Sen. Rand Paul (R-Ky.) is calling on Republican Senate leaders to introduce several important changes to their plan to replace Obamacare, including one very unique reform idea that has the potential to dramatically change the U.S. health care system.
Paul is one of several conservative Republicans in the Senate who say they can’t vote in favor of the Senate leadership’s proposal to replace the Affordable Care Act — the Better Care Reconciliation Act — in its current form. According to Paul and other conservatives, including Sens. Ted Cruz (R-Texas) and Mike Lee (R-Utah), the BCRA keeps too many of the problematic provisions in the Obama-era ACA in place.
On June 27, Paul sent a letter to Senate Majority Leader Mitch McConnell (R-Ky.) urging him to adopt several important reform ideas. Among them was the expansion of “Association Health Plans” in the BCRA. The expansion of AHPs would allow organizations and individuals to form associations for the purpose of buying group health insurance. Existing associations could also buy health insurance in this way, significantly increasing the power of consumers in negotiating rates and helping to resolve problems related to the ACA’s pre-existing conditions clause.
In his letter to McConnel, Paul wrote that he wants “the language [in the BCRA to] be changed to allow any individual, including self-employed individuals, to form associations for the purpose of purchasing group health insurance.”
If passed into law, Paul’s proposal would have far-reaching implications for the U.S. health care market. Under the current system, most Americans are insured through either a family member, an employer or the government. Those who work for small businesses that don’t offer insurance and individuals who are uninsured for some other reason have been required to buy insurance as individuals. This has given them significantly less negotiating power than the power enjoyed by large employers when negotiating rates, and prior to the passage of Obamacare, it put people who did not have employer-provided health insurance but were suffering with a pre-existing health condition at a significant disadvantage.
Since Obamacare was implemented, individuals with pre-existing conditions have been able to purchase health insurance, but health insurance prices have skyrocketed as a result, exacerbated by the fact many health individuals have chosen to pay the Obamacare penalty for not having insurance rather than pay for increasingly expensive health insurance plans that have gigantic deductibles.
Many free-market health care experts believe Paul’s plan for association health plans would go a long way toward resolving these problems, because individuals could purchase health insurance together. The larger the group, the more powerful it would become in negotiating prices, and the less the pre-existing conditions of some of its members would matter. This is precisely why, along with tax advantages, large-employer health insurance plans are so attractive to many employees.
Imagine, for instance, the advantages of receiving your health insurance through your church, rather than an employer. Wealthier families in the church could help subsidize the cost of insurance for the lower-income families without the government getting involved, insurance rates would be cheaper than if an individual were to seek health insurance on his or her own, the church could ensure that the health insurance policies purchased are in line with the congregation’s religious beliefs and people who lose their jobs or switch their employers would no longer need to find a new insurance plan. The same could be true for almost any association of like-minded people, including groups like the National Rifle Association and retirement organizations.
It remains unclear whether McConnell and the rest of the Senate leadership is willing to add Paul’s proposal to expand association health plans to the Better Care Reconciliation Act.