With budget talks occupying Congress, we really should be asking “how much money are you putting aside to fund health care?” Does the budget assume that the government will continue to be responsible for funding exchanges, subsidies, expanded Medicaid programs, etc., or does the budget assume repeal? I If the plan is to repeal the ACA; then the funding required for HHS and other government services related to health care will be significantly less than the amount required to support the legislation. If a replacement plan is intended, budget requirements for the new plan would have to be reviewed and approved. In this uncertain environment, the Republicans must take another swing at repealing and replacing the ACA, or risk funding it for another year.
It looks like the Freedom Caucus and others were able to help craft such a revised bill. Do we really want to know how they make the sausage?
The new plan weaves together all the failures. It provides tax subsidies that only have meaning for the wealthy; it allows the costs to increase from 3x to 5x for older Americans; lets the states establish risk pools with approximately $8 billion of subsidies for those pools, a drop in the bucket; it allows the states to determine their level of participation in things such as benefit definition and Medicaid expansion; and, most importantly, it does nothing to address the skyrocketing cost of insurance.
The American Health Care Act, the Republican’s first attempt at replacing the ACA, failed because it did nothing to solve the problems Obamacare created, increasing policy costs, higher employee contributions, higher deductibles, higher co-pays, narrower provider networks, nor did it meet the goals put forward by the Republicans, and, for the government, a significant financial burden. It tried to get the federal government out of the entitlement business by substituting subsides with tax credits. It gave specific tax benefits to health insurance company executives, eliminated support for the states that were obligated to pay for coverage for citizens that had obtained healthcare through Medicaid expansion, and, in generally, took a piece of highly flawed legislation, the Affordable Care Act, and surprisingly made things worse. The loss of healthcare benefits for 11 million families was impactful, not because they would lose their expensive coverage, but because they would lose the negotiated rates for care that was negotiated.
The American Health Care Act was so bad, it even alienated the Republican party members whose support was assumed. It alienated people on the far right represented by the Freedom Caucus because it was not a repeal of Obamacare; it alienated certain moderate Republicans, resented by the Tuesday Group, because it went too far in unraveling the Affordable Care Act’s benefits, such as expanded coverage for the poor under Medicaid.
Withdrawing the bill saved Republicans from a significant defeat. But withdrawal meant that their promise to repeal and replace would not be addressed. To make good their promise, they had to revise their initial attempt and go for a second bite at the apple. To accomplish this, a PAC was set up, America First Policies. The PAC spent $3 million purchasing adds, supporting Congressmen who supported the American Health Care Act. A party rewarding their congressmen with Ad Buys who support a bill is nothing new – but bolstering Republicans who blindly supported the American Health Care Act ignores the fact that that the Obamacare replacement did nothing to reduce the cost of health care.
Enter the Freedom Caucus. A compromise allowing the exercise of state’s rights, and presto, a new plan is on the table, ready to approve. The new Republican plan is almost identical to the old one; the primary difference being an opt out provision so that each state can choose whether or not to participate in not only the Medicaid expansion, but also the ACA mandates such as the essential health benefits. It also will allow insurance companies to charge more for insuring people with preexisting conditions. This revised legislation also gives more leeway for insurance companies to provide different product offerings, encouraging more insurance companies to participate in each state. It does nothing to control costs.
While this was “a good start”, it wasn’t enough to get the bill passed. Congressmen “worried” about their constituents with pre-existing conditions. Allowing the states to set up high risk pools restores what was in place prior to the ACA. In those days, insurance companies were required to offer insurance to high risk persons at the same price as was available to healthy individuals. It was considered a cost of doing business in the state. If insurance companies didn’t provide this benefit, they couldn’t sell ANY type of health insurance in a state; no group policies sold to businesses, no Medicare supplement policies, nothing. Now, we are taking the hit insurance companies used to pay and passing the cost of these policies onto the taxpayers. This isn’t good news. Worse, putting money into high risk pools will help those with preexisting conditions pay less; but less than what? Since, in the newly revised American Health Care Act, there is no control over the price of insurance for people who are healthy, having sick people pay the same rates that healthy people can’t afford to pay makes no sense and helps no one.
The bottom line of all of this is that it creates more customers for insurance companies. Thinking that giving insurance companies more customers will result in lower prices is insane. I don’t know any business man or woman who would lower their prices because they have more customers willing to buy their products. Prices are lowered when consumers are not willing to buy products because they are too expensive. Rates are controlled and approved by each state’s insurance commission; variation in product pricing for the same product is generally not approved because the state is more concerned with ensuring the financial integrity of the businesses to ensure they have sufficient money to pay out any and all claims. Lower prices may mean higher risk of default. When more companies competed for insurance business in a given state, they competed by offering different types of product offerings and different payment strategies. They did not directly compete on price.
The Republicans should be focusing on solving the health care crisis in America by crafting legislation that will make health care more accessible and more affordable for average Americans. The $3 million ad buy by America First Policies would have been much better spent figuring out how to implement Health Savings Accounts coupled with catastrophic coverage while limiting the administrative excesses of the insurance companies.
