By: Kathleen Gmeiner, Project Director, OCHC

Three Republican Senators – Orrin Hatch, Tom Coburn and Richard Burr – introduced on January 27, 2014 the Republican replacement plan to go with their party’s call to “repeal and replace Obamacare.” It’s called the “Patient Choice, Affordability, Responsibility, and Empowerment Act (CARE Act).” It would be a very poor replacement for the ACA. It makes health care affordable for far fewer people and at the expense of comprehensive benefits and covering those excluded from the market by pre-existing conditions. Here is what it does:

• People would have protection from insurance company discrimination based on pre-existing conditions ONLY IF they were continuously insured. Otherwise their option would be state high risk pools that the law would aid. [Note: State-run high risk pools have never been effective in covering the millions with pre-existing conditions].

• Young adults could still remain on their parents’ insurance policies.

• Prohibition on lifetime limits in what an insurance company will pay out remains.

• People who fail to choose a health plan would be passively enrolled in a plan at the subsidy to which they are entitled; they could drop it.

• It would encourage malpractice reform.

• It would give states Medicaid dollars based on the number of people enrolled in Medicaid, not based on what the state spent on Medicaid. The ACA provision that subsidizes states at 100% and then down to 90% would be gone. Persons eligible for Medicaid could take Medicaid or buy private insurance instead with a subsidy.

• It would keep the changes to Medicare in the ACA.

• It would prevent insurance companies from canceling insurance policies except for fraud or misrepresentation.

What’s missing from the Republican plan?

• The Marketplace

• The mandated set of benefits (The ACA requires policies to have ten essential health benefits)

• The prohibition against gender discrimination

• Protection for pre-Medicare age older adults –Under the ACA, a 60-year-old cannot be charged more than 3 times what a 20–year-old is charged. Under the Republican plan, the older person could be charged 5 times as much. And, states could even opt out and charge greater than five to one.

• Tax subsidies are cut off at 300% of the federal poverty level, not 400% as under the ACA

• Financing – the insurance, hospital and medical device provider taxes that support the ACA are gone; the replacement is a reduction on what employers who provide insurance can deduct from their taxes.

The Center for Health and Economy, a newly-created think tank by former Congressional Budget Office and Republican Douglas Holtz-Eakin, issued a fiscal analysis of the plan January 30th. Of note, the Center says that “there will be a significant increase in individual market participation, but that is “expected to be offset by large reductions in the Medicaid population.” (emphasis added)

And that’s the rub. While the plan would provide subsidies, it would greatly reduce Medicaid. And it leaves all of the people with pre-existing conditions who are unable to maintain continuous coverage at the mercy of state high risk pools, which have a terrible track record for helping large numbers of those with pre-existing conditions. Those who could maintain coverage would likely do so with higher deductible plans that would not be required to provide mental health and substance use disorder services, maternity coverage, women’s health benefits and the preventive services – all now firmly established in the ACA.

Let’s take a look at the subsidy in the ACA and the CARE Act by looking at a hypothetical.

Tricia is 26-year-old single adult living in Franklin County with annual income of $22,000, or 191% of the federal poverty level. Under the newly proposed “CARE” Act she would get a subsidy of $1,560 for a year. Applied to the lowest cost silver plan in the current Ohio Marketplace, she would pay $125 per month under CARE, while under the ACA she is paying $105. But, under the ACA she can receive, without co-pay or deductible, an annual well woman visit and a routine Pap test. Under the ACA, if she gets pregnant she’s covered. If she is diagnosed with a mental illness, she’s covered. Under Tricia’s silver plan she can see her doctor for a $10 co-pay. None of these benefits is guaranteed in the CARE plan. And without the ACA, she may be paying more for her insurance than a 26 year old male living in her same city.

There is one silver lining in the introduction of this new plan. It shows that Republicans recognize that they can’t keep calling for the ACA’s repeal without an alternative and that to have a chance at passing a “replacement” bill, they cannot totally roll back the ACA. But that is about the only positive that can be said about it.