Under this bill, the average American will be more likely to be uninsured, or insured with higher co-pays and deductibles, or “covered” with a plan worth as much as the plastic insurance card it’s issued on.
As for government-run programs, Medicare’s trust fund will come four years closer to depletion, and Medicaid will shed millions of people over time through a per capita cap, which is just as bad as a block grant, an inflexible funding outlay that fails to shift upward in times of need. Even if you get health care through an employer, the bill creates incentives for companies to throw people off insurance, sticking you in the aforementioned hazardous individual market.
If you didn’t like the ACA, whether from the left or the right, there’s nothing really here for you either. That’s because the basic structure of Obama’s 2010 law has been retained.
“Writing checks to individuals to purchase insurance is, in principle, Obamacare,” concluded the Republican Study Committee, a conservative faction in the House that opposes the bill. They are correct. The AHCA gives refundable tax credits to every American (up to a certain income threshold) to buy insurance. The size of the tax credits are pathetic, but fixing that is one Democratic budget reconciliation bill away. Because Republicans aren’t even bothering with Democratic votes on this legislation, and progressing through the clumsy reconciliation process, they’re only muting the ACA rather than obliterating it. For example, the individual mandate and employer mandate would still exist; their penalties would be set to $0, which is simple to change back. The tax credits could be dialed up as well.
In fact, if you’re a rock-ribbed conservative who can’t stand federal social spending, the AHCA isn’t for you. The bill tries to buy its way out of one of the biggest conundrums with repeal: how to handle states that refused to expand Medicaid, which would then lose out on a block grant set to current spending levels. These non-expansion states, which took such a principled stand in denying government money for years, get a $10 billion handout for “safety net funding,” and two extra years of grants to state hospitals that treat poor patients.
There’s more spending, too: $100 billion in a state-based slush fund for high-risk pools or something equivalent, $422 million for community health centers, plus three more years of expanded Medicaid before a five-year phase-out (The Republican Study Committee doesn’t think Medicaid expansion will ever go away, and indeed, there are so many cliffs and extended timelines built into this bill, you might as well call it the “Let’s Wait and See What Happens in the 2018 Midterms Act”). Don’t get me wrong, the total spending is woefully short of what the ACA provided, and the presumed ratchet on Medicaid will make it worse over time. But when conservatives say the AHCA funds a new “Republican welfare entitlement,” they’re not wrong.
Single-payer advocates should also hate the AHCA, not only because it will lead to demonstrably worse outcomes, but because it codifies a structure that falls terribly short of the system they favor. Don’t like insurance companies in control? They’ll have far more control under this framework. The “continuous coverage” provision, the Republican version of the individual mandate, has insurers keeping the full 30 percent penalty on those who don’t maintain insurance and try to purchase it later. This allows insurance companies to jack up premiums to push the poor out of the market, because they correlate with people who use health care more. Insurers can charge more to older customers, with a 5:1 “age band,” up from 3:1. Most important, insurers don’t have to be tethered to giving an actuarial value for their coverage, which means they can supply fake insurance with giant deductibles and co-pays that doesn’t pay for much of anything.
If you think the free market will never adequately deal with something as sensitive as people’s health, that gets worse here too. The continuous coverage provision offers a perverse incentive to the young and healthy to only sign up for coverage when they get sick. This will distort the insurance pool and force premium prices much higher. And since the tax credits for premiums aren’t big enough to begin with ($2,000-$4,000 just isn’t enough money to buy decent health insurance for a year), people at the low end will find it unaffordable and drop out. I’m describing a death spiral, accelerating the current decline of the individual market, which probably won’t exist in any significant form within a few years if this bill becomes law.
Given that Republicans have created legislation that nobody can embrace, why does it exist? First off, the GOP backed itself into a corner with seven years of shrieking about the horrors of Obamacare, and now they have to answer that call. What they came up with is a much worse version of Obamacare. But it gets them out of the box they’ve created.
More important, the AHCA does cut taxes on rich people, who are literally the only beneficiaries here. Every tax on the wealthy gets repealed, for a savings of about $7 million a year for the richest 400 households ($195,000 a year for the top 0.1 percent). Health insurance CEOs even got a bonus, lifting the $500,000 deduction cap on their executive pay, in one of the most obvious attempts at buying favor I’ve seen in Washington in a while. And the one tax that was supposed to replace everything, a cap on the employer tax deduction for insurance plans, got lost in the shuffle (The “Cadillac tax” on certain high-end plans lives on, but it’s pushed out until 2025, which is a nice way of saying it will never take effect). If you ask Republican leaders how they’re funding this bill, they reply “we are still discussing details.” They have no idea.
The rich almost got away with getting health insurance tax credits as a cherry on top of this sundae; someone had the bright idea to phase those out. And Republicans had to extend the taxes a year more than they wanted, to offset some spending. But that’s a small price to pay. Fundamentally, the ACHA is a tax cut bill, which just happens to make millions of Americans sicker and more vulnerable in the process.
There are a few nods to spiteful conservatives: a one-year ban on Planned Parenthood funding, a bizarrely long section on denying Medicaid to lottery winners that was clearly only written for use in campaign ads next year. But there’s nothing resembling a theory about how to best ensure health treatment for Americans in the most efficient manner, unless “cut taxes and let everyone sort it out themselves” is a theory. Even Donald Trump’s vague ideas about health care, like lowering drug prices and letting insurers sell plans nationally, are absent.
This bill fails on policy and especially on politics. If Democrats had their act together they would run upcoming special election campaigns in Georgia and Montana about just this bill. It will harm virtually everyone who comes into contact with the health care system. Through those consequences, it will only hasten the characterization of the “Obamacare/Obamacare 2.0” framework as unworkable and discredited, and perhaps even accelerate the move to join the rest of the civilized world with a coherent, non-fragmented, universal system. For Republicans, that seems like a lot of cost to help out a few millionaires.
Author: David Dayen