Paul argued, “[Democrats] wanted to insure people. Their motives were good. Their heart was in the right place. But they put so many mandates in it, that they made it too expensive,” he explained. He argued that Obamacare “put these mandates and said that every insurance policy has to have 10 items, things like pregnancy and dental coverage and all these things, which are great, but they add cost. And that forced people out of the market.” His solution is to allow all sorts of plans, including cheaper catastrophic plans to induce more people into the market.
Here, then, is one issue: Can you solve the premium increase problem by in essence deregulating the market so that more people will at least be in the system (helping insurers with the adverse selection problem)? If there is no mandate, young and healthy people might not opt to buy insurance. Moreover, if, as Paul suggests, Republicans want to help people pay for insurance by offering health savings accounts, as well as a tax credit, the question becomes what kind of insurance that will pay for. Republicans would argue that they’ll give everyone “at least” catastrophic plans, but that means a benefit cut for some who enjoy a much higher level of coverage under Obamacare. Will they have to accept less coverage (albeit at a lower cost)? (Trump voters who complain about high deductibles are unlikely to be pleased to hear that they are going from a gold or silver Obamacare plan to a catastrophic plan.)
Paul raised another problem, one which Democrats think can be fixed more easily. “So what’s happening in the individual market, which is about 6 or 7 percent of the market, you have companies like Blue Cross of North Carolina losing $400 million because young, healthy people don’t want to buy it because they are told, hey, you can get it any time after you get sick.” Democrats would say, fine, then tighten up the requirements to purchase and remain in Obamacare. If that problem can be solved, Democrats will argue that the exchanges could stabilize and high insurance premiums could be reduced.
Paul also raised a concern about Medicaid, one that is not unique to Democrats. GOP representatives and governors of some red states (e.g., Arkansas, West Virginia) have complained about leaving Medicaid recipients in the lurch with a “repeal and delay” approach. Despite a huge increase in coverage in his state under Medicaid expansion, Paul gave no guarantees: “The vast majority of people that got insurance under President Obama’s Obamacare, the Affordable Care Act, got it through Medicaid. So, what we have to decide is what can be kept and what can’t be kept. And that’s going to be part of repeal.” He pointed out, “My point is, we should be honest about it. If Kentucky or Tennessee or Ohio wants to expand Medicaid, and they want — they say you have a lot of people struggling, we’re willing to help them, that’s fine. Probably, we should then raise the taxes on everybody in Kentucky to pay for Medicaid.”
Let’s unpack that a bit. If Medicaid expansion is rolled back, he would force states alone to pay for any expansion beyond pre-Obamacare levels. Would he support that in his home state, and would the conservative governor? If not, he’s simply saying people who got Medicaid expansion won’t get it in the future.
Republicans may run into a firestorm on that one. Taking Medicaid away from the poorest of the poor, including those currently on it, will strike many voters as downright unfair, if not cruel. Governors, including some Republicans, are already up in arms. (“While many pro-expansion GOP governors seek greater state flexibility to manage health programs as did their non-expansion state counterparts, they went out on a political limb to take federal money to expand Medicaid. If that money stops flowing and tens of thousands of residents lose coverage, they face huge political and budgetary challenges. Sixteen of the 31 states that expanded Medicaid are led by Republicans.”) Taking away expanded Medicaid would contradict Trump and Kellyanne Conway’s promises that everyone covered now will be covered in the future. One possible solution would be a bargain: Keep Medicaid expansion (and even spread it to other states) in return for a genuine reform of the system, which does not deliver choice to poor people, is rife with fraud and abuse and, as some governors have argued in obtaining waivers, can be run better with more flexibility.
One issue Paul did not touch upon, but which will be a major sticking point, concerns people with preexisting conditions whose high usage forces up premiums for everyone in the exchanges. The Republicans invariably respond with one alternative — “high-risk pools.” But do these work? There is plenty of evidence they are not a viable solution:
High-risk pools ‘are basically targeted welfare, which is a lot better approach than distorting entire markets with mandates and price controls,’ argued Dean Clancy, a policy consultant at Adams Auld, and a former senior health policy advisor to congressional Republicans and the George W. Bush administration.But there are widespread doubts about the viability of high-risk pools. A December 2014 Commonwealth Fund study concluded that the pools are not a workable alternative to the ACA’s rules for covering those with pre-existing conditions because they are prohibitively expensive to administer, the coverage is too expensive for consumers, and they offer skimpy benefits. The report predicted that a switch to high-risk pools would result in higher state and federal costs, fewer people with coverage, and plans that don’t meet the medical needs of those with chronic conditions. . . . The ACA’s own high-risk pool program, designed as a stopgap measure to cover uninsurable people before the exchanges and Medicaid expansion took effect in 2014, also encountered funding and implementation problems.
State-based reinsurance programs might appeal to Republicans on federalism grounds. Nevertheless, Republicans will need to own up to the fact that, if they do want to use high-risk pools, they will be very expensive and will require an ongoing revenue stream to support.
We don’t raise these issues to rule out Paul’s or others’ reform ideas. To the contrary, Paul is doing what Republicans should have been doing all along: providing alternatives, discussing risks and benefits and confronting voters with real decisions.
Republicans must stop promising to give the exact same level of coverage and more choice at less cost — and without any Obamacare taxes. Unfortunately, Trump did precisely that (“insurance for everybody”) in an interview with The Post. He vowed that we all “can expect to have great health care. It will be in a much simplified form. Much less expensive and much better.” Since no plan, let alone any plan Republicans have in mind, can do all that Trump promised, he has only set Republicans up for the same onslaught Democrats got when they promised “you can keep your doctor.” We find it hard to believe that eight Democrats will go along with major changes in Obamacare, especially if they involve rolling back Medicaid or reducing current beneficiaries’ level of coverage, but we will find out in the months ahead. Meanwhile, Republicans might have noticed that Trump just set the bar so high for a replacement plan that Republican proposals will inevitably come up short.