The GOP's prescription for health care

WASHINGTON —

While Republican leaders don't have a unified health-care plan, the rank and file have produced several bills and ideas.

At least three comprehensive Republican bills have been introduced: one by Sens. Tom Coburn of Oklahoma and Richard Burr of North Carolina, and Rep. Paul Ryan of Wisconsin; another by Rep. Tom Price of Georgia; and a third by Rep. John Shadegg of Arizona.

All three have a few themes in common with Democratic proposals. For example, they would create insurance exchanges to make it easier for the uninsured and small businesses to find affordable policies, although the exchanges have less regulatory authority than those outlined by Democrats.

The bills also would provide subsidies to help some people buy coverage and would impose new regulations on insurers.

But Republican plans also differ sharply from Democratic approaches. They don't, for example, require individuals to buy insurance or impose sanctions on employers who don't offer it.

They have no chance of passage, but could influence the debate. They would:

• Change the tax treatment of health benefits. The Coburn-Burr-Ryan bill would end the tax break for workers with employer-provided insurance and replace it with a tax credit of $2,290 for individuals and $5,710 for families. Additional subsidies ranging from $2,000 to more than $5,000 would be available for families with at least one child and income of less than 200 percent of the poverty level, or about $44,100 a year for a family of four.

The Price bill, which wouldn't eliminate the tax break for job-based coverage, would allow people who buy insurance a tax deduction for the cost of premiums. Tax credits ranging from $2,000 to $5,000 would go to people earning less than 200 percent of the poverty level. People who earn up to 300 percent of the poverty level, or about $66,150 for a family of four, would receive smaller credits.

Possible impact: While changing the tax code would "level the playing field" between those who buy their insurance and those who receive it through their jobs, some question whether the tax credits offered in the proposals would be enough for individuals and families to purchase coverage.

• Change Medicaid. Under Coburn-Burr-Ryan, most low-income families no longer would be in Medicaid, the state-federal program for the poor, but instead would receive tax credits and other subsidies to buy private insurance. States would receive block grants to help pay for long-term care; the grants could be used for care in nursing homes or non-institutional settings. People with disabilities, children in foster care and women with breast or cervical cancer would remain in Medicaid. The Price bill would allow individuals to opt out of Medicaid or other federal or employer plans and use tax credits to buy coverage.

Possible impact: Proponents say a voucher program for Medicaid would give recipients more choices of insurance and providers, but it's not clear whether the credits and subsidies would be enough for individuals to buy comparable private coverage.

• Limit malpractice awards and consider court alternatives. States would receive grants to set up alternatives to lawsuits in the Coburn-Burr-Ryan bill. The alternatives could be review panels or tribunals composed of medical experts and lawyers, who would determine liability. Those unhappy with the decisions could sue in state court. The Price bill would cap noneconomic damages at $250,000.

Possible impact: Proponents say special courts would provide another avenue for plaintiffs and may reduce the extra tests and procedures used by doctors to avoid lawsuits.

It's difficult to quantify what percentage of health-care spending is defensive, however, and how much is tied to payment systems that provide rewards for additional procedures. A 2004 Congressional Budget Office report that looked at capping malpractice awards said, "Savings from reducing defensive medicine would be very small."

• Allow individuals and small businesses to band together to buy insurance. The approaches differ. The Price and Shadegg bills would allow individuals and groups or associations of employers to come together to buy insurance. Such policies would be exempt from state rules on what insurance must cover. Under the Price bill, individuals could buy policies from insurers in other states if premiums in the individuals' home states cost 10 percent more than the national average. The Coburn-Burr-Ryan bill would allow states to create insurance exchanges, in which individuals could buy policies. States would have the ability to form multistate arrangements.

Possible impact: Proponents say this proposal would allow individuals and small businesses to find lower premiums by bypassing some state mandates and joining into larger pools. Critics say it would remove too much state control and result in skimpy coverage.

• Create options for people with pre-existing conditions. All Republican proposals stop short of an outright ban on the widespread practice of insurers' rejecting applicants with health problems. Coburn-Burr-Ryan would prohibit insurers in state-based exchanges from rejecting applicants, but it would allow them to offer other policies that wouldn't be subject to the ban. The Price bill would give states financial incentives to create high-risk pools or other methods of covering people with pre-existing conditions.

Possible impact: If exchanges attract large numbers of applicants, insurers may be more willing to take on the risk of people with medical conditions. Because participation by insurers and individuals would be voluntary, however, that isn't clear. High-risk pools already operate in more than 30 states, but premiums can be expensive. Some require waiting periods before covering policyholders' medical conditions.

• Change Medicare. Coburn-Burr-Ryan would reduce payments to the Medicare Advantage program, the private-plan alternative to traditional Medicare, by requiring insurers to compete for the business. Seniors with incomes of more than $85,000 as individuals or $170,000 as couples would pay more for Medicare physician care and prescription drugs.

Possible impact: Proponents say compelling private insurers to submit competitive bids to Medicare would help lower costs. Critics say more money could be saved by lowering payments to the private plans to the same amount spent on patients in traditional Medicare.

Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health-care policy research organization and is not affiliated with Kaiser Permanente.