GOPcare, version 1.0
If you go here, you can read a whole bunch of analyses of and reactions to the newly-unveiled “repeal and replace” health care bill proposed by the GOP.
Predictably, nobody likes it. Before I get into a few of the details, I want to talk about that. Why do I say “predictably”? Because I believe that if you couple the modern-day costs and complexity of health care with the expectations—nay, the demands—of people that everyone be guaranteed a high level of care no matter what their health problems or income, you have an almost insoluble problem.
I wrote a shortish post on the subject of the difficulty of providing a system of health care insurance very early in my blogging days, years before Obamacare was even a twinkle in Obama’s eyes. Now twelve years have passed since that post, and it has come to pass (just as the Obamacare proponents said) that Obamacare has become something to which people feel entitled—its subsidies and its universal coverage. So it has become very very difficult to take those things away. So the GOP has tried to come up with a more market-based solution that preserves somewhat more liberty but provides for most of those things nevertheless.
Conservatives are hopping mad at this bill, because they want an even more market-based system with less expense (fewer government subsidies). Liberals are hopping mad at this bill, because they would be hopping mad at anything the GOP proposes.
No wonder the GOP took so long to come up with this—which I consider the opening bid in a lengthier process, by the way.
I’ve long felt that Avik Roy is one of the better health care policy analysts, so I’ll turn to him for his viewpoint rather than to some of the other people who are hyperventilating on the subject. His article is entitled “House GOP’s Obamacare Replacement Will Make Coverage Unaffordable For Millions — Otherwise, It’s Great” and it begins this way:
That’s not an ironic headline. Leading House Republicans have included a number of transformative and consequential reforms in their American Health Care Act, the full text of which was published Monday evening. But those reforms are overshadowed by the bill’s stubborn desire to make health insurance unaffordable for millions of Americans, and trap millions more in poverty. Can such a bill garner the near-universal Republican support it will need to pass Congress?
As an aside, I will add that one of the many problems with bills that deal with health care (or what used to be called health insurance, although with coverage of pre-existing conditions it gets more into the realm of a prepaid health plan than any sort of insurance as insurance is usually known) is that they are very complex. That makes them more than ordinarily susceptible to propaganda and/or misunderstandings. How many people are going to read the whole bill (I’m certainly not among them)? How many people are even going to read an article such as Roy’s?
Roy is saying there’s good news and bad news:
The AHCA takes important steps to strengthen the Medicaid program, by converting its funding into a per-capita allotment that would give states the flexibility they need to modernize the program…
Unfortunately, the AHCA’s efforts at replacing Obamacare’s health insurance exchanges are problematic. A key limitation is that Republicans have decided to repeal and replace Obamacare on a party-line vote using the Senate’s reconciliation process. But reconciliation can only repeal Obamacare’s taxes and spending; it can’t replace most of the law’s premium-hiking insurance regulations.
The AHCA does make an effort to repeal Obamacare’s two costliest regulations: its requirement that plans charge similar premiums to the young and the old (age-based community rating); and its requirement that plans contain generous financial payouts (high actuarial value). So far, so good.
But the plan, due to the reconciliation process, appears to leave the vast majority of Obamacare’s regulations in place. The February 10 leaked draft contained language that would have returned control of essential health benefits to the states. That language appears to have been deleted.
Worse still, the bill contains an arbitrary “continuous coverage” provision, in which those who sign up for coverage outside of the normal open enrollment period would pay a 30 percent surcharge to the normal insurance premium. This surcharge is an arbitrary price control. While 30 percent represents an approximate average of the additional health risk of late enrollees, the 30 percent provision incentivizes those who face much higher costs to sign up, forcing insurers to cover them at a loss. This seems like a recipe for adverse selection death spirals.
The critical mistake of the AHCA is its insistence on flat, non-means-tested tax credits. The flat credit will price many poor and vulnerable people out of the health insurance market.
I strongly suggest you read the whole thing, including the addendum that includes an interview with Rep. Kevin Brady (R., Tex.), Chairman of the House Ways & Means Committee, that took place on the Hugh Hewitt show.
To repeat: I don’t expect that this bill is in its final form. Right now, I’m just starting to digest this particular bill and its possible consequences. I assume there will be a lot more discussion and a lot more to learn.
For all of the reasons mentioned by Neo, I’ve become a defeatist on health care reform, and I don’t see how she musters the energy to write about it. It’s not that I don’t care, that I’m am out of ideas; but, on this issue, my pessimism has run amok.
Eventually, I’d bet that the whole system collapses under burgeoning costs, and then we’ll all end up with cut-rate Medicaid. Upon a patient’s death, his property will be seized to cover health care costs. This has already been written into Obamacare, so I’ll be curious to see whether it survives the GOP version.
Obamacare is the natural consequence of international “free trade”.
Labor participation rate at extreme low rate, jobs being created are low wage and part time, neither of which offers health insurance as a benefit.
And the jobs that remain in the US are under wage/automation pressures.
Now one could argue the results of globalization are a benefit, not a bug to proponents of big government. Shrinking middle class, looking for help from government, finds a willing provider. So to those low wage workers we have a litany of government subsidies– food stamps, section 8 housing, EIC, and expanded medicaid. To that we might add a new entitlement subsidized child care if Ivanka gets her way.
It’s through that lens we need to evaluate what level of subsidies health care “insurance” should offer, not whether it should be subsidized or not.
The house leaders say that they have an idea of what the AHCA will cost so they don’t need to wait for bill to be scored by the CBO, but I haven’t heard any numbers at this point. It seems that no one and I mean no one is talking about the future cost of maintaining Obamacare or if this proposal will do anything to reduce costs– which it better if it’s true that 20 million Americans will lose coverage, according to Roy.
It seems that part of the changes to what has been proposed is to make it enticing for low wage earners to move off expanded Medicaid– something that makes a job renaissance even more critical for the country.
Bring on the border adjustment taxes!
No wonder the GOP was loathe to disclose details. No one is happy. Could it be that the bill might be just about right?
The goal is to get rid of Obamacare’s heavy mandates on both insurance policy details and for all to have insurance or pay a fine. A secondary goal is to transition those who have gained coverage under Obama care to the private insurance markets without too much disruption.
The first goal will not affect those who get their insurance from their employers (175 million people), from Medicare (55.5 million), from CHIP (40 million children), and the Medicaid recipients who didn’t get their Medicaid through the ACA (25.5 million). In other words, the vast majority of Americans.
Figures about the number of people who get their insurance from the ACA exchanges is murky, but this site seems to have some authority:
https://aspe.hhs.gov/system/files/pdf/167981/MarketPlaceEnrollJan2016.pdf
That site claims that there were 11.3 million people enrolled in ACA policies in 2016. For those who bought and paid for their insurance the new bill would allow them to buy a policy more to their liking/needs for less money. And in fact it would provide them a tax credit for buying a policy putting them on an even footing with those who get their insurance from their employers. These people would not, IMO, be adversely affected by the Obamacare replacement bill.
That leaves the people who got their Medicaid through Obamacare in the states that accepted the expanded Medicaid – a figure that is hard to pin down. I have seen figures from 6 million to 11.6 million for those people. Why can’t the replacement bill just freeze the expanded Medicaid situation where it is? It’s due to be phased out in 2020. States could all make their own decisions as to what they want to do in 2020. (Yeah, kick that can down the road. 🙂 )
I suspect that I know what my state, Washington, will do in 2020 – they will raise taxes to pay for the expanded Medicaid. 🙁
So, only about 17.3 to 22.9 million people are actually affected by the repeal of Obamacare and only 6 – 11.6 million of those may be adversely affected. It should be no problem to deal with that. Well, I can dream can’t I?
J.J.:
Obamacare could be the iceberg which sinks two presidencies.
Until we relearn what insurance is actually for, we will be doomed to really bad legislation.
I wrote several months ago the best way forward might be to do nothing at all and let the ACA exchanges fail which they will do within a couple of years, and we might well end up with that strategy by default given there is almost no chance this bill will pass both houses or even one.
Yancey Ward:
If the GOP let that happen, just about everyone would be very angry at them.
The GOP is in a very difficult position.
Wielding power is difficult and comes with costs.
At least this is a shorter bill (163 pages) but just as difficult to read since it relates to changing laws – go to this section, delete “and” and add “or” and so on. Unless you track the changes, you really don’t know what is happening.
Some of the changes that have been asked include tort reform and interstate insurance plans. Those are a bit more complex to change. You have 50 states which are used to doing things their way with their own insurance commissions.
So, do you take this right from the states in order to have a more central entity regulate it. Do all insurance plans get regulated in the state that offers the best deal? Are there any federal laws that have to be changed to get this in place?
Try changing medical malpractice rules and there are a bunch of lawyers who will argue against that effort.
One of my concerns with immediate repeal of the ACA was the impact on people. If I don’t pay, then I lose my insurance coverage. If they repeal the law, would there be a delay date or do the insurance companies get to cancel their plans and rewrite one to their favor?
So many people have been using the rally cry of “repeal” that they have not really thought out all of the problems with the repeal.
The best cartoon that I’ve seen has an octopus engulfing Uncle Sam with the doctor commenting that “this will take a bit of time.”
I am writing to Rand the Paul and Ted the Cruzer and asking them when they are going to end the entitlement program they are on. Namely employer paid health insurance. They get a huge benefit probably worth $10,000 + per year yet they pay no taxes on it. My daughter, the small business owner, pays for her insurance with after tax dollars. The tax credit that the ACA replacement bill calls for just attempts to give individual private insurance buyers the same tax benefit that those with employer paid health insurance enjoy.
The TEA Party and conservative house members that are complaining about the tax credit are also saying they want a bill that reduces the cost of health care. They cannot accomplish that with the repeal and replacement of Obamacare.
Reducing the cost of healthcare requires dealing with the lack of transparency of pricing. That is a black hole of cost shifting that comes from providing Medicare/Medicaid along with the pro-bono costs associated with EMTALA. Employer provided health insurance was the first mistake. At the time it seemed a good idea. Medicare/Medicaid was the second mistake. At the time it seemed a good idea. EMTALA was the third mistake. And it passed during Reagan’s watch. Allowing illegal immigrants to access healthcare was the fourth mistake. I don’t remember anyone thinking that was a good idea except libs. Now, the system is a mess and no one knows the true price of any medical procedure. Unscrambling the mess is not something the Feds can do except by requiring all medical providers to post their prices. Good luck with that.
There is no way politicians can create a utopia. The rabid Trumpsters are as bad about this as the Obama nuts. I would be happy if they can create a new law that starts to get people thinking about taking some responsibilty for their own health insurance–even if we have to help the poor out with this. I’m afraid that we may be getting into a Christine O’Donnell situation on this.
Once Medicare figured out that they could use it’s economic buying power to control how much they paid hospitals, the states followed for Medicaid. Eventually, the insurance companies realized that they could demand discounts or else they would move their business to another hospital. The loser was the private payer. And that’s when the retail prices started to go up.
There is a surgery center in Oklahoma City that posts their prices for various operations. They expect cash payment. It’s an interesting model.
https://surgerycenterok.com/
The focus on finance rather than on pricing is evidence that it is not a market-based reform. The length and complexity of the bill is evidence that it is not a market-based reform. The transparency, however, is positive progress, and evidence of market-based reconciliation.
Allowing illegal immigrants to access healthcare was the fourth mistake
Providing health care, not particularly financing, to non-citizens, including and perhaps especially illegal aliens, is equivalent to the argument for universal vaccination (e.g. herd immunity).
liz:
The Surgery Center of Oklahoma is a market-based model that is likely to meet the needs of most people. Something similar has been attempted with PCPs (a.k.a. family doctors). When accompanied with education reform, economic revitalization, emigration reform, and moral reform, a functioning capitalist market will ensure that health care is both affordable, available, and sustainable.
Liz:
“One of my concerns with immediate repeal of the ACA was the impact on people. If I don’t pay, then I lose my insurance coverage. If they repeal the law, would there be a delay date or do the insurance companies get to cancel their plans and rewrite one to their favor? ”
I saw Kevin McCarthy on the Bret Baer show say that the new law allowed a two year transition period for people on Obamacare to transition to a new plan. I have not seen that on paper, but I’m sure they are thinking about this issue.
The big issue of replacement is to try to transition as many Obamacare insurance holders as possible to new, better, cheaper insurance. As I pointed out in my previous comment, we’re talking about 22.6 million people – about 6.6% of the population. This should not be impossible to do. But, considering the fact that many people will not take the time to inform themselves and help themselves, who knows. Maybe it is mission impossible.
One thing that concerns me greatly, has to do with the path through the Supreme Court that got us here. I think that Rand Paul is correct. We should begin with legislation that is a flat repeal.
The first paragraph of that bill should state clearly that the Roberts Court decision NFIB v. Sebelius was a horrible and unconstitutional decision for two reasons: 1) Roberts rewrote the law so as to convert a penalty fee into a tax and courts may not rewrite legislation. 2) Only taxes based on a particular level of income are allowed by the 16th amendment. A penalty fee converted into a tax is in no way an income tax, and is therefore unconstitutional.
The constitution and the country have suffered greatly under fraudulent interpretations of the equal protection clause, the interstate commerce clause, the 14th amendment etc. Ironically, the interstate commerce clause was the argument that the Dems used to claim that the Obamacare penalty was OK. Roberts took great pains to strike that argument down as well as the long history of Wikard v. Filburn, and then turned around to create a new fraud, i.e. interpreting penalties as income taxes.
This is a small thing now, but could really gallop out of control in the future. Supreme Court justices don’t have to listen to legislator’s constitutional opinions, but they have in the past on occasion, and they should.
It is simple. Take it back from DC. Leave it to the States. Demolish the departments of Health and Human Serices, the Department of Education, the Department of Commerce, and sharply decease the power the EPA and Interior.
I, too, as the first commenter says, am a defeatist on health care. The fundamentally nutty system we have had for decades, even before it was made nuttier by Obamacare, is just too deeply interwoven into American life. It’s collapsing under its own weight, and I can’t see the Republicans reversing that. Eventually it will be replaced by an entirely government-run system (I hate the “single-payer” euphemism).
As Kevin Williamson said at National Review the other day:
“In the same way that Washington has tried to manage housing by regulating and subsidizing mortgages, politicians have long tried to manage health care by regulating and subsidizing health insurance. It does not work. It has not worked, and it is not going to work.”
If Universal Healthcare, or a one payer system, is inevitable, that it will eventually happen no matter what since you can be certain that the democrats will regain control of the government at some point in the future, why don’t the republicans just initiate the implementation of it when we are in control of the government now, at least we can have more say in how it will be run than if it is being implemented when the democrats are in control. The Democrats took all the credits from the republicans by simply enacting the civil rights when a democrat was president why not implement an one-payer system now and take all the credits for giving all people access to healthcare helping to position the republicans as the party for the poor?
a pure free market system doesn’t work for healthcare, unlike other business ventures Healthcare is a matter of life and death for many people, if you let the free market decides the value of a service that can save a person from dying then the service would be infinitely expensive since life is priceless. when the supplier of a service has the only goods that can save a person’s life, it is not a free market anymore, the patient has no leverage and has to pay whatever the supplier demands. Government has to step in at some point to put a cap on what hospitals can charge…
I’m in haste, have not read the preceding comments, and someone may have addressed this already.
But I do not understand.
If the Obamacare bill was passed in the Senate via reconciliation (and the refusal to seat a newly elected Senator…Constitutional ??), why cannot it be rescinded in the Senate via reconciliation? Is this more Alice In Wonderland?
Based on my WSJ readings this am, the AHCA is crap.
Repealing Obamacare will possibly slow cost increases of health insurance because it will create choice and competition.
However, the real work of lowering the cost of healthcare delivery will be done by unraveling all the cost shifting and opaqueness of medical costs. This can be done, but it won’t be easy nor fast. Here’s a link to an article that points in the right direction:
http://www.thefiscaltimes.com/Columns/2013/06/17/How-to-Control-Americas-Health-Care-Costs
The author, William Haseltine, believes we should copy what they do in Singapore, where they have lower costs and better outcomes in health care.
A couple of excerpts:
“Price and Outcome Transparency: Singapore requires that all prices for doctors and hospitals be publicly available. This allows the patient and third party payers to shop for the best price. In contrast, pricing in the U.S. is opaque, with the costs of pharmaceuticals, services, and procedures hidden from the consumer. Our way allows the industry to charge what the market can bear, and without competition. The result is confusion and often grossly inflated pricing. Similarly, data regarding medical outcomes is not transparent. I believe price and outcomes transparency will eliminate arbitrary pricing, allow customers to shop for the best services at the best price, and significantly lower health care costs.”
“Catastrophic Health Insurance: The most common health insurance in Singapore covers catastrophic events that require expensive or prolonged treatment. Nearly every citizen of Singapore has such coverage. The deductibles are high, with the insured paying 20 percent of the cost of care. A government safety net helps those most in need and if the additional costs exceed the ability to pay. Catastrophic health insurance costs far less than the comprehensive, low-deductible health insurance plans typical in the U.S. A shift towards catastrophic plans will help control everyone’s costs. On average Singaporeans pay 2 percent of U.S. annual insurance premiums.”
As to single payer: Military medicine is much like single payer. Everyone gets medical care from whatever medical personnel are on duty at the time. You seldom, if ever, see the same doctor. If you are scheduled for surgery, you will get whoever happens to be on call that day, not the best person to do the job. A related personal story: I was operated on by a young Navy dentist just out of oral surgery school with catastrophic results. Yet one of the best oral surgeons in the Navy was assigned to that hospital and should have been assigned to do my surgery. But he was playing golf that day. Too bad for me. My jaw is still numb 50 years later. No compensation from the Navy for the botched surgery either.
Ever hear about the VA care? More government controlled healthcare that is substandard.
Universal healthcare gives you far less choice and mediocre results. We must fight against it with everything we’ve got.
Frog:
See this and this.
J.J.:
See this on Singapore’s health care system, including this: “The specific features of the Singapore healthcare system are unique, and have been described as a ‘very difficult system to replicate in many other countries.'”
Thanks for the links, Neo. The Atlantic article glosses over the fact that Scott Brown was not allowed to take his seat in the Senate until the reconciliation process was completed and the dastardly deed was done.
It is time for the Nuclear Option across the board. Let the Dems restore the filibuster rule if they wish, once they re-achieve a majority, if ever. Once gone, the filibuster will never return.
>Conservatives are hopping mad at this bill, because they want an even more market-based system with less expense (fewer government subsidies).Liberals are hopping mad at this bill, because they would be hopping mad at anything the GOP proposes.<
Not True. There are a lot of reasons to dislike the bill. One of which many people would get less tax credits than they get under the ACA. One article noted a woman in NC [who voted for Trump] who has an autoimmune liver disease would get $5,188 less in subsidies than she gets under the Affordable Care Act.
it doesn't bring costs down and it will lead to more people without insurance. So, yes, some might be hopping mad but it's not because it is a GOP bill. Vox covers some of the issues.
http://www.vox.com/the-big-idea/2017/3/7/14843632/aca-republican-health-care-plan-premiums-cost-price
Thanks for the link, neo. I didn’t bother to check Haseltine’s article that closely because I had hoped he had done the research as to how the systems were compatible.
In a Brookings Institute article Haseltine was quited, “Haseltine noted that while the United States should not strive to adopt a health care system identical to Singapore’s, Americans can learn from its model.”
Another quote: “He concluded by discussing several lessons that the United States can take away from the health care model in Singapore. Haseltine recommended that Americans think of their country in terms of cities and regional networks, rather than as one entity. This outlook should help the U.S. adopt lessons from Singapore, a much smaller country. He cited co-payment–a concept not foreign to Americans–transparency, managed competition, and “doctors on salaries” as the primary lessons for a revised system in the United States.”
The whole article is here: https://www.brookings.edu/events/how-to-control-health-care-costs-lessons-from-abroad/
Something needs to be done and it sounds like Haseltine is at least grappling with the issues.
Montage:
Oh, there are plenty of valid reasons to dislike the bill, on both sides. I didn’t mean to imply that kneejerk objection was the only reason Democrats would object. Obviously, Republicans and the Democrats disagree on health care; that’s a given.
But Democrats would object to any bill the GOP proposed, and that is also true. There is little doubt in my mind about that.
Frog:
Take a look at my new post on the subject.
However, the idea that Brown’s swearing in was delayed until after the vote is incorrect. His election meant that the reconciliation process had to be used, because he was the vote that could block cloture. The Democrats got around his election through reconciliation; he was the cause of reconciliation (not through his own volition). Reconciliation meant the Democrats could ignore his election.
Brown was seated before the final bill was passed through reconciliation (and even though that link I just gave is from the suspect “politifact,” I remember quite clearly that reconciliation was used to pass the final bill after Brown was seated).
being someone who immigrated to America from Hong Kong I do not understand why the Healthcare system in America is so expensive and complicated. A friend of my father got into a serious car accident and stayed in the hospital for weeks, and you know how much it costed him? 10 USD, that’s it, he had no insurance at all. that bill would have been in the millions if the accident took place in America. Hong Kong has both a flat tax system (everyone pays 17% rich or poor) and a basically universal healthcare system that costs only 3% of Hong Kong’s GDP, if Hong Kong can do it, why can’t America, which is supposedly the greatest country on earth?
David:
Hong Kong is about as different from the US as it can be. It is small, quite homogeneous in its population, and extremely healthy. So analogies are very difficult to draw.
Flat taxes have been proposed in the US, but have never caught on because they are thought to disproportionately burden the poor. They are especially disfavored among liberals and the left.
Looking it up right now, I see that Hong Kong spends about 17% of its government expenditure on health care, and I also see that the figures for the US in 2014 and 2015 show that ” the overall share of the U.S. economy devoted to health care spending” in those years was also around 17.8 percent. About half of that last figure was government spending, both federal and state. In this pie chart, you can see that health care was 22% percent of all government spending, state and federal.