House Republicans Publish HealthCare Manifesto

While the Republicans in Congress have called for“repeal and replace” of the Affordable Care Act, theiropponents have repeatedly asked for the GOP alternative.At the end of June, the House Republicans announcedtheir alternative proposal.

This issue of Legislative Review provides an overviewof the GOP’s health care alternative developed by theHealth Care Reform Task Force. The report is named,“A Better Way Healthcare White Paper.”

Five Core Principles

The proposal is built around the following:1. Repeal of “Obamacare”2. More choices, lower costs and greater flexibilityas opposed to the current “one-size-fits all”approach

3. Strategies to protect the most vulnerable4. Encouraging innovation in devices and therapies5. Protecting and preserving Medicare.

The report maintains that it represents only the“beginning of the conversation” to fix what is brokenin health care.

Repeal

The report provides little new information regarding theneed to repeal the Affordable Care Act (ACA). It doescollate the grievances that the GOP has against theACA which magnifies their position in some respects.

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The information contained in this publication is intended for the general information of our clients. It should not be construed as legaladvice or legal opinion regarding any specific or factual situation.

VOL. XXI, ISSUE 6 JULY 2016

Letter from Karen Knippen

Summer is here! And Labor Day is just around the

corner. Labor Day is considered the true kick-off of

campaign season.

The economy and national security are sure to be

major topics of debate this fall. Whether health care

and the recommendations in this report are major

topics of discussion remains to be seen. Health care

was more of a side note during the primary season.

For those of us in the insurance industry, health care

is always a major topic.

Sincerely yours,

Karen Knippen, RHU, REBC, CLTCSenior Vice President

EUCLID MANAGERS® has been serving the independent agent since1976 with a portfolio of group health, professional liability andindividual health, life, annuity and long-term care products. Weproudly represent UnitedHealthcare, Delta Dental of Illinois,MetLife and UnitedHealthOne Individual. We encourage yourfeedback and suggestions. Please call your EUCLID MANAGERS®

Marketing Representative or Marcy Graefen at (630) 238-2915 formore information. Outside Chicagoland, call (800) 345-7868.Website: www.euclidmanagers.com

-2 legislative review www.euclidmanagers.com

Of particular note, the report lists 17 executive actionsthat are labeled as “unauthorized” and “egregious.”Among these are:

• Paying cost-sharing subsidies to insurancecompanies without Congressional appropriation

• Via a blog post, delaying the employer mandatebeyond the statutorily mandated start date

• Allowing insurance companies to extend non-compliant health plans without statutory authority

• Repeatedly delaying employer reporting requirements• Failing to adequately verify eligibility for recipientsof subsidies during the first year of coverage

• Delaying and then creating multiple “exemptions”to the individual mandate as well as altering openenrollment periods not specified in statute

• Failing to provide to the Treasury as much as $3.5billion in reinsurance fees.

One could argue that some of these actions, as wellas others listed in the report, are the types of accom-modations that are often made when rolling out newlaws. As this report is, first and foremost, a politicaldocument, it is not surprising that such accommodationsare not recognized as such. Other actions such as payingsubsidies without Congressional appropriation may havemore gravity. In fact, the GOP has initiated a lawsuitregarding the payment of subsidies withoutCongressional appropriation.

More Choices, Lower Costs and GreaterFlexibility

This principle is seen as supporting a move in a differentdirection from current health policy. The emphasis is onputting individuals in charge of their health care andempowering the states to continue in their rolesregulating insurance.

The recommendations, some of which have been long-standing GOP proposals, intended to provide greaterchoice and flexibility include:• Expanding consumer-directed health (CDHP) careoptions

• Making coverage portable• Preserving employer-sponsored insurance• Purchasing coverage across state lines• Expanding opportunities for pooling• Preserving employee wellness programs• Protecting employers’ ability to self-insure• Medical liability reform.

Expansion of CDHP options would include allowingHRAs to fund individual insurance premiums.Expansion of HSAs would allow catch-up contributionsfor spouses and increasing the maximum HSA contribu-tion. The proposal would also expand access to HSAs togroups such as those insured by TRICARE.

Portability would be enhanced by providing a“universal advanceable, refundable tax credit forindividuals and families. The monthly tax credit wouldbe adjusted for age. Anyone purchasing a plan thatwas less expensive than the tax credit would be ableto deposit the difference into an HSA-like account.

The proposal also includes a cap on the tax exclusionfor employer provided coverage. The cap would,however, exclude employee contributions made toan HSA for purposes of the cap.

To expand pooling, the proposal supports expansion ofassociation health plans (AHPs). Individuals would beable to come together to purchase coverage throughindividual health pools (IHPs).

www.euclidmanagers.com legislative review 3-

The GOP blueprint also calls for a study of theadvantages and disadvantages of the McCarran-Ferguson anti-trust exemption; a long standinginsurance industry exemption.

Other recommendations would provide pre-existingcondition protections, continue the coverage ofdependents to age 26 and protections againstrescissions. Age-rating would be revised from a 3-1ratio to a 5-1 ratio, with the actual ratio determinedby the states. High-risk pools would return to givefinancial support to individuals who are priced outof coverage. Individuals would have a one-time openenrollment period. If they did not maintain continuouscoverage they would forfeit continuous coverageprotections and face higher insurance costs.

Strategies to Protect the MostVulnerable

States would be given the choice of either a per capitaallotment or a block grant to fund Medicaid. Theseoptions are seen as providing more certainty to thestate for budgetary purposes and would slow growth ofMedicaid expenditures. They would also modernize thewaiver process states use to implement innovativeMedicaid programs.

Encouraging Innovation in Devicesand Therapies

To build on efforts to encourage innovative devices andtherapies, the report proposes increasing investment inbasic research at the National Institutes of Health (NIH).The proposal also calls for greater use of electronichealth records and breaking down barriers to usingthese records to spur innovation.

Protecting and Preserving Medicare

A chief recommendation is to build on the popularityand availability of Medicare Advantage programs. Theplan also calls for reform of Medigap plans. Beginningin 2020, Medigap plans would be limited to coveringno more than half of the cost-sharing between thedeductible and out-of-pocket cap.

Medicare would be fundamentally changed by combiningParts A and B and having a unified deductible. It wouldalso have a maximum out-of-pocket per year, making“traditional Medicare” look a lot more like a MedicareAdvantage plan.

The proposal also recommends that Medicare eligibilityphase in a plan to align Medicare eligibility with SocialSecurity eligibility. This alignment would be phased instarting in 2020.

And, the Critics

One of the loudest criticisms is that the reportlacks financial information such as how much therecommendations would cost – or save. This is a validcriticism as little financial data is included in the 37page report.

Another criticism is that some of the recommendationshave been longstanding GOP doctrine. That’s notnecessarily a bad thing, if the ideas are good ones.Whether these are good or bad may have to wait forthe legislative process to get underway.

There is also a question of whether the Republicanpresidential nominee will embrace the recommendationsin this report.

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Inside:House Republicans Publish HealthCare Manifesto