During a debate over at AEI a few years ago, Chris Chocola, the then president of the Club for Growth, best described the Republicans’ handling of their House majority: “What good is a majority if you aren’t going to use it? What good is being part of a team, if the team is the problem?”
This seems to be a pretty good description of the kind of policies we have been getting from the Republicans since they won majorities in the House and Senate, and, in November, control of the White House. First, there is a tax plan that would be good if it wasn’t for the distortive border tax, which is currently dividing the business community, the White House, and is looking like it won’t go very far in the Senate.
Now, there is the replacement plan for Obamacare. As Avik Roy puts it: “House GOP’s Obamacare Replacement Will Make Coverage Unaffordable For Millions — Otherwise, It’s Great.”
He writes:
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.
While Roy writes that the Medicaid reform is “the strongest part of the American Health Care Act, by far,” the Obamacare-exchange replacement ranges from problematic to awful.
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.
Roy then goes on to describe the terrible parts of the bill. The whole thing is here.
His comments are echoed by others. Health-care expert Bob Laszewsk puts it bluntly: “It won’t work.”
He concludes:
I feel for the spot the Republican leadership is in trying to please the most conservative in their caucus looking to kill all of Obamacare while also trying to please their moderates that don’t want to see people lose their coverage.
The Republicans are trying to create something they can sell to enough Republicans to pass it. What they need to create is a program that they can sell to enough consumers to make it financially viable and that will meet the needs of a consensus of voters to make it politically viable.
The Washington Examiner’s Philip Klein wrote an article headlined: “House Republican plan would create Obamacare cliff for 2020 presidential election.” He writes:
However, under the bill as proposed, the Medicaid expansion would still be funded by the federal government through the end of 2019. Only starting on Jan 1. 2020 will the GOP reform start to go into place, which would transition Medicaid into a system in which each state receives a certain amount of money for each of its residents in the program and has more flexibility over how the program functions. That allocation would revert to per person spending levels from 2016 and then grow each year at the rate of medical inflation. However, states would still receive enhanced Obamacare-levels of spending for individuals who were grandfathered in by having enrolled in expanded Medicaid before 2020.
Likewise, Obamacare’s subsidies for individuals to purchase insurance on government-run exchanges would be available until the beginning of 2020.
Cato’s Michael F. Cannon writes:
The House leadership bill isn’t even a repeal bill. Not by a long shot. It would repeal far less of ObamaCare than the bill Republicans sent to President Obama one year ago. The ObamaCare regulations it retains are already causing insurance markets to collapse. It would allow that collapse to continue, and even accelerate the collapse. Republicans would then own whatever damage ObamaCare causes, such as when the law leaves seriously ill patients with no coverage at all. Congress would have to revisit ObamaCare again and again to address problems they failed to fix the first time around. ObamaCare would consume the rest of Congress’ and President Trump’s agenda. Delaying or dooming other priorities like tax reform, infrastructure spending, and Gorsuch. The fallout could dog Republicans all the way into 2018 and 2020, when it could lead to a Democratic wave election like the one we saw in 2008. Only then, Democrats won’t have ObamaCare on their mind but single-payer.
This is disheartening. Are Republicans setting us up to be on track for a single-payer system and a European-style Value-Added Tax down the road because they won’t simply embrace free-market policies? It is possible. And the sad part is that I think the lack of courage is probably due to fears of being punished in the next election combined with an attempt to please everyone. It might seem easier at first than fighting for good free-market policies, which will require the GOP to make the case for its position. However, the reality is that this wishy-washy pro-government approach to everything doesn’t work, and it has never worked. It doesn’t even work politically.