Last post I discussed the Patient CARE Act as a possible replacement plan for ObamaCare. In this series that reviews several ObamaCare replacement plan, today I will review another plan.
The 2017 Project Plan
Jeffrey Anderson, co-founder of The 2017 Project, the Alternative to ObamaCare that was originally called A Winning Alternative to ObamaCare. Chris Conover, writing in Forbes, analyses this plan.
Conover says that HHS Secretary nominee Dr. Tom Price modeled his plan after Anderson’s plan and with his help. Price’s plan is called the Empowering Patients First Act (HR-2300) and was introduced in 2015 with 84 sponsors.
In addition to repealing ObamaCare, the plan has three main features:
- Obamacare’s income-related subsidies are replaced with less expensive tax credits that vary only by age(0-17, 18-34, 35-49 and 50-64).
- The long-standing tax exclusion for employer-provided health insurance coverage is retained, but the ACA’s Cadillac tax is replaced by a functionally-equivalent cap on the amount of the exclusion (set at the 75th percentile of annual employer sponsored insurance premiums); workers in firms with fewer than 50 full-time-equivalent workers would be allowed to purchase non-group coverage with tax credits.
- Annual contribution limits for health savings accounts are increased to $6,250 for individuals and $12,500 for families. As well, enrollees in health savings accounts are eligible to receive a one-time, refundable tax credit of $1,000 to be deposited directly into the account.
Some of the popular provisions of ObamaCare are retained:
- Previously covered households cannot be dropped from their current health plan, denied coverage through a new plan, or charged higher premiums on the basis of health status in the individual market.
- Households with coverage through an employer can transition to the individual market with the same protections.
- Young adults, aged 18 to 25, may purchase a plan with guaranteed issue protections and without facing higher premiums because of health status for one year after turning 18 or ceasing to obtain coverage through a parent’s health plan. Similarly, newborn children are eligible for the same protections for one year after birth.
- High risk pools, facilitated by the states, will receive $7.5 Billion per year in federal funding, increased annually by 3 percent (this would protect any residual population whose pre-existing conditions might make coverage unaffordable).
Scoring the Plan
This plan was also scored by the Center for Health and Economy (H & E) as follows:
Impact on Non-group Premiums
This plan is expected to lower the cost of less expensive Bronze plans (-11% for singles, -25% for families) and catastrophic coverage (-17% for singles, -5% for familes) in 2018. The average per capita savings is $350 for singles, $1681 for families. Since 51 million Americans are expected to have this kind of coverage, the projected savings on premiums exceeds $17 billion.
The plan is expected to lead to 6 million fewer covered individuals by 2023. This represents 6.1% of the under age 65 population. The decrease in coverage is the net effect of increased enrollment in both the individual market and employer sponsored insurance in conjunction with lower enrollment under Medicaid.
This plan is expected to result in greater access to providers. According to the H&E Provider Access Index, access will increase by 18 percent for the insured population by 2023, but this masks huge variations across types of coverage. For example, access is projected to increase by 57% in the non-group market by 2025.
The H&E Medical Productivity Index (MPI) is calculated in a parallel fashion by taking into account varying incentives across plans that promote or discourage efficient resource use. The Alternative is expected to lead to greater productivity than under current law. According to the H&E Medical Productivity Index, productivity is projected to increase by 9 percent by 2023 principally due to much larger gains (6%) in the non-group market.
Federal Budget Deficit
Compared to current law, the insurance coverage provisions of the plan will decrease the federal deficit by $1.13 trillion between 2016 and 2025.
So the benefit of reducing the number of covered Americans by 6.1% is a savings of $1.13 Trillion dollars over ten years. To put it another way: Is it worth $1.13 Trillion to insure 6.1% of the population?
Comparison of Plans Coverage Loss Federal Deficit Savings
Patient CARE Act 1.4% $534 Billion
The Alternative 6.1% $1.13 Trillion
These savings to curb the ever-growing federal deficit are substantial, but do require a small decline in the number of insured Americans. Is there a plan that doesn’t require these losses in coverage? Next post we will discuss another plan.