Republicans have released their ideas for health care reform. Here are the essential elements, none of which address the basic problems of cost, quality or access to health care paid for via health insurance. What we have in total is a proposal that makes health coverage less affordable for many Americans. Pooling small business simply reallocates the same costs. The proposal for pre-existing conditions moves costs around while trying to force premiums below that possibly required to cover costs. Such risk pools shouldn’t even be necessary. Isn’t the real issue how people get to be uninsured with a medical condition in the first place?
Play it again Sam, this is amateur night!
Allowing Americans to purchase health insurance across state lines;
Enabling small businesses to pool together to create “association health plans;”
Medical malpractice reform; and
Expansion of access to Health Savings Accounts (HSAs)
The measure also would permit people with pre-existing conditions to switch to another health plan even if their prior coverage was in the individual market, not just employer-sponsored coverage. Further, the bill provides $25 billion for state high-risk pools and limits the premiums in the pools to twice the average cost of insurance sold in the state.
The legislation proposes a significant change to the current tax treatment of health insurance. Regardless of the actual cost of the health plan, people purchasing their own coverage would receive an above-the-line standard deduction for health insurance (SDHI) of $7,500 for individuals and $20,000 for families, indexed annually for inflation. The SDHI would also be applied against payroll taxes. For those who receive employer-sponsored coverage, the tax exclusion would be capped at the same SDHI level ($7,500/$20,000), with any amount over that threshold taxed as wages.
By comparison, the high-cost plan (“Cadillac”) tax imposed by PPACA, effective in 2018, taxes amounts in excess of $10,200 for individuals and $27,500 for families, also indexed. The measure would not change the employer deduction for health expenses. However, both employers and employees would be subject to their respective portions of payroll taxes for amounts above the thresholds.