I’ve heard a lot of criticism of the Republican health care bill, the “American Health Care Act”, from conservatives. Let’s briefly summarize what the bill would do and then consider objections.
Key elements of the AHCA:
- Repeal most of the Obamacare taxes
- Repeal the individual and employer mandates
- Repeal the subsidies and replace them with a tax credit
- Increase the amounts that people can put into a Health Savings Account
- Loosen limits on the range of rates that insurance companies can charge to young vs old customers
- Give more control of Medicaid to the states
- Preserve the requirement that insurance companies cover pre-existing conditions, but allow them to charge higher premiums to customers who wait until they get sick to buy insurance
- Create a federal subsidy for “high risk” patients (i.e. people with long-term, expensive medical problems)
- Cut funding to organizations that perform abortions
Objection: Why are the Republicans making this so complicated? Why don’t they just write a simple, one-sentence bill: “Obamacare is hereby repealed”.
People often try to derail action by saying, “Well you know this is all very complicated …” I don’t for a moment want to fall for that old trick. But let’s not over-simplify either. Suppose Congress passed such a one-sentence bill. That would leave a lot of unanswered questions. For example, What happens to people who are currently receiving a subsidy? Would the subsidy end the day the bill is passed? When the policy expires? Or would they have to pay back the money they’ve already received? Etc. Furthermore, we can’t just set the clock back to the day before Obamacare was passed. Insurance companies have changed their policies in the intervening years. companies have withdrawn from some markets that were no longer profitable, doctors have retired, businesses have dropped policies, etc. The government can’t magically undo seven years of effects and side effects and unintended consequences just by saying so.
We shouldn’t let such concerns paralyze us. But it takes more than one sentence. Things have to be thought out. There has to be a transition plan.
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Objection: This doesn’t go anywhere near far enough. What about repealing all the regulations about what a policy has to cover? Selling insurance across state lines? Cutting down on frivolous malpractice suits? Etc. This is just nibbling around the edges. It’s “Obamacare lite”.
Trump and Ryan have said that they want to do all these things, but they are putting them in a separate bill. There is a very good technical reason for this. Under Senate rules, bills that are solely about taxes and spending cannot be filibustered. That is, you can pass a tax and spending bill with 51 votes, while most other bills effectively require 60 votes. The Republicans have 52 votes in the Senate. So Mr Ryan’s plan is, put all the tax and spending things into one bill. Get that passed fairly quickly. Even if all the Democrats oppose it, as long as the Republicans stick together it will pass. Then put things that will require 60 votes in another bill. They may have to make deals or compromises with the Democrats to get that passed. But they can ram through the tax and spending stuff without having to compromise with the Democrats.
I’ve heard many conservatives say that they don’t trust the Republican leadership, that this is all a trick to stall on the other issues and never do them. Maybe. But their stated reasons for having two bills are consistent with the facts and very plausible. Even if we suppose for the sake of argument that they are lying, still, would you agree that there are good things in this bill? Why not get the good stuff passed, and then worry about the things left out?
Objection: The tax credit is just a subsidy under another name. We should abolish all subsidies and let the free market work.
Ignoring Obamacare subsidies for the moment, if you get insurance through your job, the cost is tax deductible to the company. But if you buy insurance yourself, it is not tax deductible. So if a policy to cover you costs, say, $500, if you buy it on your own, that’s $500. But if the company pays for it and takes the money out of your paycheck, the tax deduction might be worth, say, $50. So the company could buy a $500 policy for you but only take $450 out of your check. (Most companies don’t actually say, “minus for insurance”, but simply never add it to your paycheck.) Conservatives have long said that this is not only unfair to people who do not get insurance coverage from their job, but also creates destructive incentives. That’s an issue all it’s own that I won’t go into any further here. Either no insurance premiums should be deductible or all should. It’s politically difficult to take away the deduction now. If the AHCA had said that you could deduct insurance you bought directly, liberals would object that this favors the rich, because deductions are more valuable to people in higher tax brackets. So a tax credit evens the scales between employer-provided and private insurance without favoring the rich. (In fact the bill phases it out when someone’s income passes $75,000, so it distinctly disfavors the rich.).
The high risk pool is another entitlement program. We should be ending entitlement programs, not creating new ones.
I agree. I don’t like that part of the bill either. But I get it. Realistically, as a society we are not going to say that people with expensive, chronic medical conditions should be left to die. We have to make some provision for them. Obamacare’s answer was that healthy people should be forced to buy overpriced insurance to pay for the sick people. Other possibilities are, (a) let insurance companies charge sick people more, (b) penalize people for waiting to buy insurance until they get sick, and (c) have government subsidies for the sick. This plan does (b) and (c), and sort of (a) by letting insurance companies charge older people more, given that older people usually have higher medical expenses. Is it a flawless, perfect plan? No. Is it politically possible to pass and better than what we have now? Yes. If you have a better idea, we’d all like to hear it.
Indeed, that’s what I have to say about this bill in general. Is it perfect? No. Is it better than Obamacare? Yes, much. I have problems with many of the details and a few of the basic ideas. But in real life politics, the choice is not between Obamacare and a perfect free-market approach to be achieved overnight. The Republicans have a razor-thin margin in the Senate and several members who are moderate to liberal, and many more who are cowards. The realistic question is, What is the best we can get? I would be happy to see conservatives make amendments to this bill to improve it. But if this bill dies, it will not be replaced with a better bill. If the Republicans can’t pass a decent bill now, before they can get a totally new bill together the next election will be coming up, and the cowards will be running for cover, and action will be put off until 2019. And then there will surely be more reasons to delay. Let’s get the best we can get, and then after the next elections, if there are more conservatives in the senate, maybe we can do another round and get something better still.
There’s an old saying: Don’t let the perfect become the enemy of the good.Tags: Obamacare Paul Ryan
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