The GOP, led by Republican Study Committee Chair Steve Scalise of Louisiana, introduced their alternative to Obamacare last week, HR 3121.

Calling the GOP proposal a “health” plan is like calling their recent attempt to cut $40 billion in funding for food stamps a “nutrition” program. The GOP has already been obstructing one of the only good features of Obamacare, the Medicaid expansion, and in this plan would eliminate the expansion entirely, withholding even this meager coverage from the working poor.

The proposed $20,000 tax deduction for family health coverage would save the average family about $660 in income taxes and $1,500 in payroll taxes, less than 15 percent of the average cost of a family plan ($16,351), not nearly enough to put it within reach. As a result, this plan offers little to help the 48 million uninsured, even as it diverts funds from Social Security and Medicare to the wasteful private health insurance industry.

Also, because there is no effective cost control in the plan, the rising cost of premiums will quickly outstrip the small subsidy, pushing more Americans into high-deductible health plans with limited benefits and high out-of-pocket costs. Rather than control costs, high-deductible health plans simply shift more health care costs onto the sick.

The plan promises to expand the amount of money that can be sheltered from taxes in a health saving account, a boost for the wealthy, but little help to families struggling to make ends meet.

The GOP’s tax breaks are a boon to the private health insurance companies, as are the subsidies for the Obamacare exchanges and the current employer tax deduction for covering workers. Allowing the private health insurance industry a central role in health care is what makes the U.S. health care system cost so much while delivering less care relative to other countries. Eliminating the private insurance middleman with a single-payer program would free up enough money now wasted on billing, marketing, outrageous CEO salaries and other administrative tasks (over $400 billion annually) to cover all the 48 million uninsured and eliminate copayments and deductibles for everyone else.

The other ideas contained in the bill (e.g. insurance deregulation, association health plans, tort reform) are just as tired and ineffective.

The GOP proposal is a hodgepodge of ineffective policies that conservatives have been promoting for years, not a serious health proposal. It would hurt the poor in those states where Medicaid may soon be expanded, keep the wasteful private health insurance industry at the center of the health system, promote bare-bones private coverage (“underinsurance”) and shift costs onto those least able to afford them, the poor and the sick.

Key features/impact

  • Repeals Affordable Care Act

Impact: Best features, like the Medicaid expansion and some insurance regulations, like ending “preexisting condition” denials from insurers, are eliminated.

  • Eliminates “uncapped” tax-deductibility of employer-sponsored health insurance

Impact: The bill’s language on this point is unclear, but making health insurance more costly for employers to provide will encourage them to cut benefits. This shifts costs to individuals, especially the sick and poor

  • Allows individuals with coverage to deduct $7,500 from taxable income (for both income and payroll taxes)

Impact: Tax break for affluent, insured people. No assistance to lower-income families. Also encourages underinsurance, shifts costs to sick and poor.

  • Allows families with coverage to deduct $20,000 from taxable income (for both income and payroll taxes)

Impact: Same as above. Also shifts funds from Medicare and Social Security to the private insurance industry.

  • Expansion of health savings accounts, tax-preferred, from $2,250 individual and $4,500 family to higher amounts (unclear how high)

Impact: Tax cut for the affluent.

  • Tort reform, non-economic damages limited to $250,000

Impact: Patient right to sue limited without improvement in quality. We need tort reform, but the Republican version is the wrong model.

  • Insurance deregulation, allowing sale of insurance across state lines that fails to meet state standards

Impact: Underinsurance, shift costs to sick.

  • Association health plans allowed

Impact: Underinsurance, shift costs to sick.

  • $2.5 billion annually for state high risk pools

Impact: Inadequate to care for all people with preexisting conditions, subsidy to the private insurance industry.

  • Transparency in pricing, would only apply to Medicare

Impact: None, already law.