Since the GOP's ObamaCare repeal plan was first unveiled on Monday night, I've suffered enthusiasm, skepticism, and uncertainty. Both conservatives and liberals panned it the moment it was released. The bill passed the Ways and Means Committee early Thursday morning.
After reading into the American Health Care Act (AHCA) more, and talking with various congressional staffers familiar with the bill, its seems to me that the GOP health care plan, while not perfect, is a critical step in ending the ObamaCare nightmare that meets both conservative policy goals and political reality.
First, let's recognize three facts:
Republicans do not have the votes in Congress for a flat out repeal of ObamaCare. Democrats would filibuster it until kingdom come. Republicans only option is the 51-vote budget reconciliation procedure, which only allows changes that impact the federal budget.
The HHS Secretary, Tom Price, has considerable power over ObamaCare's thousands of regulatory minutiae. The text of ObamaCare has over one thousand provisions that include “The Secretary may/shall...” This gives Secretary Price, a Republican opposed to ObamaCare, considerable leverage to undo the law from the inside out.
ObamaCare is in a self-inflicted death spiral. Millions of Americans will lose coverage as insurance companies continue to withdraw from the untenable ObamaCare exchanges. The GOP and President Trump, in a position to do something about it, will not be immune from voters' frustration over the resulting instability.
These are the cards the Republican Party has been dealt. The hand may not be ideal, but it creates enough of an opportunity to slowly but surely dismantle the worst elements of ObamaCare step-by-step, restore conservative principles to the health insurance marketplace, and achieve the one goal that always seemed to allude Democrats: actually lower health insurance costs and expand consumer choice.
By repealing two key ObamaCare regulations - and these shouldn't be overlooked - the AHCA will put choice and competition back into the marketplace.
The GOP's repeal plan would do away with an awful ObamaCare regulation that drives the death-spiral: the age-based community rating.
ObamaCare prohibits insurance companies from charging the elderly more than 3 times what they charge a young person. This is an arbitrary ratio that ends up unfairly and artificially jacking up premiums for young people, but its a boon for older or sicker Americans who consume more care. Young people as a result pass on the expensive plans, while insurance companies lose money and pull out of the exchanges, resulting in the dreaded “death spiral.”
The AHCA would remove this source of market instability by raising the ratio to 5:1, which is more in line with the actual variance in costs between older and younger groups. This would take pressure off insurance companies and allow them to charge premiums that would actually keep their business afloat and bring more young people, who would be cheaper to insure, into the risk pools.
The AHCA would repeal another awful anti-market ObamaCare regulation: the required “minimum actuarial value” for essential benefits.
ObamaCare requires that all health plans sold in the marketplace cover ten “essential health benefits” (EHBs) - they include maternity leave, drug rehab, psychiatric counseling, etc. - and then exacerbates this demand by requiring every plan's minimum actuarial value (how much of the EHB costs it actually covers) be at least 60%. This regulation is asinine because it effectively strips away consumers' ability to select a healthcare plan that actually fits their needs (single young men need to pay for maternity leave?) while raising prices for everyone across the board (these EHBs aren't cheap to cover).
The Republicans' plan, meanwhile, would repeal the minimum actuarial value requirements, giving insurance companies more flexibility in what kinds of products they can offer consumers. The EHBs can't be touched via the reconciliation process, but the HHS Secretary - Tom Price - has a degree of flexibility in how the EHBs are defined.
By repealing these two major regulations - not to mention the thousands of other regulatory rollbacks Secretary Price can issue - the healthcare marketplace will actually be a free market of competing health insurance products, which will drive down costs and provide consumers with more options that actually fit their needs.
That's not all the AHCA does, though.
Nearly every tax, fee, and mandate under ObamaCare is gone.
The individual mandate that taxes Americans for not buying health insurance? Gone. The medical device tax? Gone. The pharmaceutical company tax, the tanning bed tax, the Medicare tax, the investment tax? Gone, gone, gone, and gone.
Repealing these taxes, a hodgepodge of random schemes the Democrats came up with to finance ObamaCare, amounts to almost $500 billion over ten years. This is a win for the economy and justice for industries and their resulting lost jobs that were unfairly targeted to finance the law.
The AHCA would enact the biggest reform of Medicaid in fifty years - and the biggest conservative welfare reform since the 1990s.
With all the hysteria over the bill, I am surprised this portion is being overlooked by both sides: the AHCA transforms Medicaid's funding system into a per-capita allotment. This conservative reform is a massive change - too much to get into here - and would put some restraint on Medicaid's out-of-control growth at the federal level and require states to get smarter about how they are spending their Medicaid dollars.
Not only would it help generate more efficient health outcomes for patients truly in need, but it would save the federal government astronomical amounts of money in the long term.
Here's the rub: the GOP's tax credit system.
The AHCA does away with ObamaCare's subsidies for health insurance and replaces it with a tax credit, adjusted by age and limited by income, that gets more generous as you get older.
The tax credits are a way to help struggling Americans without easy health insurance options enter the market and find insurance that fits their specific needs. This is not a free-for-all tax credit. It does not apply to people who qualify for Medicaid or Medicare, nor does it apply for people who have a health insurance option from their employer. It's not means-tested, which takes the IRS and other government bureaucracies largely out of the equation.
Critics are dismissing it as new entitlement, but it's a fairly conservative idea, as Ryan Ellis at Forbes pointed out this week. Nevertheless, this might be an area where conservative lawmakers can win some concessions.
This bill is a good start.
The impetus for health care reform in 2009 was Americans' concerns that healthcare costs for millions of American families were skyrocketing. Democrats acknowledged this concern, then betrayed it by instead creating ObamaCare, which focuses on universal coverage while leaving those same families out to dry by dealing them higher costs for fewer choices.
The AHCA is not perfect. It's a first step. But it does lift a substantial tax burden off the economy, reform Medicaid with conservative principles, and restore commonsense back into the insurance marketplace by providing more choice and cheaper options for millions of American families. Wasn't that our biggest gripe with ObamaCare in the first place?