a guide to a

better alternative to obamacare

TOC

TABLE OF CONTENTS
INTRODUCTION: A Guide to a Better Alternative to Obamacare 1
The Failed Obamacare Experiment 2
More Choice. Better Access. Controlled Costs. 2
A Better Alternative 2
#1: Choice 3
Putting control into the hands of patients 3
Preserving access to doctors and treatments 3
Make tax treatment fair to all 4
Encourage more active involvement
by individuals 4
Ensure coverage for people with
pre-existing conditions 5
#2: Improve the market-based model  6
Fix Broken Promises  6
Expand the Marketplace7
Sensible Medicare reform7
#3: Portability 8
Encourage employers to provide a portable
health insurance benefit 8

#5: Protect the right of conscience11

We have learned12
We can do better12

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#4: Assistance to those in need 9

More Medicaid means lower quality health care 9
Take steps to reform Medicaid 9
Fraud costs America billions of dollars 9
Reform medical liability laws 10
Reforming Scope-of-Practice and
Certificate-of-Need 10

INTRODUCTION

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a guide to a better
alternative to obamacare
Obamacare has provided America with a monumental teachable moment. We now
see the negative effects of an enormous new government bureaucracy that restricts
freedom and imposes unnecessary burdens on the American people. And while
everyone can agree that we must reduce the cost of health care and remove barriers
to access, Obamacare is definitely not the solution. It is a failed experiment. But if
we can now take what we have learned and implement better solutions, the future
of health care in America will be bright.
Fixing the health care system doesnt need to be a battle. The American people agree
on many of the issues. And if we can work together, thoughtfully and methodically,
America will succeed in this endeavor. Our first step, however, must be to repeal
Obamacare and begin from a clean slate.
This ebook will objectively outline the core problems of Obamacare and offer viable
alternatives to achieve more effective, long-term results. Every American can make a
difference by passing this information along to others and by contacting Congressional
representatives and state government officials. A people united have the power to
influence their government. And this issue is too important to ignore.
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THE FAILED OBAMACARE EXPERIMENT

The Patient Protection and Affordable Care Act Obamacare puts government, not
patients, in charge of individual health care decisions. Moreover, Obamacare will not
reduce premiums for average American families, bend the cost curve in health care
spending or bring down the deficit.

MORE CHOICE. BETTER ACcESS.

CONTROLLED COSTS.
To improve the quality, availability and cost of health care in America, The Heritage
Foundation advocates empowering individuals, with their doctors, to make their own health
care decisions free from government interference. We encourage Congress and the states
to enact patient-centered, market-based reforms that better serve all Americans.

a better alternative
Policymakers should pursue reforms based on five basic principles:
choice, market-based purchasing, portability, assistance to those in need,
and protecting rights of conscience.

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NO 2

Principle

#1

Choice

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Putting control into the hands of patients.

Obamacare uses mandated government-run insurance exchanges that restrict
individual choice. It literally forces Americans to buy insurance policies that they
dont want.
Positive reform would encourage Americans to purchase insurance policies and
health care services from a free market. That would allow individuals to purchase the
kind of coverage they want and that addresses their specific health needs.

Preserving access to doctors and treatments.

Through its new system of government control, Obamacare restricts choice and
access for many patients in many ways. For example, the nonpartisan Medicare
Trustees report concluded that the Medicare reimbursement reductions in
Obamacare could make 40% of all hospitals unprofitable in the long term, thus
creating access problems for beneficiaries.
Positive reform would adopt a system of patient-centered health care, designed to
maximize access to health care professionals, thus preserving and enhancing the
patient-provider bond.

One survey found that the

mandates and requirements in
the law mean that more than
half of all insurance policies
purchased directly by individuals
will not qualify as governmentapproved under Obamacare.
As a result, many Americans
are finding that they will not be
able to keep the health plan they
have and like, despite President
Obamas repeated promises.

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NO 3
Principle#1: choice

Make tax treatment fair to all.

Obamacare imposes new taxes that increase burdens on virtually all taxpayers. Its 40% tax
on so-called Cadillac health insurance plans is but one of 18 separate tax increases included
in the law. According to the Congressional Budget Office and the Joint Committee on
Taxation, these taxes will raise $771 billion in revenue from 2013 to 2022.
True health care reform should equalize the tax treatment of health insurance, without
raising new revenues. This would remove a major obstacle that discourages individuals from
buying and holding their own health insurance policy for years and taking that coverage
from job to job.
All Americans purchasing health coveragewhether through an employer or on their
ownshould receive the same tax break if necessary. According to the Congressional
Budget Office, reforming the tax treatment of health insurance would provide stronger
incentives for enrollees to weigh the expected benefits and costs of policies when buying
insurance, thus helping to reduce costs.

Encourage more active involvement

by individuals.
Americans are eager to take more control of their health care. Thats why health savings
accounts (HSAs) have become a popular way for millions of families to build savings
for needed health care expenses. HSA plans combine higher deductibe/lower premium
health insurance with a tax-free health savings account. HSAs provide financial
incentives for consumers to act as wise health care consumers.

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According to the Congressional

Budget Office, reforming
the tax treatment of health
insurance would provide
stronger incentives for
enrollees to weigh the expected
benefits and costs of policies
when buying insurance, thus
helping to reduce costs.

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NO 4

The need to provide health insurance access to individuals with pre-existing

conditions is a critical component of any health care reform. But this need did
not necessitate the massive regulation, taxation and government spending
included in Obamacare.

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The good news is, some solutions already exist. For instance, 35 states operate
high-risk pools with a collective current enrollment of 227,000 individuals
to ensure access to coverage for individuals with pre-existing conditions.
Alternatively, states could establish reinsurance or risk transfer mechanisms under
which insurance companies would reimburse each other for the cost of treating
individuals with high medical expenses without added funding from state or
federal taxpayers.

JANUARY 2013

Ensure coverage for people

with pre-existing conditions.

MARCH 2005

Unfortunately, HSA holders still face obstacles to building their personal savings.
For instance, under current law, funds contributed to an HSA may not be used to
pay for insurance premiums, except under very limited circumstances. Changing
this restriction and increasing HSA contribution limits would enhance both
personal savings and personal ownership of health insurance.

NUMBERS OF PEOPLE ENROLLED

Principle#1: choice

YEARS

The number of people enrolled

in HSA-eligible policies has
skyrocketed from one million
in March 2005 to 15.5 million in
January 2013.
In 2011, the Obama
Administration suggested
that as many as 129 million
Americans with pre-existing
conditions were at risk without
Obamacares massive changes in
Americas insurance markets, yet
only 115,000 signed up for their
federal high risk pool.
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Principle

#2

Improve the
market-based model.
Many individuals have already learned that they will not be able to retain their
current health insurance. Repealing Obamacare will rectify this unprecedented
broken promise. Then, rather than undermining markets through centralized
bureaucracy, reform should provide greater choice through market incentives.

Fix Broken Promises

Currently, state consumers are limited to the options allowed by their state. In some
states the markets are uncompetitive and very few insurance carrier choices. Forced
benefit mandates and excessive regulations raise health insurance premiums,
sometimes costing each consumer hundreds of dollars per year. By allowing
cross-state purchasing and by scaling back costly benefit regulations and benefit
mandates, consumers will have access to an expanded marketplace.

Congress can help to mitigate

these problems by removing
federal barriers to interstate
commerce in health insurance
products. Individuals should have
the ability to purchase insurance
products from another state,
choosing the health plan that best
meets their needs regardless of
the location of its issuer.

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Principle#2: Improve the market-based model

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Expand the Marketplace

Small businesses, individual membership associations, religious groups, and fraternal organizations
should be able to sell health insurance policies through new group-purchasing arrangements. By
extending the benefits of group coverage beyond the place of work, these purchasing arrangements
would also encourage portability of health insurance coverage.

Sensible Medicare reform.

Congress should provide seniors with a generous contribution toward the purchase of a
Medicare plan of their choosing. Seniors who choose a plan costing less than the subsidy
would pay less and pocket the saving, while seniors who choose a plan costing more than the
subsidy would pay the difference in price.

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Congress should also eliminate the anti-competitive restrictions that prevent doctors and
patients from contracting privately for medical services outside of traditional Medicare.
Expanding choice and competition in Medicare will preserve it for future generations
of Americans.

According to the Medicare

Trustees report, the Medicare
reimbursement reductions
in Obamacare will make 15%
of all hospitals unprofitable
within the decade and 40%
unprofitable by 2050. As
a result, seniors may face
significant obstacles to
obtaining health care in the
future.
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NO 7
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#3

Portability
Encourage employers to provide a portable
health insurance benefit.
According to one annual survey of employer health insurance plans, 87%
offer only one plan type. And when an individual changes employers, his or
her health plan typically changes, sometimes dramatically.
To foster a more cohesive continuum of health care for individuals, The
Heritage Foundation proposes that employers move from a defined-benefit
model to a defined-contribution model. Rather than providing health
insurance directly, employers instead would offer cash contributions to their
workers, enabling them to buy the plans of their own choosing.
Moving to a defined contribution model for health insurance would allow
workers to buy a health insurance policy in their youth and take that policy
with them from job to job into retirement.

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Principle

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Principle

#4

Assistance to those
in need

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More Medicaid means lower quality health care.

The Medicaid program is known for its poor quality and outcomes for patients. A
recent study from Oregon concluded that after two years, patients on Medicaid
did not achieve measurable health benefits from their insurance coverage. Even
participantsrecognizing that many physicians will not treat Medicaid patients
complain that the program is not real insurance.
Obamacare makes Medicaids problems worse, consigning millions more
Americans to this poorly run government program.

Take steps to reform Medicaid.

True reform would mainstream low-income Medicaid beneficiaries into private
health insurance that they can own and keep, lessening the burden on states to focus
on providing more patient-centered care to the truly vulnerable.
States should begin moving toward more personalized care and include strong
incentives for personal responsibility. Congress could take steps to encourage
states to adopt premium assistance. A block grant or a per capita spending
cap proposal would trade additional flexibility for states in exchange for a fixed
spending allotment from Washington.

Fraud costs America billions of dollars.

Some estimates suggest that as much as $60 billion in Medicare spending may
involve fraud. Similar problems plague many state Medicaid programs.
What can be done? Reforms should end the current pay and chase model, under
which investigators must attempt to track down fraudulent claims and providers
after they have already received reimbursement. Other solutions would enhance
penalties for those who engage in fraudulent activity. Reducing fraud in these
government programs would strengthen Americas ability to care for those who are
legitimately in need of assistance.
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Principle#4: Assistance to those in need

Reform medical liability laws.

Litigation drives up health care costs. One government estimate found that reasonable limits on
non-economic damages could reduce total health spending by as much as $126 billion per year
by reducing the amount of defensive medicine practiced by physicians. Therefore, states should
reform their medical liability laws, such as capping non-economic damages and taking other
steps to reduce the incidence of frivolous lawsuits and ensure proper legal protections for health
care providers.

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Reforming Scope-of-Practice
and Certificate-of-Need.
State governments control the licensure of both medical professionals and medical practices.
By removing artificial obstacles that restrict the supply of medical providers, states can expand
access to health services across populations while unleashing new competition that can work to
reduce costs.
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A total of 36 states also impose certificate-of-need requirements, which impede the introduction
of new hospitals and medical facilities. Reforming or eliminating certificate-of-need restrictions is
one example. It would encourage the development of new medical facilities, expanding access to
care and giving patients more choices.

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10

NO 10
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#5

Protect the right

of conscience.
Congress should protect Americans (consumers, insurers, employers,
and medical personnel) from facing the moral dilemma presented by
Obamacare, which has forced individuals, employers, and religious
organizations to choose between violating the law and violating their faith
or consciences.
Congress should make permanent in law the existing annually enacted
prohibitions on the use of federal taxpayer funds to finance abortions
or health insurance coverage that includes elective abortions. These
protections, enacted as the Hyde Amendment every year since 1976,
prevent the use of taxpayer dollars to fund elective abortions. After nearly
40 years of renewing these protections on an annual basis, Congress should
finally make them permanent in law.

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Principle

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We have learned.
Americans have realized that Obamacare moves health care reform in the wrong
direction. Not only does the law raise health costs rather than lowering them, it also
creates new bureaucracies that will erode the doctorpatient relationship. The trillions
of dollars in new spending for Obamacare will place a massive fiscal burden on future
generations of taxpayers.

We can do better.
First, Congress should repeal Obamacare in its entirety.
Policymakers should then advance health reforms in a step-by-step fashion that moves
toward patient-centered, market-based health care. Such reforms would:
promote personal choice and ownership of health insurance;
enable the free market to respond to consumer demands;
encourage portability of coverage for workers;
help civil society, the free markets, and the states to assist those in need;
protect the rights of faith, conscience, and life.

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CONCLUSION

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The Heritage Foundation wants

Americans to understand that reform
is a process, and mistakes are made
along the way. Its important to learn
from those mistakes in order to move
toward a more beneficial outcome.
Obamacare is the perfect example.
This experience is a test to see if our
leaders can govern with humility and
take the necessary steps to create a
health care system that does no harm,
but rather enhances the quality of life
for all.
The Heritage Foundation is dedicated
to empowering Americans to
participate in our democracy. Please
use this ebook as your guide. Share
it with everyone you know, and
encourage them to join you.

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