Posted on 03/07/2017 7:56:10 AM PST by SeekAndFind
The first thing to understand about the GOP healthcare bill is that it is not merely Obamacare-lite or a bad “replacement” bill. It doesn’t repeal the core of Obamacare in the first place. In fact, the few parts that it repeals or tweaks within a few years will actually intensify the death spiral of Obamacare when mixed with the core regulatory structure, exacerbated by the subsidies that they do keep. And this time, the GOP will own it politically. All of it.
The most dangerous myth about the GOP plan is that it repeals Obamacare. At least if GOP leadership would be honest and say they are too scared to repeal the ACA and are just tweaking it a few years from now (after the death spiral is made worse), then we can blame the Democrats for voting for it. Now that a bill codifying Obamacare in the worst possible form is being sold as “repeal and replace,” Republicans have bailed out Democrats from their most toxic political issue without securing a single concession.Regulations, spending, mandates, subsidies, and taxes
The basic structure of this plan is what I outlined last week after the first draft was leaked to the media. There is no discussion of lowering prices, fostering a revolution of choice, competition, portability, cost-consciousness, or breaking down the barriers between consumer and provider. That is because most of the regulatory structure and the exchanges are left in place.
There is no innovation, and no way to lower costs. While some of the regulations are tweaked with more flexibility, the 800-pound gorilla in the room — guaranteed issue mixed with community rating (which is responsible for almost all of the premium hikes) — is left in place. Nor does this bill repeal the mandated essential benefits, which require insurers to cover a specific number of people and sex change operations, maternity care for men, etc.
And even the repeal of actuarial value “metal” requirements (platinum, gold, silver, bronze) — the most positive of the outlined changes — would not take place until the 2020 plans.
Amazingly, while the “American Health Care Act” blows up the insurance market in order to mandate coverage of the sick, it still throws a whopping $100 billion at states in order to further subsidies to the poor and the sick (on top of Medicaid expansion and exchange subsidies).
… the GOP bill is actually worse than Obamacare for two reasons: 1) It will exacerbate the death spiral of fiscal insolvency; and 2) It will destroy the employer market.
Furthermore, the existence of the exchanges and the subsidies being steered to those exchanges will force insurers to continue competing for government-run health care that is actuarially insolvent. This continued structure will ensure that startup companies — which lack economies of scale to operate within this rigid (albeit slightly relaxed) structure — cannot enter the market. That is the core of what ails the health care industry.
On top of leaving the regulatory regime and the rigid exchanges, this House bill replaces the income-based subsidies with age-based subsidies – ranging from $2,000 for younger people to $4,000 a year for older enrollees, and as much as $14,000 for a family. It is a massive new entitlement for middle-income and lower-income Americans. It would apply in full for families earning up to $150,000, and then phased out $100 per thousand dollars earned over that threshold. Thus, a family could theoretically get some sort of subsidy well into the $200,000-plus income level.
As for Medicaid, the draft plan grandfathers in the entirety of the Obamacare expansion. Worse, it doesn’t freeze future enrollment for another two years, which will incentivize states to massively expand Medicaid before 2020. It also throws another $10 billion to states that never expanded Medicaid.
Between the regulatory structure, subsidies, and Medicaid expansion, this bill is Obamacare. Literally.
But, in fact, the GOP bill is actually worse than Obamacare for two reasons: 1) It will exacerbate the death spiral of fiscal insolvency; and 2) It will destroy the employer market.
The one part of the bill that does actually immediately repeal an Obamacare provision is the immediate elimination of the individual mandate and the employer mandate that requires individuals to purchase and employers to provide health insurance.
By leaving the price-hiking regulatory and subsidy structure in place, yet repealing the individual mandate, this bill will exacerbate the death spiral because people like myself — who are getting crushed with ridiculous premiums — will dump their insurance. Likewise, employers who are now forced to provide insurance will quickly dump their employees from their plans.
This is what happens when Republicans focus on coverage numbers at the expense of lowering costs through the regulatory structure. They achieve neither. While the individual mandate is replaced with a provision mandating that insurance companies charge individuals who dropped their insurance an extra 30 percent when reenrolling, that provision doesn’t take effect until 2019. The adverse selection and death spiral will be terminal by then ; the employer mandate is not replaced at all.
Also, the 40 percent Cadillac tax on more expensive health plans is delayed from 2020 until 2025, but not repealed.
Thus, House Republicans have replaced the notorious taxes, regulations, subsidies, and mandates of Obamacare with … taxes, regulations, subsidies, and mandates. Except, this time, Republicans will own it. And that is exactly what the lobbyists for the status quo wanted.
… this is one of the rare instances when it’s better to do nothing if they don’t want to do the right thing. There is no upside for a conservative to sign onto this, and only downside.
Now that Republicans will have their reputation tethered to Obamacare, they will be forced to consistently continue the hospital bailout program, otherwise known as Medicaid expansion. They will constantly be forced to re-up the individual and corporate cost-sharing subsidies to make up the gap from getting rid of the employer and individual mandates. This is not a half a loaf, it’s a poisonous loaf
House leadership will tell its members, “Look, this isn’t perfect, but isn’t it better to take a half a loaf than no loaf at all?” In reality, this is a poisonous loaf. Again: It doesn’t repeal Obamacare, will exacerbate the death spiral, dump people off employer-based insurance, and force Republicans to own it this time.
Yes, this is one of the rare instances when it’s better to do nothing if they don’t want to do the right thing. There is no upside for a conservative to sign onto this, and only downside. Also, remember that the Senate GOP is even more liberal than the House GOP, so this is the opening bid that will invariably get worse.
Big picture: The result of this bill is that insurance companies will continue to look to government to regulate and subsidize. Thus, insurers will continue to run health care based on government and lobbyists to keep the gravy train rolling, and box out competitors instead of being forced to compete directly with new insurers for consumer business.
Under the guise of promoting expanded coverage rather than decreasing costs, this plan will exacerbate both. Well done, Republicans.
If nothing else, this is a vindication of those who warned during the primaries that Republicans were lying to us all along.
It’s time for President Trump to lead, or this is over.
I’m in agreement with all of that.
What I don’t understand is the mechanism for preventing a third party from developing an actuarial risk calculation and investing in that risk? Insurance seems to be a lucrative proposition...
Would the government forbid entry into the health market by third parties?
Would healthcare become so inexpensive that private citizens wouldn’t need to share the risk to avoid being wiped-out completely by an unexpected health crisis?
If so, would that reduce the number of health care providers available, leaving the market susceptible to price-fixing?
I believe the market can handle insurance speculators, and company sponsored insurance plans as well.
1. An insurance policy is intended to spread the risk of high-cost events from one party to a group of others. This can be a high-cost/low-probability event like a house fire, or a high-cost/defined-probability event like a person's death. In the case of a homeowners' insurance policy, the policyholder may pay premiums for decades and never have a single claim. That's fine, because the whole purpose was to protect the homeowner from a catastrophic loss that might never happen. In the case of a life insurance policy, the coverage is for an event that will happen with 100% certainty, but at an unknown time in the future.
2. In both of the cases I mentioned above, the insurance company can use a combination of actuarial calculations and limits on financial exposure to accurately assess the risk and price the insurance accordingly. The company that insures a $400,000 home knows that its maximum loss is $400,000 if the home burns to the ground. The company that underwrites a $1 million life insurance policy knows that it will pay exactly $1 million to the estate of the policy holder at some point in the future.
3. Medical insurance doesn't operate like traditional insurance coverage because the insurance company has enormous unknown financial exposure. A person can pay health premiums for years without making any claims, then suddenly incur huge medical bills for procedures and treatments that didn't even exist a few years ago. This is the equivalent of buying a life insurance policy for an unknown death benefit that may be $1 million but may also be $100 million ... or a homeowners' policy on your $400,000 home that will cost anywhere from $400,000 to $4 million (or more) to rebuild if it burns down five years from now.
There's no way an insurance company can deal with this using actuarial tables and other traditional methods. In the past, a insurance company would be able to accurately measure its maximum financial exposure for medical policies by imposing lifetime limits on coverage for each policy holder. ObamaCare included a provision that eliminated lifetime insurance caps. Is it any wonder why health insurance premiums began skyrocketing immediately?
There's nothing wrong with a catastrophic health insurance policy that only covers catastrophic illnesses and injuries. Very few people in this country want such a thing, because we're used to living in an environment where we can get whatever medical treatment we think we need, and pass the costs off to others. Maybe we're starting to figure out that the "others" include US now.
>>I do not belI’ve he or the GOP congress can meet the false goal of improving Obamacare without bankruptING the nation
You are exactly right. ObamaCare is the mechanism by which the globalists who destroyed American jobs and the American work ethic will finish off the middle class to create the nation of servile poor people that they can use to compete with the servile poor people in all the other Third World nations. It was a suicide pill from the start. It can’t succeed and it can’t be taken away now that the expectations are in place. Everything about it is a landmine that a single touch is political suicide.
All quite rational, and irrelevant to my preceding point...
Insurance coverage for well-care is an asinine idea as well, but also outside this scope.
My question was, “who stops the market from absorbing these risks and costs, absent government regulation?”
Till now the Democrats owned this piece of sh**, lock, stock and barrel.
Now Republicans have their fingerprints on it.
Absolutely true, and worse. The idiot neverTrumper, Glenn Beck, was already crowing about "TrumpCare" this morning. This is a disaster! If this is the opening bid of what's intended to be a negotiation, then the RINOs are negotiating against conservatives and Trump's base.
This sucks.
Yes, listening to Sean’s press conference now. Shit. Ah well.
Nobody stops the market from doing anything, except that the entire system collapses because nobody can afford an insurance policy when the market prices these risks accordingly.
Government intervention is what happens under public pressure when the public realizes they can't afford something they think they're entitled to.
Bring forward a bill with everything in it, now.
The bill would add insurance across state lines, portability and tort reform. This should also reduce the pre-existing issue, though where not, Medicaid would pick up the slack within limits.
It would get rid of Medicaid expansion, which is just for those who would rather spend 'disposable' income on non-necessities than on health insurance.
Lose Snow and Collins, but hold on to Paul, Lee and Cruz.
It might pass; it might not. But you did your best to honor your commitment to the American people, who will credit you for that.
Then two years from now, you will have 56 or so Senate seats and can implement the right plan for us all.
What Ryan is offering you now is a ticket to the price Bush Sr. paid for breaking his promise to "read my lips: no new taxes!"
As for taxes, without Medicaid expansion, removing Ryan’s soaking the middle class with another 10 points on our tax rate between $75,000 and $215,000 would be revenue neutral.
There would be no "kicking it to the out years”, no phase-in or delay. Move to the best approach immediately.
Why he ever endorsed that back stabbing rat bastard is beyond me.
I’ve never learned a damn thing from a man that agrees with me.
That’s a very interesting and insightful post. What prompted that? LOL.
Thank you for the civilized conversation?
Thank you, too!!
The question is not what 'here' looks like today, the question is, what will 'there' look like tomorrow with a follow up question when will tomorrow be, would it be naively hopeful to consider tomorrow to extend beyond Trump's guaranteed 4 year term?
Those are the targets and constraints that I want to see debated and agreed upon THEN once clearly identified, LEGISLATED.
President Trump, as Candidate Trump and as Nominee Trump, promised to repeal ObamaCare. This bill, which President Trump supports, does not repeal ObamaCare.
That is the truth.
Obamacare replacement is obamacare lite or RINO care because ALL of these politicians including the Gop politicians are owned by Soros.
Only Donald J. Trump is not owned by anyone and is why the Donald is the only on on the side of freedom and the American people.Trump is his own man and is for America
I hope this flops as it is written right now.
I said planned, not wrote. So nice try.. right back at ya. There is a difference. Obamacare light.. here we go! It makes zero sense to send a replacement plan through reconciliation. That just screams weakness. I am still comparing RONO care to the freedom caucus. If Rinocare gets passed, it will go back through committee and get some adjustments. Just can’t see the final bill defunding abortions. That was a bone to conservatives to get them to cave.
“You mean all those tens of millions of immigrants are in perfect health or can afford health care?”
exactly. the millions of illegals that have poured into this country in order that hard working tax paying Americans must pick up the tab for their healthcare as they jam the hospital ER for their “free” care is a major major blight on our economy. we pay more for our medical care because someone must pick up the health care costs of these free loading invaders.
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