Repeal and Start Over By Robert Romano

03/29/2010

Now that ObamaCare is the law of the land, and is as unpopular as ever, Congressional Republicans are left with the daunting task of peeling back the layers of the newly-expanded entitlement state left in the wake of the government takeover of health care.

A CBS News poll released last week found an overwhelming majority, 62 percent, of Americans want the GOP to continue their resistance to government-run health care. That includes 66 percent of political Independents, and even 41 percent of Democrats who said that Republicans should continue their opposition. This, as businesses (see: Boston Herald and New Hampshire Union Leader) warn that ObamaCare is a jobs-killer.

With any political mandate, however, the question becomes not whether or not to pursue the public’s agenda, but how. On that count, there appears to be a bit of debate. Should Republicans campaign on repealing the bill entirely, or should they maintain certain provisions?

As reported by Americans for Limited Government Director of Congressional Affairs, Derek Baker, “there has been much discussion and confusion about whether Republicans should pursue a strategy of ‘repeal’ (or ‘repeal and start all over’) versus ‘repeal and replace.’ While this may seem a matter of semantics to the casual observer, there is substance to the debate. At issue is what’s assumed in the repeal and replace mantra: leave the now current law mandate in place to cover preexisting conditions, rather than pursue the piecemeal strategy (once ObamaCare is repealed) that has been championed all year by Republicans of moving incremental bills that improve the healthcare system step-by-step (such as the ability to purchase insurance across state lines).”

The trouble with leaving the mandate in place for insurance companies to cover so-called preexisting conditions is that it accepts the premise of federal control over minimum levels of insurance coverage. As with any coverage expansion mandated by law, this will place upward pressure on the cost of premiums — the very problem health care reform purports to address.

In short, accepting it is tantamount to accepting higher premiums. One of the major reasons premiums have risen to the degree they have is because of the minimum insurance requirements that states already impose upon companies. Coupled with the ban on the interstate purchase of health insurance and thus the lack of a competitive national marketplace, some states have seen premiums rise faster than others.

To be certain, several states already have used what are called “guaranteed issue” and “community rating” rules that cover preexisting conditions. These rules require insurers to accept applicants without regards to factors like health status or age, and not to charge higher premiums as a result. According to a study conducted by Milliman, Inc., when such laws were implemented, insurance markets were disrupted, with the result being “enrollment in individual insurance… tended to decrease, and premium rates tended to increase, sometimes dramatically.”

How dramatically? America’s Health Insurance Plans (AHIP) reports that in 2009, the average individual insurance premium was $2,985 and family insurance premium was $6,328. In every instance except for Kentucky, the states that AHIP studied with guaranteed issue and community rating rules saw premiums higher than the national average. The reason for the exception? Kentucky repealed the guaranteed issue and community rating rules because they were so bad.

Of the states that retain such rules, in New York, the average price an individual plan was a whopping $6,630 and $13,296 for a family plan. In less densely-populated Maine, it was $4,061 for an individual plan and $7,260 for a family plan. Massachusetts saw a gargantuan $5,143 for individual plans and $13,288 for family plans.

In every instance, the adoption of such measures resulted in higher premiums for affected state residents. Another unintended consequence was the decline of the issuance of plans with richer benefits. Is that really the position Republicans want to tether themselves to?

The fact is, their proposed reform that would allow individuals, families, and businesses to purchase plans across state lines would give everyone access to markets that utilize guaranteed issue and community rating rules. Then, folks comfortable paying higher premiums for plans that apply those rules could do so, and those who wished to opt into lower cost plans could so.

The American people oppose government-run health care for a reason, namely, a great many of them already live in states where that is the case. In fact, prior to passage, according to Rasmussen Reports, 55 percent of Americans wanted Congress to start over and not to work within the framework outlined by Barack Obama. Republicans need not accept the premise of federal control over insurance companies when the results of state control over insurance companies are plain for all to see: higher costs, lower quality, and less competition.

Since that is the central tenant of its national, entitlement state model, ObamaCare should be repealed in its entirety, and a new bill with market-based competition as its centerpiece ought to be enacted. That is something the American people would accept across party lines, and really would lower costs.

Robert Romano is the Senior Editor of ALG News Bureau.