Conservation of issues

.@SenAngusKing It all comes down to money – add enough into the system and the details of what you call it (hidden pool, reinsurence etc) less important

— Mitchell Stein (@mhstein) May 1, 2017

The core issue of the AHCA is not the decision to gut pre-existing conditions protections by gutting community rating requirements where everyone has to be offered a policy at the same price. It is the decision to pull out almost a trillion dollars of spending on healthcare and redistrisbute those resources towards upper income tax cuts. Everything else is a detail.

Those details matter. Paying for healthcare at Medicaid rates instead of rental network commercial rates is far cheaper and buys a lot more units of service. Using smart value based insurance design buys more efficient and effective units of care at a given price. Visible or invisible risk sharing and risk pools alters incentives of carriers. Market design matters.

But all of this matters at the margin. The core short run problem in healthcare is the conservation of issues. No matter what the law is in July, the same people will present with the same problems. The question is who bears the cost and how it is financed. The pre-ACA system had employers a significant element of the cost if the individual had a good job. Medicare and thus society as a whole bore the cost if the individual was old or permanently disabled. Medicaid and CHIP bore the cost if the individual was a kid or pregnant or in a nursing home or severely ill. And then fifteen to twenty percent of the people bore all the cost and the risk themselves. The ACA has altered that equation. The AHCA will push a massive amount of risk back onto that fifteen to twenty percent of society plus add some more people at full risk of their own health.

That is one way to lower federal government costs. But the issues are conserved. It is just a cost shift to people without the reserves to actively handle risk efficiently. The issues don’t go away because the money goes away.