Still missing the mark: Scott Walker’s Health Plan

Last updated on: August 18, 2015 at 10:54 pm by Jane the Actuary

Still missing the mark: Scott Walker’s Health Plan 2015-08-18T22:54:33-06:00 Jane the Actuary

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(image: Scott Walker, from wikimedia commons, photo by Gage Skidmore)

Scott Walker’s released his “repeal and replace” health care plan today. Here’s a link to a National Review article evaluating the plan, and here’s the plan itself.

There’s a lot that’s good in it, especially the proposed Medicaid reform, which splits Medicaid up into three entities for the three groups served by the program: medical care for low-income children and adults, medical care for the disabled and low-income seniors, and long-term care for the disabled and low-income seniors. Each of these groups has different needs and should reasonably have services delivered and managed in different ways.

But here’s my immediate complaint: this plan, like others that precede it, proposes per-person tax credits to enable those without employer-provided insurance to purchase health insurance in the private market. To be sure, this is an improvement on Obamacare in that there’s no means-testing, no cut-offs and breakpoints that disadvantage those on the wrong side of the cut-off, and an improvement on flat per-family credits that have been proposed before. But, in order, I suppose, to simplify things for a nice policy document, he creates four age brackets. Do insurance companies price their policies with these age brackets? No, of course not. Which means that if you fall at the top end of the age bracket, you’re in trouble, and at the bottom end, you come out a bit ahead.

Here’s my research: I looked at ehealthinsurance.com for rates, based on a nonsmoker, in my suburban Chicago zip code. (How do we compare against other regions? I’m not sure. Exercise left for the reader.) For all ages, the rates came with a $6,000 deductible. The column to the right are the proposed Walker-plan credits. And, despite the plan’s claim to the contrary, at the older ages within each range, the credits are far from sufficient to even buy this catastrophic plan.

Age DOB Monthly Annual Credit 64 1951 $ 398 $ 4,782 $ 3,000 50 1965 $ 237 $ 2,847 $ 3,000 49 1966 $ 227 $ 2,719 $ 2,100 35 1980 $ 162 $ 1,948 $ 2,100 34 1981 $ 161 $ 1,935 $ 1,200 18 1997 $ 84 $ 1,012 $ 1,200 17 1998 $ 84 $ 1,012 $ 900 0 2015 $ 84 $ 1,012 $ 900

Now, it should be a simple thing, really — “My reform plan provides tax credits sufficient, based on age and location, to buy a typical bronze plan.” How hard is this?

A couple more gripes: $6,000 really is quite a large deductible. Megan McArdle has suggested deductibles as a percent of pay (sorry, I can’t find the link); in any event, sliding-scale clinics would still play an important role, and should be strengthened (see here for a prior article) and made available to the insured with high out-of-pocket costs, in any event. But clinics are not hospitals, and don’t help when you need the sort of treatment that only a hospital can provide.

What’s more, you’ve still got the inequity between employers who do and don’t provide health insurance, and the incentive for employers to cancel insurance coverage and increase pay instead. Wouldn’t it be better to give the tax credit to everyone, and factor it into the deductibility of health insurance?

And you’ve still got the issue of the individual who earns 133% of poverty and gets that one extra dollar raise and loses eligibility, or of disabled adults afraid to get a job because they depend on Medicaid’s complete coverage of their extensive health needs. This gulf between Medicaid and Exchange plans, or between Medicaid and Walker’s tax credits, needs to be bridged in some way. (Or does the Walker plan propose narrowing Medicaid eligibility, given its sweeping claim to a full ACA repeal?)

So, it’s a starting point (and better, I’ll admit, than the complete lack of policy documents by some of the other campaigns), but it still needs work.

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