How the GOP Plans to Replace Obamacare

The new Republican majority in the U.S. House and Senate claim they are going to replace the Affordable Care Act (aka Obamacare) now that they control both houses. With what? The same old policies of the past two decades: malpractice reform, allowing insurance to be sold across state lines, and "personal responsibility for health insurance" (high-deductible plans and health-savings accounts). These ideas are so stale that I decided to repost a modified version of something I wrote on The Huffington Post over four years ago when a wacky person named Christine O'Donnell was running for the U.S. Senate in Delaware. Below is a version of that post.

Since the Clinton health-reform effort failed in the early 1990s, Republicans have been making these same points. They had eight years during the Bush administration to show that these three talking points or "solutions" could make a difference. They did nothing about it. Why? Because these three talking points would have little to no impact on the real problems health reform has been trying to solve. Here's why.

1) Malpractice reform? Please. For years studies have shown that malpractice reform, while desirable for a variety of reasons, would have almost no impact on the reduction of healthcare costs. According to Naomi Freundlich at The Century Foundation's "Taking Note" blog:

[A] ... study, published ... in Health Affairs suggests that costs associated with medical malpractice are far less than the $650 billion figure (26% of all money spent on health care) cited by some Republicans who have made tort reform a cornerstone of their vision for "bending the cost curve" in health care. The newly calculated figure, $55.6 billion, represents just 2.4% of health costs.

Reform the malpractice and medical-liability system? Of course. But don't make it the centerpiece of a plan to reform health care. At best it's a byline.

2) Selling insurance across state lines? Republicans love this idea. Why? Because the very sleaziest of health-insurance products and companies -- the ones that have such high deductibles that you might as well not even have insurance (e.g., $10,000), what they call "catastrophic" plans -- are just waiting for your state to allow them in to sell you stuff that has almost no value. Over the years there has been legislation to allow this sale of policies across state lines, but the conclusion is that it would have little to no impact on the real problems we face.

(2015 update: Many health-insurance companies already sell their products in multiple states, and the ACA offers options for companies to do just that by setting up "compacts" among states that will protect consumers.)

As Ezra Klein pointed out in the Washington Post, this is a terrible idea:

As it happens, the Congressional Budget Office looked at a bill along these lines back in 2005. They found that the legislation wouldn't change the number of the uninsured and would save the federal government about $12 billion between 2007 and 2015. That is to say, it would do very little in the aggregate.

But those top-line numbers hid a more depressing story. The legislation "would reduce the price of individual health insurance coverage for people expected to have relatively low health care costs, while increasing the price of coverage for those expected to have relatively high health care costs," CBO said. "Therefore, CBO expects that there would be an increase in the number of relatively healthy individuals, and a decrease in the number of individuals expected to have relatively high cost, who buy individual coverage."

That is to say, the legislation would not change the number of insured Americans or save much money, but it would make insurance more expensive for the sick and cheaper for the healthy, and lead to more healthy people with insurance and fewer sick people with insurance. It's a great proposal if you don't ever plan to be sick, and if you don't mind finding out that your insurer doesn't cover your illness. And it's the Republican plan for health-care reform.

3) Taking personal responsibility for your health? This is the Republican answer to "personal accountability," but what it really means is transferring the risk and responsibility for the purchase of insurance and the costs to you through the sale of consumer-driven or consumer-directed health plans, where the high upfront deductible is meant to discourage people from seeking unnecessary care. Not a bad idea if it's a real choice for people. If they have enough money to pay those deductibles before they get the care, fine. But it has been shown that consumer-driven products tend to work better with higher-income consumers, and consumers tend to delay care when they enroll in those plans. According to a December 2005 survey by the Employee Benefit Research Institute and The Commonwealth Fund:

Individuals with [consumer-directed health plans] or [high-deductible health plans] were significantly more likely to avoid, skip, or delay health care because of costs than were those with comprehensive insurance, with problems particularly pronounced among those with health problems or incomes under $50,000.

(2015 update: Unfortunately, buying health insurance is quite a bit more complicated than buying auto or life insurance, and under Republican rules it could be even less regulated than those products. Consumers generally do not know the cost of the treatment their doctor has prescribed (and often the doctor does not know the cost either), and even with insurance they don't have access to information to help them buy that treatment responsibly. "Personal responsibility" in Republican lingo simply means you are on your own. Enjoy your freedom!)

As you listen to the Republican chatter in the next few weeks, raise a glass every time you hear those talking points (but be careful to drink something nonalcoholic or you'll pass out). And remember that as complicated as health reform is, it is too complicated for three talking points. It is the Democrats who attempted to really solve these problems and will continue to work on this year after year until all the wrinkles are ironed out.