The PJ Tatler

Review Finds $2.34 Trillion in Savings for Obamacare Replacement Bill

President Obama has accused Republicans of offering no viable reforms to Obamacare, but an independent review of a plan put forth by a House doctor found $2.34 trillion in savings over 10 years.

Rep. Tom Price (R-Ga.) introduced the Empowering Patients First Act in June to make the purchase of health coverage financially feasible for all, ensure insurance challenges portability and coverage of pre-existing illnesses, lower healthcare costs and improve the healthcare delivery structure.

“The status quo in America’s health care system is unacceptable. Today, because of Obamacare, it is only getting worse,” said Price. “The American people are looking for positive solutions to the challenges in our health care system, and they do not want to put Washington in charge of their personal health care decisions. This analysis confirms that the Empowering Patients First Act would have a tremendously positive impact on our nation’s health care system. It is a testament to the reform proposal’s validity and seriousness, and it confirms that patient-centered solutions can yield savings, reduce costs, and increase access.”

The American Action Forum review was conducted by former Congressional Budget Office Director Douglas Holtz-Eakin.

“Under Obamacare, the American people are losing the health care coverage they have while experiencing higher premiums and less access to physicians and hospitals,” Price continued. “This is occurring because the president’s health care law violates every principle of health care we hold dear: affordability, accessibility, choices, innovation, quality and responsiveness. The impetus for an alternative approach to health care reform is obvious, and we ought to be pursuing solutions that empower patients, families and their physicians, not Washington.”

Highlights from the report:

According to our analysis, H.R. 2300 would lead to smaller premium increases on average when compared to current law. The largest reductions would occur in narrow network and high PPO insurance products. The number of insured individuals would increase by 29 percent in 2016, a smaller net increase than current law by 3 percentage points. Over ten years, H.R. 2300 would yield a net savings of $2,337 billion

There are five critical elements of the proposal: (1) guaranteed issue insurance coverage with no pre-existing condition exclusions; (2) interstate sale of insurance; (3) promotion of Association Health Plans (AHPs) and Health Savings Accounts (HSAs); (4) income-adjusted health insurance vouchers; and (5) malpractice and provider antitrust reform. We assume each of these components is to take effect on January 1, 2016.

These characteristics enter our analysis through rules and regulations defined by the proposal and various modelling assumptions. AHPs enable small business owners to pool risk in the insurance market, and HSAs allow every citizen over the age of 18 the opportunity to save the unused portion of their health insurance benefits. HSA accounts can be used for pre-tax dollar payment of medical care, as well as concierge care and health insurance premiums. The health insurance voucher is an income-adjusted, advanceable, and refundable tax credit, which increases with the general inflation rate. The full tax credit—$2,163 for singles and $5,799 for families in 2013 dollars—is available to households earning less than 200 percent of the federal poverty level (FPL) with a subsidy phased down to zero for those earning at or above 300 percent of FPL. Malpractice and antitrust reform are accounted for in accord with reports issued by the Congressional Budget Office and the Department of Health and Human Services, as well as relevant economic literature.

As compared to estimates under current law, H.R. 2300 will lower premiums in all categories of insurance except high deductible health plans in 2016. But due to slowing of premium increases, high deductible health plans will be 6 percent cheaper by 2023 than under current law for individual policies and 3 percent cheaper for families. By 2023, H.R. 2300 will yield substantially lower premiums than current law in all insurance product categories with savings up to 19 percent for single policies and up to 15.1 percent in savings for family policies.