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  • GOP health care alternatives – convention a chance to present these smart options

    This week’s Republican National Convention offers the GOP an opportunity to detail its governing agenda to a relatively captive audience of voters before November. That’s especially important for health care, which voters rank as their number-two issue for this fall’s presidential election.

    The GOP needs to shift the debate away from the quixotic quest for universal coverage – and instead explain how they’ll create a health insurance market characterized by affordability, access, choice and portability.

    Let’s start with portability. The joblessness resulting from COVID-19 isn’t an argument for single-payer. But it does reveal the dangers of tethering health coverage to employment.

    One strategy for ending that connection is to expand the use of “health reimbursement arrangements.” These accounts enable employers to subsidize workers’ individual-market premiums and out-of-pocket costs instead of providing a health plan directly. As such, HRAs give individuals the freedom to choose coverage that’s right for them. Just as importantly, they ensure workers own their policies – and so can keep them when they change jobs.

    Last year, the Trump administration expanded HRAs. But there’s plenty more Republicans can do to encourage employers to adopt them. For instance, Congress could enact legislation making a greater variety of individual health plans compatible with HRAs.

    On the matter of affordability, Republicans can build on the president’s work making short-term limited-duration insurance plans a more practical coverage option. These plans fill gaps in coverage when people switch jobs or experience other major life events. But since they’re not subject to ObamaCare’s premium-inflating rules, they tend to be far less expensive than plans sold on the exchanges.

    Democrats have largely condemned these plans as “junk.” Their allies in the insurance industry have sued the Trump administration to try to get them banned. But they’ve lost twice, most recently last month before the U.S. Court of Appeals for the D.C. Circuit. Some states – including Democratic strongholds like California, New York and New Jersey – have made these plans illegal.

    Yet a recent study from the Manhattan Institute finds that short-term plans offer comparable coverage to ObamaCare plans, in some cases at nearly half the price.

    Association health plans are another coverage option the GOP should get behind. These plans allow small businesses and sole proprietors to band together to purchase insurance. By joining forces, small companies and self-employed Americans can drive harder bargains with insurers, just as bigger firms do.

    The Trump administration has already taken steps to expand access to association health plans. Democrats have since challenged those moves in federal court. Republicans will need to make the case this week that Democrats are standing in the way of lower-cost coverage options.

    Republicans can also champion health savings accounts as yet another tool for bringing greater choice and affordability to the health insurance market. These accounts allow patients to set aside money tax-free, which they can later use to cover out-of-pocket health expenses.

    Democrats have long denounced HSAs as useless to low-income Americans, in part because of the high deductibles that come with HSA-compatible plans. But that’s an argument Republicans should welcome. It was Democrats, after all, who gave us ObamaCare – a policy that has sent deductibles for non-HSA-compatible plans soaring. In 2020, the average deductible for an individual plan on HealthCare.gov is a whopping $5,316.

    HSAs simply offer a way to make high deductibles less burdensome. Anyone should be allowed to contribute to them – including those over the age of 65, a group currently banned from doing so. HSA holders should also be permitted to use the tax-free proceeds to pay premiums.

    By articulating policies like these this week, the GOP can draw a contrast with Democrats on health care. The left wants to collapse the insurance sector into a single, government-run health plan – they just disagree on how fast. Republicans, meanwhile, can offer an alternative vision where insurers compete in a vibrant, diverse coverage market, and patients enjoy a wide variety of affordable insurance options.

    If they present the choice this way, Republicans might just regain control of a health care narrative that Democrats have dominated for too long.

    Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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