As you've probably heard, the four candidates for the Republican nomination for the U.S. Senate in Nebraska agree that the Affordable Care Act of 2010 should be repealed.
All four — Midland University President Ben Sasse, former State Treasurer Shane Osborn, Pinnacle Bank Chairman Sid Dinsdale and Omaha attorney Bart McLeay — have criticized the health care law.
But Sasse has published the most detailed alternative plan, made it the centerpiece of his campaign and gotten national attention for his views on health care.
Both the Affordable Care Act and proposals like Sasse's, including those by other Republicans, aim at providing access to care and controlling its cost. But they follow different paths.
Instead of requiring everyone to be insured and requiring insurance companies to sell policies to almost anyone, Sasse wants people to voluntarily decide their level of coverage and rely more on their own money they put aside in health savings accounts. He wants states to craft their own programs to take care of those who can't.
His proposals are raising concerns.
“I think this is going to take it two steps backward in terms of denying care,” said Dr. Kevin Nohner of Omaha, president of the Nebraska Medical Association, who was asked by The World-Herald to review Sasse's plan. “I'd rather that we move inches forward and build on it, and work collegially to make it better.”
George Rejda, a business professor emeritus at the University of Nebraska-Lincoln who studies insurance benefits, said: “My gut feeling would be that if this plan were enacted, the situation in health care would worsen compared to what we had before and what we have right now.”
Jennifer Beeson, deputy director of the Washington, D.C., consumer group Families USA, which generally favors the Affordable Care Act, declined to discuss Sasse's proposal specifically but commented on some of the ideas that Sasse and others have proposed.
Sasse thinks it would be possible to repeal Obamacare if conservatives do well in the next two congressional elections and a Republican wins the presidency in 2016.
So what would Sasse’s replacement health care system look like?
Voluntary insurance
Sasse proposes: People would decide whether to buy insurance and what benefits they want. Insurers would decide what benefits to offer, who can buy policies and at what prices.
How it works now: Obamacare requires almost everyone to buy a policy with a list of “essential benefits,” including free preventive care, with subsidies to reduce out-of-pocket spending. Children are allowed to stay on their parents’ policy until age 26. Insurers are required to accept all applicants and consider only age, smoking status and family size — not past medical history, gender or other factors — in setting rates.
The change: Consumers could decide not to buy insurance or could choose full or limited coverage; subsidies would end. Insurers could deny coverage because of pre-existing medical conditions and charge different rates for men and women and for other reasons. Obtaining free preventive care and keeping children on family policies until age 26 would depend on the policy purchased.
What Sasse says: Competition among companies in private marketplaces and at work would give consumers alternatives and help slow cost increases. Not paying for unwanted benefits, such as having everyone pay for maternity coverage, would reduce premiums.
“If consumers want a plan that manages every aspect of their care, they can continue to select those kind of policies,” but that shouldn’t be mandated.
What others say:
Rejda: Requiring people to buy coverage and requiring insurers to accept all applicants go hand in hand in making the system work, and dropping either or both would reduce access to health care. Obamacare’s required “essential benefits” will reduce costs in the long run by encouraging early treatment and avoiding more serious problems.
Beeson: Without guaranteed coverage, “people were left out in the cold in the individual market, denied coverage for even minor conditions.” The Affordable Care Act “opened the doors for a lot of people to being able to buy the coverage they were denied for a long time.”
Nohner: Without free preventive care, patients put off health care and don’t take medicine because of the expense, and big medical bills bankrupt them.
Reliance on health savings accounts
Sasse proposes: Many people would use health savings accounts to supplement lower-premium catastrophic coverage. Premiums for nongroup individual insurance could be deducted from income taxes, and insurers’ role as middleman would be reduced, freeing consumers to negotiate and providers to innovate. Policies would be portable so people could keep them if they moved or changed jobs.
How it works now: Insurers offer high-deductible plans paired with health savings accounts, which offer tax advantages. Employers can deduct their spending on health care benefits, but people on individual policies can’t deduct premiums. People can buy insurance in Affordable Care Act marketplaces if they lose group insurance. People can take their savings accounts with them when they change jobs.
Insurance companies negotiate volume discounts with health care providers, as well as handle payments and claims. The “middleman” administrative fees — up to 15 percent of premium revenue under the Affordable Care Act but not limited in Sasse’s plan — pay the salaries of 485,000 U.S. health insurance workers.
The change: The law would encourage the catastrophic coverage/health savings account system. The tax deduction would lower costs to consumers. Consumers themselves would negotiate prices with providers.
What Sasse says: More direct-to-consumer arrangements with medical providers would trim costs. “If air travel were like health care, customers would have to log onto the FAA’s website to be approved for their trip, see which airlines were ‘covered’ and pay the same price no matter which flight they take.”
Automobile owners pay for routine costs such as oil changes but carry insurance to pay for major damage. “With health care, we somehow decided to insure against contact lens purchases, even though you can predict that,” leading to greater spending on health care.
What others say:
Beeson: Health savings accounts already are available, but many people can’t save enough to cover their health expenses. Many employers don’t contribute to the accounts.
A study this year by Fidelity Investments found that people underestimate how much they need to save for health care. While the average couple retiring today are projected to need about $220,000 to pay for out-of-pocket health care costs, about half the people Fidelity surveyed estimated the need at $50,000 per person.
The future of Medicare
Sasse proposes: Medicare rules would be changed to increase revenue, cut expenses and switch to defined contributions so it would remain viable for future generations.
How it works now: Medicare stands to go into the red as the elderly population increases, and high-income people receive the same benefits as middle-class people. Private insurers generally can’t compete with Medicare.
The change: Raise the minimum Medicare age by two months per year, charge higher-income people more for Medicare benefits, allow private insurers to compete with Medicare, and transition to a defined-contribution system with benefits determined by the amounts put into individual accounts.
What Sasse says: Medicare “is in crisis because it operates like a Ponzi scheme. ... Medicare beneficiaries receive $3 in benefits for every dollar they have paid into the system.” Senior citizens shouldn’t face a future of uncertainty, he said, and the next generation deserves a government “making honest, sustainable promises.”
What others say:
Beeson: So far there is no “politically viable way” to make changes like charging wealthier people more. “It’s been difficult to find common ground on any health care policy.”
Rejda: A Kaiser Family Foundation study indicates that raising the Medicare age doesn’t save the program money. At higher ages, people older than 65 and their employers would pay higher costs before they retire and, when they switch to Medicare, average costs would go up because they are older.
Care of sick and poor
Sasse proposes: States would run high-risk insurance pools for people denied coverage and manage Medicaid programs, with no-strings federal money, for people who can’t afford insurance.
How it works now: States are eliminating high-risk pools because insurers must accept all applicants under the Affordable Care Act. The federal government has an open-ended commitment to help states cover Medicaid costs; in return, it requires states to cover certain groups of people and to provide specific benefits.
The change: States would be responsible for their Medicaid programs, rather than following federal guidelines, and would receive the funding through block grants, which may be capped.
What Sasse says: “We need a social safety net ... but not one where Washington writes all these rules. States have shown a far greater ability to solve problems and live within their means than Washington ever has.” States should receive federal funding in the form of block grants, which eventually would evolve into even more streamlined grants.
Advocates exaggerate the number of people who are denied coverage or who must pay unaffordable rates because of their past medical conditions. Most uninsured people either don’t want coverage or lost their insurance for six months or less while changing jobs.
If people could buy portable products they wanted at affordable prices “we’d have far less uninsurance than we have under Obamacare.”
What others say:
Kaiser Family Foundation reports that a study pointed out that lump-sum payments from the federal government risk not keeping up with growing Medicaid costs or patient loads. Federal payments now cover an average of 60 percent of Medicaid costs, depending on how many people are eligible under federal guidelines. Who’s eligible also would end up varying by state.
Beeson: The federal government adds more money during an economic downturn, when more people need assistance. Proposals that would cap federal money would mean “people end up not getting the coverage they need.”
Nohner: The Nebraska Legislature discussed expanding Medicaid coverage but didn’t override Gov. Dave Heineman’s veto. “I don’t see where there’s the will in the state of Nebraska to empower us to take care of those people.”
Insurance sales across state lines
Sasse proposes: States should continue regulating health insurers, but people could buy policies from any company in the nation.
How it works now: States regulate insurance companies and approve them to sell policies only in each state. Residents of a state generally can buy only from insurers approved in that state. The state regulators are charged with protecting consumers and keeping insurers’ rates fair and their finances sound.
The change: People could shop nationwide for coverage. Nationwide insurers could market products broadly while subject only to the regulations of their home states.
What Sasse says: “Enabling the purchase of coverage across state lines will promote competition and innovative product design,” and “dismantle the corporate insurance monopoly in health care delivery.” Insurers could offer policies without state-required coverage mandates. Private exchanges would give consumers a range of choices.
What others say:
Beeson: Nationwide selling “guarantees that the state with the fewest consumer protections becomes the national norm. It’s a race to the bottom.” A company from a state that allows poor-quality insurance could charge low rates and undercut companies from states that require terms that protect consumers, she said. “That destabilizes the risk pool and could exclude people who are sick.”
State insurance commissioners would lack authority to protect consumers and deal with complaints about companies from other states.
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