CARE Act – The Republican Private Exchange?

Since the inception of the Affordable Care Act, there have been relentless efforts to minimize the benefits of the law, expose loopholes in the operation of health reform, and repeal the law more than once. In a recent effort to improve Obamacare by repealing and replacing it with health reform that is arguably better than PPACA, three Republican senators – Richard Burr of North Carolina, Tom Coburn of Oklahoma, and Orrin Hatch of Utah – have unveiled the law. Patient CARE. The Patient Choice, Affordability, Responsibility and Empowerment (CARE) Act is a proposal that replaces the fundamentals of PPACA with the Republicans’ own proposals.

However, a closer look at the proposal under the CARE Act reveals that it is nothing more than a glorified private insurance exchange and is far from the solution that Obamacare currently needs. So what is the CARE Act all about?

1) Establish sustainable reforms: Republicans widely feel that Obamacare is falling into a death spiral under its own weight. While that seems a long way from happening, the CARE Act plans to implement common sense consumer protection plans that can be sustained over a longer period of time. With that, the Republicans also propose to create a new protection plan for patients with a pre-existing medical condition. However, they have overlooked the fact that private health exchanges under Obamacare work to normalize the risk pool by enrolling younger, healthier people. The classic example here is the private eHealth exchange, which boasts a 40% youth enrollment rate.

2) Modernization of Medicaid: The modernization of Medicaid for better coverage and care for patients through a capped allocation is one of the most prominent features of the CARE Act. While this cap may sound crazy right now, it will provide states with predictable funding and flexibility.

3) Limiting Employer-Provided Health Coverage: In an effort to reduce distortions in the tax code, Republicans have proposed a cap on the tax exclusion given to employers for employee health insurance.

4) Increase transparency in the price of health care: To affect a transparent system that delineates the price of health care, Republicans propose greater transparency to ensure that the customer can make a better purchase decision when purchasing health insurance .

However encouraging as the list above may seem, the CARE Act will do nothing to fix the promise of Obamacare. In fact, by adding these loopholes to the ACA, the CARE Act is only amplifying the pain points for potential customers. For example, capping Medicaid, reducing employer-provided insurance, and manipulating the successful aspects of Obamacare – all of these will hamper the current shape of American health reform.

So instead of repealing PPACA and replacing it with CARE, a much smarter solution would be to keep PPACA and fix certain things, like making the law more attractive to invincible youth. For now, that is what the United States needs for its health care reform, instead of another attempt that is nothing more than a private exchange governed by different rules.