Association health plans are plans offered by groups--such as business or professional associations and chambers of commerce--to their members or to the employees of their members. Association plans are already common in the United States, but the regulation of them varies from state to state. The Republican bill would subject them to federal regulation, largely preempting the existing state regulations. Consumer protection under the federal law, however, would be quite minimal, focusing primarily on financial solvency.
Congress has rejected Republican association health plan proposals in the past. The main reason has been concerns that association plans could pick off the best health risks, making it more difficult for higher risk individuals and groups to find coverage. Another concern has been the lack of consumer protection and fraud prevention in association health plan proposals. (See here and here.)
The Republican bill would also permit an insurer licensed in one state to sell insurance across state lines, largely free from regulation in the states in which the insurance was sold. The idea is to increase competition among insurers and to free insurers from burdensome state regulations. Both the House and Senate health reform bills also permit interstate insurance sales. But those bills would give the states substantially greater power to protect its consumers--because there is a very real concern that the sale of insurance across state lines could lead to a race to the bottom in insurance regulation, with a significant increase in risk segmentation in insurance markets and in fraud.
High risk pools, another idea endorsed by the Republican bill, already exist in 34 states and provide needed help to many Americans excluded from insurance markets because of their health status. (See here.) Too often, though, they offer insurance with high deductibles and out-of-pocket costs. The Republican bill would allow them to charge premiums of up to 150 percent of a standard premium. This coverage would simply be unaffordable to many of the uninsured.
It is hard to argue against malpractice reform. Our current system leaves most victims of medical negligence uncompensated while it infuriates doctors and primarily benefits malpractice insurers and plaintiff and defense attorneys. There is ample evidence, however, that simply capping recovery of non-economic damages and attorneys fees at low levels, as the Republican bill would do, has the primary effect of making it difficult for victims of malpractice to get legal representation and nearly impossible for those who suffer no-neconomic loss (such as loss of reproductive capacity, disfigurement, the death of a child, or loss of functional capacity by a person who is not employed) to get any compensation.
Although it is commonly believed that defensive medicine is a major contributor to medical costs, there is little empirical evidence the support this belief. The CBO estimates that reductions in the utilization of medical care due to the Republican tort reforms would reduce national health care expenditures by only three tenths of one percent. The CBO also acknowledged that the Republican reforms might result in worse patient outcomes. We need malpractice reform, but it must do more than simply turn victims away from the courthouse door.
Click on the link above to read the full post. He goes into CBO comparisons of the two parties' proposals, which is worthwhile.
I'll just add that it is important to remember that these proposals have been brought up before, including several times when the Republicans controlled Congress from 2003-2006, and for some strange reason, they never even made it out of committee. Why would that be? My guess is that the Republican Party is just flat-out not serious about reforming the health insurance system.
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