The New Republican Response to the ACA

Rep. Pete Sessions and Sen. Bill Cassidy  introduced legislation last month calling for replacing elements of the Affordable Care Act. A House task force established by Speaker  Paul Ryan is expected to follow with more health-care proposals. These Republican health plans are generally referred to as "replacements" for the ACA-in the spirit of "repeal and replace"- as though they would accomplish the same objectives in ways that conservatives prefer. But the proposals are better understood as alternatives with very different goals, trade-offs, and consequences. Whether they are "better" or "worse" depends on your perspective.

To boil down to the most basic differences: The central focus of the Affordable Care Act is expanding coverage and strengthening consumer protections in the health insurance marketplace through government regulation. By contrast, the primary objective of Republican plans is to try to reduce health-care spending by giving people incentives to purchase less costly insurance with more "skin in the game," with the expectation that they will become more prudent consumers of health services. They also aim to reduce federal spending on Medicare and Medicaid and the federal government's role in both programs. Elements of the ACA were designed to reduce costs, such as the law's Medicare payment reforms, and elements of Republican plans such as tax credits aim to expand access to insurance, but the primary aims of the ACA and the Republican plans differ.

In public discussion the architects of these Republican plans often gloss over their differences from the ACA. But it is not as if they can somehow achieve the same things the ACA achieves, just in a way that involves less spending and regulation.  The differences between Republican and Democratic objectives make it tricky to fairly evaluate the GOP proposals. With the ACA now the status quo, should Republican plans be evaluated against whether they maintain or don't maintain ACA coverage gains and insurance protections? Should they be evaluated on how well they achieve their own objectives-promoting consumer choice and lower-cost insurance plans, reducing marketplace regulation, and reducing federal spending and the federal role in health care? Should GOP proposals and the ACA both be assessed against general criteria pretty much everyone in health care uses, such as how well they improve access and quality, and control costs? All of these metrics can be used, but conservatives and liberals are likely to weigh them differently.

There are many ideas that conservatives have favored embodied in the ACA, just as there are ideas in Republican plans that will be palatable to Democrats. But fundamentally, Democrats could not cover almost everyone, while ensuring that they get comprehensive benefits and that sick people were protected in a market that had excluded them and at the same time achieve Republican goals. In the same way, Republicans cannot deregulate, reduce spending and the federal role, give consumers more skin in the game and all the while achieve Democratic goals. There is an inherent tension between the objectives each side wants in health reform.

Karl Rove recently wrote in The Wall Street Journal that " Republicans must campaign on credible, substantive alternatives to ObamaCare." That seems fair enough. But health-care experts, the media, and architects of health-care proposals can do more to make it clear that the ACA and Republican plans are not different means to the same ends but means to different ends-each legitimate depending on one's political and policy priorities, and each with their own trade-offs and consequences for the public.

Key Provisions of the Final Rule

1. Sets the standard salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South ($913 per week; $47,476 annually for a full-year worker);
2. Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
3. Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.