Hiltzik: GOP alternative to ‘ObamaCare’ is ‘an anti-consumer bill of rights’

Back in January, House Majority Leader Eric Cantor (R-Va.) declared “This year, we will rally around an alternative to ObamaCare and pass it on the floor of the House.” I analyzed the proposed GOP alternative at the time. GOP ‘ObamaCare’ alternative is a sick joke:

snidely-whiplashAfter four years, the Republicans are saying they finally have an alternative to their Heritage Foundation/RomneyCare/ObamneyCare health care plan. The outlines of the plan are a rehash of old proposals floated and rejected for years, and restores to insurers the financial advantage they enjoyed over consumers before “ObamaCare.” It would cover far fewer people, limit coverage and allow for exclusions, and result in a tax increase for employer-sponsored health insurance plans.

The Los Angeles Times reports, House GOP will offer Obamacare alternative this year:

House Republicans plan to pass a healthcare reform bill that could replace the Affordable Care Act, Majority Leader Eric Cantor announced Thursday.

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Cantor said the proposal would build off of various alternative health plans that Republicans have offered this year, a Republican aide said, and would allow consumers to buy plans across state lines, reform medical liability and create health savings accounts, among other components.

Read the rest of this earlier post for the analysis.

The Congressional Budget Office (CBO) scored the GOP alternative proposal in February. CBO scores GOP health care alternative to ‘Obamacare’:

A Congressional Budget Office (CBO) report (.pdf) scoring the GOP health care alternative to ‘Obamacare’ finds that it would reduce the number of people receiving employer-based coverage, increase dependence on government-sponsored health care, and raise the national deficit.

It appeared that this bogus attempt to create a GOP alternative to “ObamaCare” had died a quiet death, until it suddenly reappeared this week. The Washington Post’s Robert Costa reports that House Republican leaders are still moving towards some kind of reform blueprint to present to voters in advance of the 2014 midterms. House Republican leaders craft their vision for an alternative to health-care law:

The plan includes an expansion of high-risk insurance pools, promotion of health savings accounts and inducements for small businesses to purchase coverage together.

The tenets of the plan — which could expand to include the ability to buy insurance across state lines, guaranteed renewability of policies and changes to medical-malpractice regulations — are ideas that various conservatives have for a long time backed as part of broader bills.

But this is the first time this year that House leaders will put their full force behind a single set of principles from those bills and present it as their vision. This month, House leaders will begin to share a memo with lawmakers outlining the plan, called “A Stronger Health Care System: The GOP Plan for Freedom, Flexibility, & Peace of Mind,” with suggestions on how Republicans should talk about it to their constituents.

Michael Hiltzik, the Los Angeles Times business reporter analyzes the GOP alternative to “ObamaCare” and pretty much concludes the same thing I said back in January: it is a sick joke. Why the GOP’s new healthcare ‘reform’ plan looks so danged familiar:

[T] he House GOP majority is crafting a new healthcare “reform” program to substitute for the Affordable Care Act. It should surprise no one that the new plan incorporates two provisions that have been Republican nostrums, like, forever, and that are distinguished by their utter irrelevance to the goal of making healthcare more accessible and affordable to anybody.

These nostrums are (1) allow health insurance to be sold across state lines and (2) make it harder to sue for malpractice.

These are two of the most anti-consumer ideas ever proposed in the healthcare field; they amount to a bill of rights for ripoff artists, bad doctors and careless hospital managements. It’s worthwhile to explain, for the umpteenth time, why.

First, selling insurance across state lines. As we’ve explained before, this has long been Item A on the health insurance industry’s wish list. It’s amazing that it still walks among us, because the downside is evident from an experience that almost every adult American has had: paying their credit card bill.

The credit card industry shows us exactly what would happen if health insurers were no longer subject to the insurance and consumer protection laws of the states where their policyholders lived, as opposed to the states where the insurers are located. There would be no standards at all.

Until 1978, credit card issuers were subject to the interest rate caps in their customers’ home states. In California, for instance, cards couldn’t charge more than 10% interest, the state limit. But that year the U.S. Supreme Court ruled that credit card issuers could “export” their home state’s interest cap.

Promptly, the states with high or nonexistent interest rate caps, such as Delaware and South Dakota, became kings of the credit card industry, attracting the consumer credit subsidiaries of Citibank, Wells Fargo and other big banks. One issuer in South Dakota, which counts its credit card industry jobs by the thousands, even put out a card carrying an annual rate of 79.9%.

Eventually, Congress stepped in to impose some relatively modest consumer protection rules on the industry–in 2009. So it only took 31 years.

The same thing would happen if health insurers were permitted to export their home states’ health insurance standards and regulations. In the same sense that interest rate limits on credit cards no longer exist, coverage standards and rate regulation in the health insurance industry would no longer exist. You’d be able to buy coverage if, and only if, you were a good risk, and it would be the insurer who would decide. (The insurer would set its own price, too.) If that’s the insurance market you think we should have, the GOP plan is for you.

Then there’s malpractice “reform,” another hardy GOP perennial usually pitched as an effort to end “frivolous” lawsuits.

This specious variety of reform has lots of fans. As we wrote a few years ago, “the public’s on board because it’s easy to hate lawyers. Doctors and hospitals love it because they hate to get sued. Insurance companies love it because the less money they pay out to plaintiffs, the more they get to keep. Republicans love it because trial lawyers give three-quarters of their political donations to Democrats. And Democrats pay it lip service because they’re afraid to look like lawyer lovers.”

The only people hurt are those who find the courthouse door slammed in their face. In California, which has had a model tort reform statute on its books since 1975, that’s predominantly women. That’s because California’s law, like most other such proposals, works by slashing “pain and suffering” awards in favor of protecting economic damages such as lost earnings and medical expenses.

Because women injured by malpractice typically earn less than men but suffer greater lifestyle injuries, their recovery is slashed. So, too, are recoveries by families of infants and small children, who don’t have earnings to lose. California’s law, as it happens, has had such negative effects on consumers that its own creator, former Assemblyman Barry Keene, now says it was a mistake.

Tort reform laws are openly discriminatory, but what’s even worse is that they’re aimed at a problem that has been grossly exaggerated.

Objective studies show that medical liability isn’t a big driver of health costs overall. The cost of malpractice litigation–including both court costs and the cost of excessive tests and procedures to stave off malpractice cases (“defensive medicine”) has been estimated by the Congressional Budget Office, among other sources, at roughly 2% to 3% of all U.S. healthcare spending — in other words, no more than $50 billion out of a total annual bill of more than $1.7 trillion. (You’ll hear estimates as high as $200 billion from outfits like the American Medical Assn., which is the antithesis of an objective source.)

The whole notion that U.S. juries are handing out huge awards for “frivolous” malpractice claims is also baloney. A study by Harvard’s School of Public Health found that frivolous cases — those that should not have been brought at all — are rare — and usually don’t end with a payment to the plaintiff. The bigger problem is the opposite — worthy cases in which the victim doesn’t get a dime.

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So the GOP package is sadly typical. As is often the case, the question is who the GOP is representing when they put these ideas out. Because it sure isn’t you or me.

The GOP alternative to “ObamaCare” is “an anti-consumer bill of rights for ripoff artists, bad doctors and careless hospital managements,” and does nothing to make healthcare more accessible and affordable to anybody. It is a sick joke. Why does anyone still listen?

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