The Sure Fire Failure Republican Health Plan

One would think that last week’s passage of the Republican version of the American Healthcare Act, the bill to “repeal and replace” Obamacare, would be met with jubilation on the right. Instead it’s been met with a mostly “meh” attitude. Unlike Obamacare, which Democratic activists enthusiastically defended every step of the way, Republican activists aren’t happy with this bill. When the bill is taken up in the Senate, they are likely to be even less happy. Probably the only positive feature that Republicans will agree on is that it’s likely to be better than Obamacare.

Some of the features of the Republican bill include:

• Ends the mandates and tax penalties of Obamacare.
• Changes the subsidy system to a system of tax credits
• Allows states to get waivers to the old Obamacare coverage requirements
• Blocks Planned Parenthood payments for one (?) year.
• Stops and begins the rollback of the Medicaid expansion.
• Changes Medicaid from an entitlement to a block grant.

If, through some miracle, this bill were to sail through the senate unscathed, and become law as currently written, it would destroy healthcare in this country and do to Republicans what Obamacare did to Democrats; Reduce their numbers to a shrill minority in the House and Senate and forfeit the Presidency to the Democrats for the foreseeable future.

Why am I so glum about the results of the bill? Changing the subsidy to a tax credit is a positive step, one that Republicans have supported for years, but the range of tax credits, $2,000 to $4,000, and the method of doling them out, is a disaster. First, the tax credit amounts are ridiculously low. John McCain’s 2008 health reform plan was better than that, and I thought that was a bit low at the time; $5000 for families and $2,500 for individuals. Also, the amounts are more based on age rather than income. There may be a rationale for that, but the Republicans in the House have not attempted to explain why basing tax credits on age will be more helpful to people than basing them on income. The average family employer insurance plan cost for 2015 was $ 17,322.00. To buy an equivalent plan on the individual insurance market, the tax credit should be anywhere from a third to half of that (to provide somewhat equal equivalence to the employee cost that employer plans have); way more than the Republican bill is offering.

The other issue is Medicaid. Changing Medicaid from an entitlement to a block grant is probably the single most important long term feature of this bill, and one that does the longest term good. However, depending on where you get your estimates, more than 84% of the increase in health insurance coverage is due to Obamacare’s increase in Medicaid expansion coverage. That’s coverage that, to the recipient, is free, with no premiums or co-pays. Almost 12 million people will lose the Medicaid Expansion coverage over time. To offer them a replacement of a $2, 000 tax credit (with no mandate to force coverage) will leave a result that almost all of those people will lose coverage and not get a replacement plan.

However in terms of media coverage, the GOP elephant in the room has been pre-existing conditions. The way the House bill handles pre-existing conditions is described in Time this way:

“The American Health Care Act stipulates that states can allow insurers to charge people with pre-existing conditions more for health insurance (which is banned under the ACA) if the states meet certain conditions, such as setting up high-risk insurance pools. Insurers still cannot deny people coverage outright, as was a common practice before the ACA’s passage, but they can hike up premiums to an unaffordable amount, effectively pricing people out of the market.”

So if you have a pre-existing condition, your health care costs are likely to go up, even though you’ll still be able to purchase insurance. We are currently in an Obamacare death spiral; a death spiral which probably represents a good portion of the Obamacare exchange market. Next year it will be worse. So in this way at least, things are likely to continue under the House bill the same way they are currently under Obamacare-higher prices and fewer choices.

Of course there is an answer to the Pre-existing conditions conundrum, one I touched on back in 2012 during the Obamacare discussions. But I think that’s probably an entire post on its own, so stay tuned…

So to summarize, the House bill is an unworkable mess as currently written and is less a repeal and replace than an optional opt out of Obamacare, while taking away the features of Obamacare. So Congress is keeping the Obamacare rules and regulations, but taking away the features that made them workable. States can opt out of those requirements, but Medicaid Expansion is going away anyway. If you have a pre-existing condition, you may be no worse off, but certainly no better, than if we do nothing and let Obamacare death spiral into the ground.

Some reform.

Ultimately, none of this will probably matter. The Senate is likely to so alter the bill that it will be unrecognizable. But the struggle and fight over the House bill is a precursor to the fight in the Senate.

 

I'm not happy you can't remove 88 Billion a year to Medicaid and Block Grant it without hits to those on disability in the program, poor elderly in Nursing Home Care and joint Medicaid/Medicare programs or children who get help. I'm not upset about using HMO models we do that in Florida its arguably better I have no major issues but needs proper oversight and design in the states to work and population density matters I have three plans to choose from in some counties you get no choices at all but one plan.

 

In general Medicaid is supposed to be a 50/50 split with the states. There are certain types of Medicaid that I thought were all federal though, like certain disability programs, like kidney dialysis. But there is no way to control costs since it's an entitlement program. Setting up a formula to determine how much each state gets for medicaid is a good thing in my opinion, since the states get to organize Medicaid however they want; that's one of the purposes of block granting it. So if there is shortfall the state should make that amount up. It will be a mostly state program, so states can raise taxes to supplement whatever they need.

 

In theory, not practice, states don't tend to raise taxes so the money must be found somewhere or there will be cuts. But they could do three cost control reforms. One is let all the States form cooperative blocks working with insurance company HMOs or other delivery options and negotiate drug prices as a big group of states if the Federal government won't do it. Two let states do the same for major medical equipment like power wheelchairs. The last won't be popular but must be done the option must be there to say no this means if a older person is unlikely to benefit from a medical device for long say ten years or whatever the marker is or cancer drugs don't cure the disease with a fair chance someone must say NO and it has to stick.

 

I'm not sure this has been tested since Medicaid has been an entitlement since it's inception, so we don't know what states would do if the percentage of funds begins to decline. If we want to pay for something, like medical care, why shouldn't we have taxes to pay for it?

 

Therein lies one of my major problems with Republicans. As you aptly pointed out, the Republicans want to replace subsidies with inadequate tax credits. Of course, tax credits are a form of cutting taxes, and cutting taxes is always OK with the Republicans ... instead of actually paying for things because "paying for things" may mean tax increases.

If you have read things I have written in the past about spending and the budget, you may remember a recurring statement I make: We can have things if we want them. Thankfully, we are a wealthy nation. But if we want things, we have to be willing to pay for them. If we don't want to pay for them, we can't have them.

According to statistics I found on the web, 15.7% of Americans were uninsured prior to the ACA. But what the Democrats did when they passed the ACA was to create subsidies out of thin air, adding to federal deficits, and, since they weren't adequate, people and companies who do pay for their insurance have seen dramatic premium increases and coverage reductions. So basically, the Democrats screwed working people trying to sustain themselves in the middle class. And what the Republican plan is going to do is screw older folks, people with preexisting conditions, and make medical insurance even more unaffordable to middle class working folks by replacing the subsidies with these paltry tax credits.

God help me, but I hate politicians.

For the life of me, why don't we just face the truth? And the truth is, unless we are willing to accept the idea that the uninsured should just die, we are going to take care of that 15.7% when they get hurt or sick. So why don't we just admit it and pay for it? A payroll tax of about 3% would very likely insure that 15% against major injury and illness and routine preventative care.

This shouldn't be so damn hard to figure out.

Did I mention that I hate politicians?

I can't stand the progressives, and the Republicans just piss me off.

I shall remain an independent.

My two cents .... Seth

 

People fear change especially with something so fundamental as health insurance. Like everything in politics, there will be winners and losers. More people just need to put their big boy pants on and take care of their own business instead of leaving it up to the government. As I have said many times here, I have the same policy today I had pre-Obamacare, that policy is not ACA approved, and I do not get a subsidy. I had zero interest in going through the marketplace nonsense especially after I heard that you basically has to give them every financial detail in your life just to get a quote.

 

Funny you didn't mention -
Old people can be charged much higher premiums
Pre-exisiting conditions can force you into High-cost high-risk pool.
Tax credits are of no use to the lowest incomes - you can't pay an insurance invoice with a tax credit, you have to have the money to lay out.
Limits on how much profit an insurance company can make are gone.

The House bill essentially reverses the calendar to Pre-ObamaCare days when all too many people lacked health insurance.

 

Well the tax credits would be a good way to pay for insurance premiums if they were high enough to make a difference. They are a cost to the treasury, just like the subsidies are. But the problem with the ones in the House Bill is that they are not sufficient to make up the loss of the subsidies, and of course, they should be paid for, either through taxes or cuts elsewhere.

 

Well I have to disagree with you on...well almost everything you said. The way the high risk pools are supposed to work is to subsidize the insurance companies directly for individuals identified with pre existing conditions. I don't think that's the best way to handle it, but I don't think it will make a difference at the consumer level.

Tax Credits are useful to the poor because they are credits, not a deduction (which would be useless to the poor since the poor generally don't owe taxes).

 

Regular people like you and me should be setting policy. I'll bet we could hammer out something in a day that would make economic sense and that would leave no one uncovered.

 

The point is that high-risk pools drive the cost out of reach.
You ignored my point - tax deductions or credits - won't pay for an insurance premium - saying that you may get it back doesn't help if you don't have the money.

 

Funny you should mention that. I'm working on plan to cover pre existing condtions. Stay tuned.

 

Well I'm not sure how high risk pools drive the cost out of reach, their purpose is to subsidize the higher cost of carrying people with pre-existing conditions on regular health insurance plans.

I've already addressed that tax credits aren't sufficient to cover the cost of premiums. Not sure how you missed that, but on the other hand, the subsidies didn't cover the full cost either. The tax credits under almost all Republican reform plans go directly to the insurance company, so you don't need to worry about coming up with the cash out of pocket for the credit.

 

OK, I will. Generally speaking, I believe preexisting conditions, and simply being older, should just all be mixed into the insurance pool for the overall good. After all, the preexisting condition that I have is something that came up some years ago for which I was treated. The possibility exists that I may need to be treated for it again someday. But I went through about 59 years of life before it came up. Point being, no one but no one has a guarantee of being perfectly healthy forever. Recently my low back has been bothering me. I went to the doctor, and the doc prescribed physical therapy which I did. But I don't think that fixed it. I suspect something more is going to be required. I don't know what yet. Fortunately for me, I have been insured by the same company for decades, and I will remain with that company until I go on Medicare, so I can't be denied coverage for my preexisting conditions. But if for some reason I lost that coverage, and I had to get new insurance, they could look at my old records and exclude me from anything having to do with that first issue a few years ago and anything having to do with my lower back. Or they could charge me an arm and a leg for insurance, maybe so much that I couldn't afford it.

For us to accept that outcome .... is stupid. Nobody stays perfectly healthy forever, and we all grow older. Even if you are in your 20s, you are the elderly .... just not yet, but inevitably.

As I said earlier, we are a wealthy nation. For that we can be thankful. But the down side to that wealth is that it can give birth to selfishness and arrogance and shortsightedness, and I see those negatives in this health care debate all the time. What I believe is that the nation should take care of itself, that those of us who are the most blessed should be generous, and that we should be willing to pay for the things we want. Not someone else - us.

Seth

 

Isn't THAT a cozy arrangement.
Well, at least the GOP legislators give their donors their money's worth.
If that is true, how does it really differ from a subsidy??

 

I have not heard one complaint in all the years I've been debating Obamacare that the fact that the subsidies went to insurance companies directly was an issue, or a "cozy arrangement" as you would say. It's another case of loving it when Obama does it, but when Republicans do it is a "cozy arrangement." Aren't the subsides also a "cozy arrangement?"

 

The solution to healthcare in America is very simple. All American should get the same healthcare as out rulers in the government. Everything else is a joke.

 

Of course it will make a difference on the consumer level. First high risk pools have never actually worked in practice. Second it is just a pretend plan because of course neither the states or the feds are going to actually supply the money required.

 

You may be right that the high risk pools might be underfunded in the future...just like any other government program that you put your hopes and dreams in. But I wasn't promoting high risk pools, merely describing how they are supposed to work.

You know what doesn't work that we're sure about? Mandates to require coverage so that every healthy person would be in the Obamacare insurance pools. That was a big fat failure.

 

Only because it wasn't an actual mandate. Piddly penalties for not carrying insurance guaranteed that the plan wouldn't work.

Not too different from saying you have to have insurance to drive a car but if caught without insurance the penalty will be twenty dollars.

 

Good summary.

The current ACA also has tax credits in it, only they are refundable. If you are going to contrast this in the new Trumpcare-2 plan then you will need to note if there is any difference.

 

Don't worry ... the Senate said they are going to start completely over. They will take months, if not years, to do this better. Then they will send their version back to the House and into Committee the two versions will go.

This could take years.

The GOP may not even have control of the Senate or House by the time this gets out of committee.

Trump may not even be POTUS anymore by the time this gets out of committee.

 

It all depends if the tax credits are refundable or not.

You did not know about that detail.

 

John Birch Society, huh ?!