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GOP health care reform: A simple explanation, updated
Health care plans too long for you? Read our cheat sheets for both parties' plans. Health care plans too long for you? Read our cheat sheets for both parties' plans.

Health care plans too long for you? Read our cheat sheets for both parties' plans.

Louis Jacobson
By Louis Jacobson February 26, 2010
In the wake of President Barack Obama's bipartisan summit on health care reform at Blair House on Feb. 25, 2010, we thought it would be a good time to review the Republican Party's health care proposals.

Because the Democrats control the White House and both chambers of Congress, their proposals have dominated the discussion over the past year. (And we've summarized the Democrats' plans in a separate report.) Indeed, Republicans have at times expressed consternation that no one is paying attention to their ideas.

"Republicans have been offering all sorts of solutions," said Rep. Tom Price, R-Ga., in a Republican conference call with reporters during the summit.

We examined the Democratic plans with our article, "Health Care Reform: A Simple Explanation, updated." Here, we'll look at the Republican approach.

House Republicans offered an amendment in November 2009 that -- if it had passed, which it didn't -- would have replaced the House Democratic health care bill. It was much smaller (219 pages, compared to roughly 2,000 for the Democratic bill) and had a more limited scope. It relies on bedrock GOP principles: consumer choice, no tax hikes, limited government involvement and caps on lawsuits.

Here's an overview of the Republican plan and how it differs from the Democratic version:

More limited reach for the federal government. Consistent with Republican complaints that the Democratic bills represent a government "takeover" of health care, the GOP bill has no public option — that is, no government-run insurance program, or anything remotely like it. Nor does the GOP bill include an expansion of the federal-state Medicaid health insurance program for the poor. The House Democratic bill has both, though the Senate plan and Obama's plan abandon the public option.

The GOP plan has no health care exchanges, the government-run marketplace for people who are now uninsured, and it has no administrator to run the exchanges. And consistent with Republican fears of government moving toward a system of deciding what treatments patients can receive, the GOP plan, unlike both the House and Senate Democratic bills, does not foster "comparative effectiveness" research to try to determine which treatments are the most effective.

No new taxes. Living up to a key Republican principle, the GOP bill would not impose any new taxes. By contrast, the Democrats have proposed a number of tax increases in areas involving expensive health care plans, medical devicemakers and drug manufacturers. Those taxes would go to subsidies to help low-income people buy health insurance and other health care expansions.

No cuts to Medicare. Republicans, who have seized on proposed Democratic cuts to Medicare Advantage, would not touch the government-run health care plan for senior citizens in their House bill. By contrast, Democratic bills would cut Medicare Advantage and reduce the growth in Medicare payments by a total of roughly $400 billion over 10 years. Many of these cuts would involve Advantage plans, which are private plans operating under the Medicare system. These plans are reimbursed by the federal government at a higher rate, and Republicans maintain that seniors who belong to these plans would see reductions in benefits under the proposed cuts. But Democrats seeking to cut costs see Medicare Advantage plans as a target, arguing that they are essentially subsidized to an unnecessary degree by regular Medicare beneficiaries and ordinary taxpayers. They have said the cuts in the growth of Medicare payments will not hurt benefits.

Medical malpractice reform. Republicans have long sought to curb medical malpractice lawsuits, which they say needlessly raise health care costs. The Republican bill curbs malpractice lawsuits by capping noneconomic and punitive damages and making changes in the allocation of liability. The Democratic bills do not.

Favoring consumer choice over a guaranteed safety net and minimum benefits. The Republican plan would try to expand coverage and reduce costs voluntarily, primarily by increasing consumer options, rather than the Democratic method of using government leverage (such as mandates, penalties and subsidies) to corral more uninsured Americans into obtaining coverage.

The Republican bill would allow Americans to buy health insurance across state lines, something that is currently not allowed, and would allow small businesses to pool insurance coverage through trade associations, an option only allowed for larger companies and labor unions today. The bill would also expand the use of health savings accounts, which allow allow people to use pretax dollars to pay medical expenses. None of these programs would be mandatory.
Finally, the Republican bill would offer aid to states to establish "high-risk pools," groups of sicker (and thus more expensive) patients who typically have trouble finding insurance today because of restrictions on pre-existing conditions. It would also boost state-based reinsurance mechanisms that can help insurers that find it too costly to insure such pools.

Democrats, by contrast, would make a more strong-armed effort to reduce the ranks of the uninsured. Whereas the Republican bill would offer incentive payments to states that manage to reduce premiums and the number of uninsured, Democrats would make everyone purchase insurance coverage or else pay a stiff penalty if they don't. Businesses of a certain size would also have to provide health coverage for their workers or face a penalty. And the Democratic bill would establish minimum benefit packages and expand existing safety net programs such as Medicaid.

Unlike Republicans in the House, Senate Republicans have not gone so far as to coalesce behind a single bill. But at the Blair House summit, Senate Republican Conference Chairman Lamar Alexander, R-Tenn., provided a list of principles that he said underlie his colleagues' efforts on health care.
The list includes: association pools for small business health coverage; the ability to buy insurance across state lines; malpractice reform; incentive payments to states that lower health care costs; an expansion of health savings accounts; and an end to barriers based on pre-existing conditions.

"Some of my Democratic friends will say, 'Well, Lamar, where's the Republican comprehensive bill?'" Alexander said at the summit. "And I say back, 'Well, if you're waiting for (Senate Minority Leader) Mitch McConnell to roll in a wheelbarrow with a 2,700-page Republican comprehensive bill, it's not going to happen, because we have come to the conclusion Congress doesn’t do comprehensive well.'"

The Congressional Budget Office, a nonpartisan group that estimates the cost of legislation, has confirmed that the House Republican bill is quite inexpensive in comparison to the Democratic one.

The CBO found that the insurance provisions of the Republican bill would cost about $61 billion between 2010 and 2019 — a far cry from the $871 billion cost during the same period under the Senate Democratic bill. But when new revenues and spending cuts are factored in, the Senate Democratic bill would reduce the deficit by $132 billion over 10 years, compared with $68 billion for the Republican bill.

The CBO also confirmed that the cost of health insurance premiums would fall under the Republican plan, partly because of the medical malpractice reforms. In the market for individually purchased insurance policies, premiums would fall by 5 percent to 8 percent by 2016. For smaller businesses, premiums would fall by 7 percent to 10 percent. And in the large group market, for larger employers, they would fall by up to 3 percent. Under the Democratic bill, the CBO estimated that premiums would rise by 10 to 13 percent in the individual market, would be largely unchanged in the small-group market and would fall up to 3 percent in the large group market. But Democrats argue that these numbers do not account for subsidies included in the bill, and they do not reflect the improved benefits the bill would require for low-end plans.

Critics have focused on a few aspects of the Republican bill:

It doesn't do much to reduce the uninsured population. By 2019, the number of uninsured would drop by 3 million, leaving 52 million nonelderly Americans uninsured. That means 83 percent of legal nonelderly residents would have insurance coverage by 2019, roughly the same as it is today. The Senate Democratic bill, by contrast, would reduce the uninsured to 31 million, or 94 percent coverage.

It might reduce consumer protections. The flip side of several of the Republicans' new consumer options is a decrease in regulation. If insurance policies are sold across state lines, critics say, there could be an incentive for insurers to locate in the least-regulated states, allowing them to scale back coverage. And the Republican bill, unlike the Democratic bills, doesn't specifically bar insurers from excluding pre-existing conditions, even though that policy has broad support in both parties.

Its idea of boosting high-risk pools for sicker patients may not be effective. The states that have tried high-risk pools in the past have not found them to be popular, largely due to the high costs for the consumer. In theory, experts say, such pools could be subsidized enough to make premiums low enough to be attractive. But it would be expensive to do so, and many experts say the Republican bill doesn't provide enough money to make them work. The Republican plan calls for $25 billion in funding through 2019.

It misses an opportunity to trim Medicare spending. Health care experts have long pointed to the need to rein in the growth of Medicare spending, because if nothing is done, it could eventually eat up an enormous share of the federal budget. The Republicans' current stance of protecting Medicare Advantage may be politically popular among senior citizens, but critics say it allows the most generously reimbursed portion of the Medicare system to continue unabated, effectively delaying the fiscal day of reckoning for the program. (While the Democrats do propose cutting Medicare Advantage, and while they would impose permanent reductions in certain payment rates to the tune of $229 billion over 10 years, some critics have called their approach too timid as well.)
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Our Sources

Text of a Republican amendment to H.R. 3962 (the Democratic health care reform bill)

Kaiser Family Foundation, side-by-side comparison of major health care proposals, accessed Feb. 25, 2010

House Republican Conference, "Republicans’ Common-Sense Reforms Will Lower Health Care Costs" (summary of bill), Nov. 4, 2009

Congressional Budget Office, analysis of Republican amendment H.R. 3962, Nov. 4, 2009

Congressional Budget Office, analysis of H.R. 3962, Oct. 29, 2009

Congressional Budget Office, analysis of H.R. 3962, Nov. 20, 2009

Congressional Budget Office, analysis of the Senate health care bill, Dec. 19, 2009

Congressional Budget Office, analysis of the Senate health care bill's effect on premiums, Nov. 30, 2009

Wall Street Journal, "House Leaders Unveil Health Bill ," Oct. 30, 2009

New York Times
, "G.O.P. Counters With a Health Plan of Its Own," Nov. 3, 2009

New York Times' "Prescriptions" blog, "What the Health Care Bill Really Costs," Oct. 29, 2009

Roll Call, "GOP Health Bill Would Cut Deficit but Leave 52 Million Uninsured, CBO Says," Nov. 5, 2009

Mike Pence, "Pence Hails CBO Report on Republican Health Care Bill" (news release), Nov. 4, 2009

Lamar Alexander, "Alexander Gives Republican Health Care Remarks at White House Summit" (news release), Feb, 25, 2010

Tom Price, comments during a conference call with reporters, Feb. 25, 2010

Interview with Edwin Park, senior fellow at the Center on Budget and Policy Priorities, Nov. 4, 2009

E-mail interview with Henry Aaron, health policy scholar at the Brookings Institution, Nov. 4, 2005

Interview with Robert Zirkelbach, America's Health Insurance Plans spokesman, Nov. 4, 2009

E-mail interview with Michael Steel, spokesman for Rep. John Boehner (R-Ohio), Feb. 25, 2010

E-mail interview with Don Stewart, spokesman for Sen. Mitch McConnell (R-Ky.), Feb. 25, 2010

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GOP health care reform: A simple explanation, updated