House Speaker Paul Ryan (R-Wis.) outlined a health-care plan to his members yesterday. Surprisingly, it did not include much detail, either because the speaker has not gotten that far or because he’s afraid of the reaction when the numbers are revealed.
The basic outline comes from his “A Better Way” health-care plan. The Associated Press reports:
It features a revamped Medicaid program for the poor, tax breaks to help people pay doctors’ bills and federally subsidized state pools to assist those with costly medical conditions in buying insurance.
Lawmakers called the ideas options, and many were controversial. One being pushed by Ryan and other leaders would replace the tax increases in Obama’s law with new levies on the value of some employer-provided health plans – a political no-fly zone for Republicans averse to tax boosts.
“You have to legislate with a sense of political reality,” said Rep. Tom Cole, R-Okla., who said backing that proposal “would set up an ad against you from multiple directions” during upcoming elections.
In lieu of an individual mandate and subsidies to buy insurance from the exchanges (according to a sliding scale by income), the GOP plan gives rich and poor alike a tax credit, which would be adjusted by age. It’s not yet clear the amount of the credit or what it would buy (a catastrophic plan?). The absence of dollar amounts is striking. Unless the amount of the credit is linked to the cost of coverage comparable with what people received under the Affordable Care Act (and subject to indexing), it will represent a reduction in coverage (or higher costs if people want to “buy up”). If people will be reduced to buying catastrophic coverage, their deductibles may be larger, not smaller than they were under Obamacare policies. That’s a step backward for many Americans, who complain that the deductibles are too high already. Moreover, depending on the differential between the credit for older and younger Americans, older people (who use more health care) may wind up paying more. These also happen to be the most regular voters.
Equally problematic is the use of health-care saving accounts in lieu of the subsidies available on the Obamacare exchanges. If working-class people do not have the extra income to contribute (albeit on a pre-tax basis), once again they will be worse off than they were previously. Democrats will also see this as cost-shifting from rich to poor since the rich in higher income brackets get a bigger benefit from pre-tax dollars than do people in a lower income bracket.
Ryan’s solution to preexisting conditions is to dole out grants to states to maintain high-risk pools. But what if the amounts are not enough to cover these people?
The most controversial element may be in the Medicaid arena. “According to documents distributed to members and obtained by The Associated Press, the expansion of Medicaid to millions of additional poorer people — almost entirely financed by federal taxpayers — would be phased out. In a compromise aimed at resolving a bitter dispute, extra Medicaid money would flow to the 31 states that accepted that expansion and the 19 that didn’t, though it would end ‘after a certain date’ left unspecified.” How are states to continue covering people — or are they expected to kick poor people off the Medicaid rolls?
For Medicaid, Ryan envisions moving to either a block grant or per-capita cap. In essence, Medicaid would go from a defined benefit to a defined contribution plan. Without numbers, it is hard to see whether those getting benefits now will be cut off or have higher out-of-pocket costs.
When you look at this on paper, the central question remains: From the point of view of the consumer, how is the GOP plan better? We know the problems with Obamacare, but Republicans have been claiming that their plan will be more flexible, more generous and cheaper while also offering higher-quality care. Based on the scant details we know so far, this does not come close — for a very good reason. Without massive new taxes to pay for it, it’s hard to deliver more coverage for less. In other words, Republicans promised more and are delivering arguably less than Obamacare does.
No consensus exists for this plan — or any other plan. And when President Trump figures out that the GOP plan may adversely affect his strongest supporters (older, working-class voters), he may well turn around and attack his party. (No wonder many House members are paralyzed.) Moreover, even if Republicans can agree among themselves, it’s hard to come up with the names of eight Democrats who would go along with their plan.
Meanwhile, the task of cost containment still looms. Republicans hope that allowing insurance sales across state lines and use of health-care savings accounts will help rebuild the insurance market, increase competition and thereby lower costs. That’s the theory, but no one really knows how effective that will be. Moreover, even if coverage costs come down over time, ordinary Americans may be footing higher medical bills in the short term.
This is not an argument for the ACA or against reform. We simply point out the gap between what Republicans have been promising and what they are willing to deliver. That gap, the unfavorable comparison with Obamacare benefits and the lack of a funding mechanism do not bode well for a “repeal and replace” plan.
You do wonder when Republicans will come around to a piecemeal approach. Try to fix rural health care in one bill, for example. Perhaps attempt to rejigger the requirement that insurance companies spend at least 80 percent of the money they take in from premiums on actual health care so as to try to induce them back into the market. Instead of high-risk pools, allow states to experiment, as Alaska did successfully, with reinsurance systems. In addition, it might be necessary to leave those Obamacare taxes in place to pay for all this.
These might work, but, of course, it would not constitute a “repeal” of Obamacare in any sense of the word. Such reforms will not be “big” enough for many Republicans or for Trump, who promised the sun and the moon and remain hemmed in by their no-tax-hikes-anytime doctrine. No doubt Democrats would respond to their colleagues by saying: It’s your own darn fault. They have a point.