Healthcare will never be the Same, Part II
Corey Uhden, Politics Contributor
Opinion -- In January, I wrote a piece previewing the debate over Republican proposals to “repeal and replace” the Patient Protection and Affordable Care Act (ACA), colloquially known as Obamacare. If the conclusion of that piece was “we are never going back to the way life was before Obamacare,” the premise of this piece is a corollary: we cannot have Obamacare for less.
The Republican-controlled House of Representatives has passed its proposal to “repeal and replace” Obamacare, and the Republican leadership team in the Senate has unveiled the “discussion draft” of its own plan, dubbed the Better Care Reconciliation Act. Stop me if you’ve heard this before, but the Senate bill is a proposal with few vocal defenders and several high-profile detractors.
Crucially, the Senate bill proposes advanceable tax credits that phase out for individuals above 350 percent of the federal poverty level (FPL). It would, however, guarantee such subsidies to working-age adults who are not eligible for Medicaid, i.e. those living in states that did not expand Medicaid under the ACA. One of the key elements of the ACA was that eligibility for Medicaid would be extended to individuals earning at or below 138 percent of the FPL. To entice states to sign up, the Democrats channeled Vito Corleone - they made the states an offer they could not refuse - offering to match health care spending on this population up to 90 percent after 2020, well above the 50-75 percent threshold for previously-enrolled Medicaid beneficiaries. Some states refused anyway, but even some Republican-controlled states took the bait. Surprisingly, the Senate bill would actually make the change permanent while ratcheting down the higher federal match rate, and cap future spending on Medicaid to a different measure of inflation, the consumer goods-price index (CPI-U) rather than the medical consumer-price index (CPI-M), saving $772 billion over 10 years.
Cutbacks to Medicaid and subsidies for lower-income individuals are not particularly popular, but they are necessary for two reasons. The first is that the bill cannot add to the deficit outside of a 10-year budget window (2018-2028), so the Republican bills have heavily frontloaded spending and rolled back the taxes imposed under the ACA, while promising less spending in later years. The second reason is that the government’s current health care spending is unsustainable with improper, inefficient Medicaid spending contributing mightily. The expansion exacerbated the problems and without reducing the higher match rate, Medicaid reforms might impact disabled children, seniors in care centers, and rural hospitals.
The ACA was meant to address a discrete market. Most Americans are covered by their employer’s health insurance plan, but people outside that pool face navigating a challenging and volatile individual market. The uninsured population has always been comprised of small business owners and their employees, unemployed adults living without children, and people with pre-existing medical conditions that cannot afford the plans offered to them. Democrats aimed to insure these groups through expanding Medicaid eligibility, offering advanceable tax credits to individuals living at or below 400 percent of the FPL, and mandating that everyone purchase insurance plans with essential health benefits. As a result, the Kaiser Family Foundation estimates that a net gain of over 12 million Americans have gotten coverage, a major improvement from nearly 42 million uninsured in 2013, but certainly not the universal coverage the Democrats had promised.
It seems Republicans are intent on maintaining the ACA’s coverage while jettisoning the mandates and fees to pay for it. Conservative health policy analysts such as National Affairs editor Yuval Levin, and the Washington Examiner’s Philip Klein admit that “repeal and replace” is politically unviable, instead viewing Republican health care reform plans as a “tweak” or “rescue.” I tend to think of them as “trying to improve the American health care system,” and through this lense, the Senate bill addresses many of the problems with the bill that passed the House, although both would prevent a potential collapse of the individual market. Still, even a partial repeal would prove devastating to Obamacare’s most sympathetic beneficiaries. The very mention of waivers for the states, a key measure to increase the number of insurance options and bring down costs, is characterized as a “heartless” gutting of coverage while giving wealthy Americans a tax break. Democrats are pillorying the proposals and offering none of their own, but they were never going to support a Republican health care reform bill. That is all this is: the Republican approach to health care reform.
A conservative approach would aim to bring down costs and create an environment for universal access to affordable health insurance. Medicaid eligibility did not need to be expanded. Rather, a refundable tax credit to pre-fund flexible health savings accounts for the poor would expand coverage and introduce consumer cost-consciousness for millions of unemployed and under-employed adults. Small businesses should not face a mandate. Instead, they should be permitted to band together in associations to negotiate for the best insurance plans to fit their employees’ needs. Guaranteeing affordable coverage to customers with pre-existing conditions is the root of the imbalanced risk pools on the exchanges established by the ACA, but it could be accomplished through federally-funded invisible risk pools run by each state. Sen. Ted Cruz (R-TX) is calling for a “consumer freedom amendment” that would authorize health insurers to sell multiple plans as long as one of them meets essential benefits requirements. As five Senators have now come out against their leadership’s proposal and many more are “undecided,” Republicans should insist on improvements where possible.
Doing nothing is certainly not an option, and this bill is a marked improvement that would stabilize collapsing health insurance markets. Passing it might prevent calamity, but would present problems of its own. Sorry Republicans, there are still no easy answers available.
You can follow the author on Twitter @CACoreyU
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