Last post I talked about ObamaCare’s Last Stand, an eleventh hour attempt to replace ObamaCare with a bill called Graham- Cassidy. The bill must be passed by the Senate before the end of the month if it is to use the reconciliation rules that only require 51 votes.
Just how good is this last minute bill pieced together by Senators Lindsey Graham (SC), Bill Cassidy (LA) Dean Heller (NV) and Ron Johnson (WI)?
John C. Goodman, the father of Health Savings Accounts and perhaps the premier healthcare economist of our nation, says it is very good and he gives us ten reasons to believe that:
There are currently about 30 million Americans without health insurance, mostly because the value of insurance products being offered isn’t worth the money. Millions have elected to pay the tax associated with non-compliance rather than purchase an expensive and largely worthless insurance product. Graham-Cassidy will allow states to offer more attractive insurance packages at lower cost.
The use of risk pools and reinsurance will also help control costs for high-risk patients. Goodman says, “If a state establishes a dedicated source of funding (outside of its block grant) for this purpose, it should be able to reduce premiums in the non-group market by as much as 50%.”
At least one plan could be offered with a premium that is no more than the subsidy the state provides. Since these plans would require no out-of-pocket payment by the enrollee, people could be automatically enrolled through the Food Stamp program, by H & R Block, the DMV, or other ways. Universal coverage could be a reality.
The block grants to the states would allow them to tailor insurance products for the specific needs of the people. Currently, low and moderate income families are being forced to buy coverage inappropriate for their needs or their finances. Instead, they could choose policies that meet their needs and even allow them to establish a Health Savings Account.
This bill would allow states to level the playing field for those purchasing insurance in the individual market. Currently they do not enjoy the tax exclusion of those getting their insurance through their employer. Under this reform, the employer and individual mandates go away and states can equalize the subsidy offered in the group and individual market.
Because states will have the power to equalize the government subsidy available at work and in the marketplace for low and moderate income families, they will also be able to allow portable insurance for these same people. Therefore, employees could take their insurance with them when they change jobs, just like a 401-K account.
It is a well-known fact that healthcare outcomes with private insurance are much better than those with Medicaid. This reform will allow many people currently on Medicaid to purchase private insurance with the same government dollars.
Gaming the system is a big problem with ObamaCare. Many people drop their insurance when they are healthy and sign up again when they are sick. Of those who enrolled in January, approximately 25% have dropped out of the system by September and then roughly half of those re-enroll the following year. Because insurance companies must cover people for a 90 day grace period, these people abuse the system. It’s like being able to purchase homeowner’s insurance after your house is on fire. This greatly increases the cost of insurance for everyone.
Under Graham-Cassidy, states will be able to require individuals to pay the full actuarial cost of any unfair gaming activity.
At $50 per month for an adult and $10 for a child, the cost of direct pay (concierge) medicine has come down to a level that should make it accessible to almost everyone. This reform allows these fees to be paid from a Health Savings Account or by a third-party insurer.
Centers of excellence will be able to specialize in specific diseases – such as cancer care, heart disease and diabetes. They will be able to ask health questions and screen applicants to help get the right patient to the right plan.
A Real Health Insurance Marketplace
ObamaCare’s risk adjustment is focused on plans, not patients, and there is no realistic way for a plan to know what compensation it will receive for enrolling a patient with a costly medical condition. This uncertainty forces insurers to raise prices. With the flexibility in this bill, states will be able to set up a risk-adjustment mechanism that will protect patients, not health plans, and centers of excellence will be rewarded for providing efficient, high-quality care to patients with the most serious medical problems.
That’s plenty of reasons to support Graham-Cassidy as a huge improvement over ObamaCare.
(Senate Majority Leader Mitch McConnell has pulled the bill for now because there are insufficient votes for passage. It is my hope the bill will be brought up again in the future.)