious. Yes, it costs us on average $250 to visit the doctor when we’ve been sick or injured, but we’ve never actually reached our deductible in any given year, and our savings have continued to grow. We purchased insurance for what it’s meant to be: protection against catastrophic events, not a pre-paid plan for ordinary illnesses.
Senator Paul’s plan also allows people to choose which items they want to cover. Why should a middle-aged couple be mandated to purchase maternity coverage, for example? Or a single man, for that matter? Similarly, non-drinkers and non-smokers might opt out of substance-abuse care and shoulder that unlikely risk themselves. Obamacare and the Republican plan both mandate total coverage, and that’s one of the main reasons insurance premiums have skyrocketed under Obamacare.
- Health Savings Accounts. Once available only through employer-based insurance, health savings accounts (HSA) are the perfect way for individuals to save for regular and unexpected medical expenses, shop for medical care, and make educated decisions regarding their own health choices. Recently I injured my wrist and wanted to get it x-rayed. I didn’t have a family doctor in the area, so I needed to choose among the hospital emergency room, a walk-in clinic, and an unfamiliar general practitioner. Not one of them could tell me how much the visit and the x-ray would cost. In fact, at the clinic the receptionist responded by asking me how much I earned, because that would determine how much the government would pay—she assumed that I was poor, when actually I was a reasonably wealthy individual who is simply cost conscious, as we all should be.
Using HSAs also encourages people to take better care of their health, and to limit unnecessary trips to the doctor, since they’re using their own savings accounts to pay the bills. Yet the money is there, waiting to be used, for necessary treatment.
- Tax deductibility. Currently only employers are allowed to deduct insurance premiums as a business expense, and individuals can only deduct medical expenses that exceed a certain percentage of income. Senator Paul’s plan would allow individuals to deduct their insurance payments and Health Savings Account contributions from their income tax, and to pay their insurance premiums with HSA contributions.
- Pre-existing conditions and chronic illnesses. These two problems have been at the heart of health care reform. Insurance companies were anxious to rid themselves of customers who needed long-term care, and unless you were covered under a group plan at work, insurance coverage was simply unavailable. If you lost your coverage for any reason (such as changing jobs) you couldn’t buy a new policy. We all feel sympathetic toward people who have catastrophic conditions, and medical bills are one of the leading causes of bankruptcy. My heart goes out to those who start GoFundMe campaigns to pay for expensive treatment.
Under Senator Paul’s plan, those with pre-existing conditions who previously were uninsurable outside of a group plan would be allowed to purchase insurance during a two-year window. After that window closes they must remain continuously insured. This makes sens, and is the only way a health insurance plan can be sustainable. If individuals are allowed to wait until they’re sick or injured to buy insurance, then premiums will continue to skyrocket. It’s the same with auto insurance and life insurance: we have to be insured before the accident has happened or the terminal illness is contracted. Continuous coverage will be much easier to maintain for life when group policies are available outside of the workplace and greater choice helps keep costs and premiums lower. Let’s face it: Insurance is the one item we buy, hoping that we will never have to use it. The lucky ones are those who “waste their money” on insurance they never use.
- What about the poor? They would continue to be covered by Medicaid through programs administered through the states.
- Innovation. Several cost-containing measures were already being introduced through market-based solutions when Obamacare was passed. For example, the Surgery Center of Oklahoma is a free-market organization that doesn’t accept insurance and provides a list of procedures and their prices. They charge considerably less than insurance-based providers. Similarly, mobile clinics had begun bringing health care into lower-income areas where families did not have access to general practitioners and tended to use the emergency room for ordinary health care.Senator Paul’s plan encourages these kinds of market-based solutions to health care.
Let’s lobby for Senator Paul’s plan. It’s simple, it’s personalized, it controls costs, it protects people with pre-existing conditions, it encourages innovation, it’s written by a doctor, and it’s even tax deductible. This is the right health plan for America.
You can read his four-page proposal here: https://www.paul.senate.gov/imo/media/doc/ObamacareReplacementActSections.pdf
Jo Ann Skousen is co-producer of FreedomFest and founding director of the Anthem Libertarian Film Festival.
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