Replacing the Affordable Care Act?

By David Orentlicher

[cross-posted at HealthLawProfs blog]

With the future of the Affordable Care Act in doubt after last week’s hearing before the U.S. Supreme Court, Republican lawmakers are busily preparing back-up legislation. New options should not be necessary—the government should prevail against those challenging its interpretation of the Act’s premium subsidy provisions. But it is prudent to consider alternatives in the event that the Court rules against the government.

While most of the ideas being floated would do little to bring health care insurance to the uninsured, there is an option that really could expand access to coverage while also containing health care spending. And it could be attractive to Republicans and Democrats alike on Capitol Hill.

GOP leaders should promote an improved version of the McCain health reform plan from the 2008 presidential campaign. Under McCain’s proposal, the government would have provided a voucher to everyone for the purchase of health care insurance, and each person would have found a private plan for coverage. But McCain pegged the voucher at only about half the cost of health care insurance. Instead, Congress should make the voucher worth the full cost of the lowest-cost plan that offers the essential health benefits in the Affordable Care Act. If people wanted a more expensive plan, they would have to pay the difference in cost between that plan and the lowest-cost plan. In addition, to ensure that all persons have good access to care, Congress should include the Affordable Care Act’s ban on higher rates for persons with heart disease, diabetes, or other pre-existing medical conditions, as well as the Act’s requirement that insurers accept vouchers from all comers.

Unlike the Affordable Care Act, this kind of a voucher could provide truly universal coverage. It also could do more than the Act to limit health care spending. Because only the least expensive plan would be fully covered by the voucher, each insurer would have a strong incentive to lower its costs so it could offer the lowest-priced plan.

Such a program has been proposed by scholars like Alain Enthoven and Victor Fuchs and adopted as a policy recommendation by the Committee for Economic Development. Seniors already have something similar through the Medicare Advantage program. For Republicans who want to demonstrate that their party can get things done, a well-designed universal voucher offers a meaningful way to do that for health care reform.

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