The House Republican Study Committee is offering a “repeal and replace” plan for Obamacare. If we assume that this is purely a marketing document aimed to fulfill the check box that there is a “plan” to “replace” Obamacare that can get 218 votes in the House, then this document aces that evaluation. However, my therapist asked me to try not to be a cynical bastard before my first cup of coffee every morning, so lets evaluate this plan on the following criteria:
- Provides coverage for people with pre-exisiting conditions
- Provides coverage for people who aren’t part of the Republican donor class
- Attempts to bend the cost curve down
- Covers neccessary medical processes
Before we evaluate, let’s go over the major policy planks.
- Repeal all of Obamacare including Medicaid expansion and the three legged stool of subsidies, community rating/guaranteed issue, and mandate.
- Give people a tax deduction of $7,500 for an individual and $20,000 for families
- Significant expansion of HSA tax advantages.
- $25 billion for state run high risk pools with premium support for any premiums that are over twice the state average for insurance.
- Coverage guarantee for pre-exisiting conditions only applies to people who maintain continuous coverage
- Allow insurance companies to sell a single product through a single state regulatory filing
- Allow small groups to pool together for better risk pool pricing.
- Improve pricing transparency
- Stop comparative effectiveness research
- Tort reform to cap damage limits
- Random anti-abortion plank
The short version is MASSIVE FAIL
The long version is below the fold:
The big “idea” behind the “policy” document is that tax breaks solve all problems. The tax break is aimed at decoupling insurance from employment. However, as we all know, deductions give more money back to people who have higher incomes. Someone in the 25% bracket will see a $1,875 refund on the $7,500 deduction while someone earning $16,000 (or just slightly above 138% of poverty line for an individual) will see either $750 back (10% bracket) or less if there were any other deductions they were taking. So the tax break idea gives more help to those who don’t need it.
Right now for Obamacare, there is a significant debate on whether or not an individual with an income of $16,000 is able or willing to pay $600 a year for health insurance after they receive a $4,000 or $5,000 subsidy. The House GOP inverts the dynamic and gives a $750 subsidy for a several thousand dollar a year policy (if it covers anything at all).
Moving down the income ladder and working up in family size, a $20,000 deduction to buy health insurance does not help a family that has less than $20,000 income, and it is a cruel joke to a family of four with an income of $40,000. And as a kicker, if this policy did go into play, we can expect to hear about the 57% and all of those lucky duckies who weren’t part of the 47% for years to come. Now if a family is making $250,000 a year, this ain’t a bad policy set. But that is to be expected.
HSAs are going to be a part of the health care and health payment environment for a while. If we had a functional political system that has working factional blocks interested in give and take, HSA treatment could be a point of reasonable negoatiation. We don’t have that, we have a quasi veto controlling faction that likes to eat anthrax laced tired rims.
As a policy note, HSA tax treatment against massively favors the well-off on both the tax advantages and the fact that they have the money to put into these accounts to begin with while the middle class and poor can’t come up with $5,000 or more in cash in a single year to cover a catastrophic event, much less an annual several thousand dollar lump to cover expensive chronic care (unless you’re in Colorado). Furthermore, there has been significant research that has shown tax incentived savings don’t materially impact the total value of savings, it just redistributes savings to the favored uses. As it is, we as a society have too much of our personal savings tied up in illiquid assets such as houses and 401(k)s, so having another dedicated use savings vehicle is probably a bad idea.
High risk pools have been a conservative hobby horse. The idea to to pay for the care of people who no insurance company wants to touch. The problem is that insurance companies won’t insure these people because they are guaranteed money losers because they have known and expensive care requirements. Obamacare gets these people into the risk pool by the community rating requirement and distributes the risk via the mandate. This policy proposal shunts them to the side. The policy failure is that these people will cost way more than $25 billion dollars over 10 years to serve. And since the high risk pool often contains individuals who are more likely to either not be able to work, or can only work at low wage jobs, they don’t have the resources to pay double state average premiums before they can get any federal assistance. Again, this is a good deal for someone with means.
Continuous coverage in the private market only matters when there is no three legged stool with guaranteed issue. This allows people with pre-exisiting conditions to get insurance coverage if they have always had private market insurance coverage. If someone is employed at a place without health benefits, they are SOL as the individual market won’t insure them under this proposal. Again, if someone is pulling in 150K a year no big deal because the odds that they work at a job without health benefits is minimal, but someone make 20K a year is SOL.
Selling insurance across state lines already happens. Cigna, Aetna, Wellspan and several other major players have operations in at least half the states in the country. Right now they have to demonstrate to the satisfaction of the individual state that they are selling in that they have a sufficient network and product offering. The House Republican plan introduces the credit card and corporate law model of “regulation.” A plan approved in one state can be sold in all fifty. Some small state that is easily bought out like South Dakota or Delaware will under this scenario pass a set of insurance regulations that makes it extraordinarily easy for insurance companies to collect premiums without having to pay claims.
Furthermore several states have passed laws that allow for state residents to buy out of state approved insurance. The program evalution on these policies have shown massive fail:
The two states that have implemented across state lines laws, Georgia and Wyoming, reported similar challenges. No out-of-state insurers have entered either of these markets or indicated their intent to do so as a result of the states’ across state lines legislation. Maine officials reported that no out-of-state insurers have yet indicated their intent to enter…
As a side note, I don’t have a problem with a state deciding to either form interstate compacts with other states with similar regulatory priorities or opening up their entire insurance market to national race to the bottom regulation. States are allowed and should experiment, I oppose national race to the bottom standards. Massachusetts does not want to be Mississippi’s bitch.
Allowing small groups to pool together is already happening. That is called the “SHOP” experience on the Exchange. This is not a bad idea, it is just reinventing the fucking wheel when the pre-exisiting wheel is almost ready to roll.
Improving price transparency again is something that in a rational political environment should be a fairly easy policy to hammer out as theoretically all veto players should be interested in roughly the same agreement region.
Stopping comparative effectiveness research is a great way to waste money. We should only pay for treatments and interventions that work. CER is an attempt to figure out what actually works. This is a throw-away policy to assuage the Rascal Riders that there are no death panels and it is amazingly stupid.
Tort avoidance and damage limitation policies are designed to fuck over a Democratic donor group and reward Republican donor groups. It is a rent distribution system to favor certain groups. Furthermore, Texas has enacted tort “reform” and it has had no impact on the rate of cost growth or doctor retention in Texas.
The researchers said their study suggests that Medicare payments to doctors in Texas rose 1 to 2 percent faster than the rest of the country, Black said.
Since tort reform, some Texas residents have complained that they cannot find a lawyer to pursue a malpractice case because of the $750,000 cap on payouts for pain, suffering, disfigurement and mental anguish. The limit often makes litigation cost prohibitive…
Texas saw the number of direct patient care doctors grow more slowly after tort reform than it did before, the study says. Afterward, Texas did slightly worse than other states in attracting doctors, the study says….
And the random anti-abortion plank is in the policy proposal because the policy proposal was released on a day that ended with “Y”.