Tuesday, March 7, 2017

GOP Health Plan

A reader asked me to analyze the proposed GOP replacement for Obamacare, so I'm going to take a stab at it.  I'll be liberally quoting the NY Times article on the subject, as well as - surprise, surprise - Dean Baker's take on the issue.  The quotes below are from both (along with Krugman's commentary), intermingled, with emphases added mine throughout.

Let's start:

The House Republican bill would roll back the expansion of Medicaid that has provided coverage to more than 10 million people in 31 states, reducing federal payments for many new beneficiaries.

So, there's 10 million people right off the bat losing their insurance.

Sounds like political suicide?  Don't worry, the GOP is making sure to provide plenty of political cushioning for themselves:

For example, the plan leaves in place the expansion of Medicaid through 2020. This should be long enough so that most currently serving Republican governors will not have to deal with the effect of the elimination of this provision. After 2020 people benefiting from the expansion will be allowed to remain on Medicaid, but new people will not be added. Since people tend to shift on and off Medicaid (something rarely understood by reporters who cover the ACA), after two or three years the vast majority of the people who benefited from the expansion will no longer be getting Medicaid.

So there's the first bit.  There's really no way to sugarcoat this; this is millions upon millions of people losing their health insurance.


It also would effectively scrap the unpopular requirement that people have insurance and eliminate tax penalties for those who go without.

Freedom!  At last, an onerous government-imposed burden stricken down. 

And the likely end of affordable insurance for those who need it most.  The premise of the requiring people to sign up, even the healthy, is this: if you have separate insurance pools for healthy people and for unhealthy people, the former pools will be profitable but serve little purpose, and the latter pools will be too unprofitable to maintain:

The structure of the Affordable Care Act comes out of a straightforward analysis of the logic of coverage. If you want to make health insurance available and affordable for almost everyone, regardless of income or health status, and you want to do this through private insurers rather than simply have single-payer, you have to do three things. 

1.Regulate insurers so they can’t refuse or charge high premiums to people with preexisting conditions
2.Impose some penalty on people who don’t buy insurance, to induce healthy people to sign up and provide a workable risk pool
3.Subsidize premiums so that lower-income households can afford insurance

Let us never forget: private insurers have no incentive to pay your health care costs.  Their incentive is to make a profit, and nothing else.  They could not care less whether you live or die.  That sounds cruel, but that's the logic of the market.  If you were running a health insurance company, would you not do everything in your power to kick the sickest people off your rolls, to avoid paying them out?  You certainly would.  Otherwise you'd be fired.

A health insurance pool composed only, or primarily, of the unhealthy would pay out more than it took in.  To keep such a pool from running in the red, you'd have to raise premiums to an absurd level - an unaffordable level.  There is no way to run a profitable private insurance pool that provides coverage for the sick unless the pool covers plenty of the healthy and ergo takes in more money than it pays out.  Period!  This is not rocket science.

The Republicans propose to raise caps on health savings accounts, which will give healthy people a strong incentive to buy plans with very high deductibles. As a result, plans that have lower deductibles will have a less healthy population and therefore be very expensive. This should make it more difficult for people with health conditions to afford insurance.

The sick are about to get sicker.


The requirement for larger employers to offer coverage to their full-time employees would also be eliminated.

This plan just gets better and better.  Are you @!#*&@$ing kidding me?  I don't think this point requires commentary.  But, hey!  Another onerous regulation eliminated.

Let's go back to the now-stricken "mandate" discussed above for a moment.  With people no longer required to buy insurance, how to maintain private insurance pools profitable enough to make pay outs to the unhealthy?  Why, it appears the way is with a massive new penalty designed to replace the old tax!

People who let their insurance coverage lapse, however, would face a significant penalty. Insurers could increase their premiums by 30 percent, and in that sense, Republicans would replace a penalty for not having insurance with a new penalty for allowing insurance to lapse.

Holy ----.  Are you kidding me?  So if you lose your job, and along with it your employer-provided coverage, you now face a premium increase of 30% when you get a new job, and new coverage?  You've got to be kidding me.

The GOP plan does keep the popular provision prohibiting denial of coverage to people with pre-existing conditions.  HOWEVER:

The plan also allows insurers to charge people with pre-existing conditions higher rates, if they allow their insurance to lapse.


And people with pre-existing medical conditions would face new uncertainties in a more deregulated insurance market.

What about buying insurance on your own, not tied to your employer?  That's long been a cornerstone of GOP health care policy (such as it is).  To a large extent, a market for non-employment-linked health care simply doesn't exist; Obamacare barely changed this situation.  To the extent this market does exist, it exists because the government provides subsidies to folks to buy insurance on their own.  After all, no job, no money for insurance, unless you get a subsidies.  Wither those subsidies?

The bill would also repeal subsidies that the government provides under the Affordable Care Act to help low-income people pay deductibles and other out-of-pocket costs for insurance purchased through the public marketplaces. Eliminating these subsidies would cause turmoil in insurance markets, insurers and consumer advocates say.

Turmoil, or perhaps oblivion.  As stated above, there's really no incentive for private insurers to maintain pools for the sick, or the unemployed, or the sick and unemployed.  How do they make money that way?

Oh but hold on - the GOP plan eliminates subsidies, but does provide a tax break - the only tool that GOP policy-makers seem to think exists - for individuals who want to buy insurance:

The tax credits proposed by House Republicans would start at $2,000 a year for a person under 30 and would rise to a maximum of $4,000 for a person 60 or older. A family could receive up to $14,000 in credits.

Hmm, ok!  That's intriguing!  That'll help in some way,  right? 

The Republican plan does provide modest subsidies to people for buying insurance, but the impact of these subsidies will be swamped by the rise in health care costs. The subsidies would be $2000 a year for those under 30 and $4,000 a year for those over age 60. According to the Center for Medicare and Medicaid Services the average cost of health care per person was $9,100 in 2013. Per person costs are projected to rise to $15,800 by 2025.

When you don't have a job, and your health care costs you above $9k per year, and someone gives you a $2k tax credit, you are still out $7k.  I work a full-time job in Midtown Manhattan - I am hardly a member of the suffering White Working Class or otherwise, and I am telling you right now I do not have a spare $7k just laying around.  Were I to lose my job, I would be sunk.

And here's a nice touch, separating the rich from the poor policy-wise:

In a late change, the plan reduces the tax credits for individuals with annual incomes over $75,000 and married couples with incomes over $150,000.

At first glance, this seems responsible.  Surely the well-off should have to pay more than those who have less!  But when you stop and think about it, such an arrangement gives the well-off little to no economic incentive to vote for the continuation of subsidies to those who have less-than, making it more likely these subsidies will be scrapped in their entirety at some later date.  It was to avoid this fate that the FDR administration insisted that the payments and benefits of Social Security be the same regardless of income bracket - Social Security is a program for all, not just an easily-scrapped program for the lower classes.  And Social Security is still with us today.  Imagine that.

Given the assault on all that made Obamacare work (as flawed as it was), it's kind of hilarious that the GOP plan isn't Conservative enough for many Republicans.

Representative Mark Meadows, Republican of North Carolina and the chairman of the conservative House Freedom Caucus, also offered a warning on Monday, joining with Mr. Paul to urge that Republican leaders pursue a “clean repeal” of the health care law.

“Conservatives don’t want new taxes, new entitlements and an ‘ObamaCare Lite’ bill,” they wrote on the website of Fox News. “If leadership insists on replacing ObamaCare with ObamaCare-lite, no repeal will pass.”

In further political hide-saving, the GOP is also foregoing any sort of "Cadillac tax," which might make their plan more affordable, an odd move from the party that so routinely lectures all of us on fiscal responsibility:

It drops a proposal to require employees with high-cost employer-sponsored health insurance to pay income and payroll taxes on some of the value of that coverage. In addition, it would delay a provision of the Affordable Care Act that imposed an excise tax on high-cost insurance plans provided by employers to workers.

Congress had already delayed this “Cadillac tax” — despised by employers and labor unions alike — by two years, to 2020. The new legislation would suspend the tax from 2020 through 2024. 

This is a fine move by me, but the hypocrisy smells to high heavens, and, of course, undercutting a potential source of income to pay for Trumpcare or whatever they're going to call it makes it easier to scrap the whole deal entirely in coming years.

There's States Rights fetishism in the plan, naturally:

Medicaid recipients’ open-ended entitlement to health care would be replaced by a per-person allotment to the states.

GREAT.  The wisdom of our state governments will absolutely suffice to stand-in for the actual needs of the population on Medicaid.  I DON'T FORESEE ANY PROBLEM WITH THAT. 

The reader who asked for this analysis asked me how much I thought GOPcare was going to cost.  It goes without saying that the GOP refuses to state how much this will all cost.  It's not clear that's even been calculated.  So, unfortunately dear reader, I couldn't tell ya.

Republicans did not offer any estimate of how much their plan would cost, or how many people would gain or lose insurance. The two House committees plan to vote on the legislation without having estimates of its cost from the Congressional Budget Office, the official scorekeeper on Capitol Hill.

In the middle of this colossal debacle, there is one intriguing, if still flawed, concept:

Under the House Republican plan, the income-based tax credits provided under the Affordable Care Act would be replaced with credits that would rise with age as older people generally require more health care. 

I'm not sure this is a good idea - this places a higher financial burden on young people, who tend to be healthier but also are just getting their careers going.  It's at least an intriguing concept, one worthy of debate, unlike the rest of this hot garbage.

What's the bottom line for GOPcare?  Take it away, Dean:

In the years before the Affordable Care Act (ACA) the uninsured population peaked at just over 50 million people. It fell sharply when the main provisions of the ACA took effect, falling to less than 28 million in recent quarters. However, in its effort to make America great again, the Republicans expect to raise the number of uninsured back above 50 million. Serious analysis of their plan shows that they have a good shot at meeting this goal.

Take it away, Paul:

Taken together, these moves would almost surely lead to a death spiral. Healthy individuals, especially low-income households no longer receiving adequate aid, would opt out, worsening the risk pool. Premiums would soar – without the cushion created by the current, price-linked subsidy formula — leading more healthy people to exit. In much of the country, the individual markets would probably collapse.

Time to take this garbage out and set it on fire.

If the Republicans push this plan through, will it cost them their majority in Congress?  You'd think it should, but there might be enough political padding, what with stretching the Medicaid expansion out until 2020, to save their asses.  And, of course, Republicans might be able to pull off blaming people's loss of health insurance on immigrants, muslims, Hollywood liberals, and "smug" professional types, especially doctors and academia.  The typical bogeymen.  They've done it before, and they can do it again.  To turn the working man and woman against their fellow workers at the behest of the wealthiest people in this country has never been difficult.  In the words of the railroad magnate Jay Gould:

"I can hire one half of the working class to kill the other half."

Or, just swindle them, ideologically.

1 comment:

  1. A few points

    1.) Higher caps for HSAs is a generally good idea. It is, in my opinion, the highlight of this proposed plan even if it's done with the expectation that virtually anyone who can afford to put money away won't be able to afford to do so. So it's kind of a free gimmie for insurance providers to compromise on - 30% premium increases is going to be a windfall.

    2.) Do the 30% penalties for dropping insurance and re-enlisting stack? Perhaps it's the D&D player in me, but that one could easily imagine someone having insurance and re-applying for coverage 3-4x a lifetime.

    3.) With state-led healthcare initiative, that seems like the fixings of a two-speed country if I ever heard one. Massachusetts, California, Virginia, and other health-prioritized economies vs Alabama, Georgia, Nevada....What we're doing to education we'll do with healthcare.