GOP Health Plan "Health Insurance Industry Dream"

Jed Lewison writes:

Yesterday, with little fanfare, Republicans finally introduced legislation putting down on paper exactly what they think health care reform should look like.

The GOP's "Empower Patients First Act," sponsored by Republican House Study Committee Chairman Tom Price, is a $700 billion giveaway to the health insurance industry and its introduction creates a huge opening for the White House and congressional Democrats in the health reform debate. It has three main elements:

1. Health insurance deregulation. The bill would deregulate the insurance market, dismantling state-level consumer protections and allowing insurance giants to sell their plans nationwide without fear of oversight. (Edit, 9:41AM: The problem here is that the GOP plan creates an unregulated national market, unlike the Democratic proposal for a national insurance exchange, which would create a national market, but with consumer protections.)

2. Subsidizing private health insurance. The bill would give private health insurance subsidies to lower-income individuals and families. This sounds good at first, but subsidies in the absence of other reforms will simply increase the cost of health insurance for everybody else, leading to another inflationary spiral in health care.

3. No comprehensive plan to pay for plan. In order to fund subsidies, the bill calls for a 1% annual cut in Federal discretionary spending each year for the next decade, yielding about $120 billion. Although this would result in major across-the-board cuts in federal spending, it still leaves nearly $600 billion unfunded. Republicans say they can find "efficiencies" in the health care system to cover that $600 billion shortfall, including malpractice reform, but fail to offer specifics, suggesting the legislation would dramatically increase the deficit.

In sum, the Republican health bill would be a disaster for ordinary Americans, but it's the health insurance industry's dream. It slashes consumer-protection regulations, it increases health care costs by subsidizing private insurance while simultaneously deregulating it, and it would create another explosion of federal debt.

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