The Affordable Care Act proceeded from the belief that the government needed to make sure most everyone had access to health-care insurance, meaning that those with preexisting conditions or insufficient income would get help. Once that decision was made, the individual mandate was needed to deal with two problems: the “free-riders” (i.e. people without insurance who would show up in emergency rooms) and, more important, adverse selection. As to the latter, unless insurance companies had enough younger, healthier people in the exchanges who paid premiums and didn’t use much health care, they could not afford to cover the older, sicker people who used a lot of health-care services. It didn’t work out, because people gamed the system (going in and out of the exchanges) and many people simply didn’t sign up, willing to incur the penalty for not buying insurance. Carriers started losing money and then raised premiums or pulled out. The exchanges in some cases were left with a single provider, which naturally raised premiums.
House Speaker Paul D. Ryan (R-Wis.) seemed to suggest on Thursday in his PowerPoint presentation that the very idea of risk-sharing (healthier people subsidize sicker people) was the problem. If he really means that, then taxpayers shouldn’t be helping to support a cost-shifting, risk-sharing system at all. Then again, taxpayers wind up paying for Medicaid and Medicare (people get more out than they ever pay in). Moreover, Ryan’s support for health-care savings accounts (HSAs) becomes hypocritical, because the taxpayer subsidizes pretax deposits. (HSAs benefit richer people with disposable money to deposit.) Does he want to cost-shift for the very poor (Medicaid), the elderly (Medicare) and the rich (HSAs) but not for the working poor and the middle class? That’s essentially what his plan does — which is a problem, because President Trump’s campaign was all about helping the working poor and the middle class. (Since this bill socks it to the older, poorer and sicker people, Trump doesn’t want his name on it. He has, however, embraced it, so Trumpcare it is.)
That refusal to subsidize health care for everyone else is where we were before the ACA; apparently it’s where the Freedom Caucus and others wish to return. They are convinced that, when left alone, the “market” will provide competitive, affordable health care. We know, however, that’s not right. The market is already distorted by Medicaid and Medicare; moreover, this effectively says that those with preexisting conditions get priced out of the market and those who just don’t have enough income and don’t get coverage through their employer do not have insurance that allows them to access the health-care system.
In other words, it seemed that Americans have come to view health-care insurance as something the federal government should guarantee (by credits or subsidies, as well as through Medicaid and Medicare). Ryan says that this is not really decided, and the right-wing opponents say, “Hell no!”
Linda Blumberg and John Holahan explain it this way:
Deciding how much of total health care expenditures should be shared across the population and how to share it is the fundamental conundrum of health care policy. There is more risk pooling the larger the share of health expenditures included in the insurance as covered expenses (i.e., the fewer benefits excluded and the lower the out-of-pocket cost requirements), the larger the number of both the healthy and the sick insured, and the lower the variation in premiums across different enrollees. Sharing the costs of the sick across the broader population (a.k.a., risk pooling) increases costs for the healthy to the benefit of those with health problems; this creates more financial losers than winners at a point in time, since there are many more healthy people than sick in a given year. Segmenting risk pools has the opposite effect, savings for the currently healthy while increasing costs for those with health problems. …
The Democrats generally advocate broad-based pooling of health care risk and the Republicans generally advocate more individual responsibility and are willing to accept much greater segmentation of health care risk.
The reason Trumpcare looks so bad to critics and will likely leave millions without insurance stems from the Republicans’ desire to make people pay more of their own way. That includes making the older pay more for premiums, allowing insurers to carve up the market by removing the minimum benefit requirements under the ACA and allowing sales across state lines. The authors explain that “insurers domiciled in states with much more limited insurance market regulations (e.g., without guaranteed issue of insurance, as well as those permitting use of pre-existing condition exclusions, premium rating based on health status, and limited benefit plans) could sell low-cost coverage to healthy individuals living in a state with policies designed to share health care risk.” The result is those left behind, the sicker people, wind up in the very death spiral that Republicans say the ACA is now experiencing. “These insurers could pull healthier consumers out of the insurance pools in their home states while leaving their sicker neighbors behind in higher-cost pools. Left with only those with health problems to enroll, insurance pools could not survive in those states attempting to share risk more broadly, ultimately leaving many of the sick with no insurance options at all.”
The Republicans’ plan — and even more so, the right-wing notion of no government guarantee at all — penalizes sicker, older people, because reducing cost-sharing hurts them while it helps younger, healthier people who no longer have to take on some of that risk. Selling that to the public is tough, because most people in the United States, contrary to the right-wing opponents’ ideological dogma, do not think “you’re on your own” is a good response to problems with the health-care insurance system. (Ryan et al. made that “sell” even tougher by abolishing the Medicare surtax, which is a large boon exclusively for wealthy people.)
Trumpcare may eke its way through the House but surely will meet its end in the Senate, leaving the House GOP with a vote for a rotten bill with which opponents can tar them in the next election. (If this sounds familiar, House Democrats took the same approach on cap-and-trade, which also died in the Senate.) Ironically, those voting to stop Trumpcare in the House and the Senate will be doing Trump’s base an immense favor — protecting them from a GOP plan that hits them hardest of all.