Rand Paul’s Market Based Alternative To The ACA Is Fantastic

While the debate of healthcare reform has largely centered around the repeal of the ACA, there is fair criticism that Republicans have under-delivered in highlighting their plan to replace it. It’s wishful thinking to expect the MSM to help promote a Republican replacement plan, but the social media avenues exist to allow the word of mouth to spread better than it already has.

Rand Paul, though, has developed and promoted a savvy, market-based plan that will not only fix the problems of the ACA, but also remedy regulatory issues that existed before the 2010 law was passed. There is an assumption among the Left that Republicans simply want to erase the ACA and fall back on the state of healthcare as it was before 2010. The reality is that, prior to the ACA, both political parties believed in the need for healthcare reform. The difference in opinion revolved around what exactly to do about it.

On January 2nd, Paul published an op-ed with Rare, in which he highlights four key points to bring more freedom to our healthcare industry:

  1. The freedom to choose inexpensive insurance free of government dictates.

  2.  The freedom to save unlimited amounts in a health savings account.

  3. The freedom to buy insurance across state lines.

  4.  The freedom for all individuals to join together in voluntary associations to gain the leverage of being part of a large insurance pool.

The major cost-drivers for rapidly rising premiums are the insurance mandates (not the individual and employer mandates). Rand’s plan would eliminate the insurance mandates and result in the opportunity for more customization in insurance plans, thereby increasing efficiency, more closely meeting the needs of relative participants and ultimately driving down costs.

The reforms proposed to Health Savings Accounts (HSAs) will provide more flexibility to individuals and families to use the HSA funds for items that aren’t currently allowed. For example, under Paul’s plan, HSA funds could be used for:

  • Prescription and over-the-counter drugs
  • Insurance premiums, which makes coverage more affordable
  • Exercise equipment, health coaching or weight-loss programs
  • Dietary and nutritional supplements

Purchasing insurance across state lines has long been a staple of Republican healthcare reform, but it definitely exposes complications in terms of the balance of federalism. In Paul’s plan, individuals would be able to purchase insurance from outside states, however, it also provides the secondary states some limited forms of control such as consumer protections, taxes, et al. This allows for the use of insurance pools among common trades or organizational ties, as opposed to just geography. (Today, for instance, if you’re a participant in a group health policy of a major corporation, you’re still limited to purchasing insurance within your state lines.)

Even before the ACA, one significant problem was the unfair regulatory treatment of the individual insurance market compared to the employer market. Employees that work for large companies enjoy the buying power of a larger group, as well as more favorable tax incentives. With the creation of Individual Health Pools (IHPs), in Paul’s plan, individual market participants would now have the opportunity to go to market with the leverage of a larger pool. The Paul plan also explains how it equalizes the tax treatment of individuals and employers:

By providing a universal deduction on both income and payroll taxes regardless of how an individual obtains their health insurance, Americans will be empowered to purchase insurance independent of employment.

All in all, Rand Paul’s plan is a solid replacement to springboard the healthcare industry toward a market-based, patient-centric model, helping to lower prices, increase flexibility and shift the decision-making powers from faceless bureaucrats in Washington to individuals and families at home.

It cannot be understated, most importantly, that Republicans should adopt these changes swiftly so that a clear direction is set in time for insurers to develop their 2018 plans by the May 2017 due date.

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Matt Christensen

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