GovCare replacement proposal falls short
03/13/17 Filed in: Healthcare
Reader feedback at end.
After years of talking about how they would repeal and replace GovCare (aka Obamacare) if the voters would just empower them to do so, Republicans now control both houses of Congress and the White House. And sure enough, legislation has been introduced in the House of Representatives and cleared by two committees that would supposedly get the job done. Introducing the American Health Care Act; Obamacare is collapsing, Republicans have a plan to repeal and replace it, #readthebill.gop (download PDF).
Read the bill, really? The AHCA proposal consists of two installments of “committee prints,” one to be cleared by the Energy and Commerce Committee and a second to be cleared by the Ways and Means Committee. There is no overall statement of purpose, name of the legislation (a search for “American Health Care Act” yields no results), or even bill number by which the status of the proposal can be tracked over time. One provision after another assumes knowledge of referenced materials with which most Americans aren’t conversant.
But perhaps the following discussion will shed some light on what’s been proposed. Recap – reactions – assessment – path forward.
A. Recap - In lieu of attempting to decipher the text, here’s a layman’s language summary. 23 things you need to know about the Republican Obamacare replacement bill, Sean Williams, foxbusiness.com, 3/7/17.
#Repealed: Individual mandate; Shared responsibility payments; Employer mandate; Advanced Premium Tax Credit (2020); Cost-sharing reductions (2020); Medicaid expansion (2020); Medical device tax (currently suspended); Net investment income tax for upper bracket taxpayers; Medicare surtax for upper bracket taxpayers; Prescription drug tax; Health[care] insurance tax (currently suspended).
#Modified: Dole Medicaid funding out to states on per-capita basis; Permit higher healthcare insurance (HCI) charges to older workers (3:1 ratio limit raised to 5:1); Replace income-based HCI subsidies for individual policies with annual tax credits based on ages with an income-based phaseout; Raise contribution limits for tax-advantaged health[care] savings accounts; Allow insurance companies to charge people who remained uninsured until they get sick a 30% surcharge on HCI premiums for one year; 10 essential minimum benefits clause (federal) stays (with some adjustments) rather than allowing states to set minimum HCI requirements; Defer Cadillac tax on high-end HCI plans supplied by employers until 2025 (currently 2020).
#Retained: No cap on maximum lifetime benefits; HCI can’t be denied based on preexisting conditions; Children can stay on HCI policies of their parents until age 26.
#Added: Patient and state stability fund to create high risk pools and stabilize premiums ($100 billion between 2018 and 2026).
Many other changes to GovCare are contemplated, but aren’t covered in the AHCA. They fall into two categories.
#Revised interpretations on a host of details by the Health and Human Services Department, which was authorized to address them by the Affordable Care Act. Trump agency heads already rolling back Obama-era rules on their own, Adam Shaw, foxnews.com, 3/8/17.
In another example of agencies taking the lead, [HHS] Secretary Tom Price says his department will go through existing health care regulations and try to "get rid" of those they determine hurt patients, as Republicans push an Obamacare replacement bill.
#Additional legislative changes for healthcare, which must supposedly be excluded from the AHCA (to be passed by the reconciliation process) because they aren’t budget-related. For example, it’s intended to permit the sale of HCI policies across state lines, thereby providing more competition, and to tighten limits on medical malpractice litigation. This bifurcated approach raises the possibility of the AHCA passing (with 51 votes needed in the Senate, which Republicans can muster so long as they remain united) and the second bill being blocked by a Democratic filibuster.
The House Republican leadership seems to expect a leisurely pace for the second bill, which might or might not ever be passed, while the president talks about pushing the two bills through the legislative maze in essentially the same time frame. Trump says privately [that] second healthcare bill ready, as early as next week, Sarah Westwood & Gabby Morrongiello, Washington Examiner, 3/9/17.
B. Reactions - Conservatives have expressed strong reservations about the AHCA as it presently stands, with most of the support coming from moderate Republicans and healthcare industry players. Indications are that the present bill can probably pass the House, despite solid Democratic opposition and defections among House conservatives, but the president has been listening to GOP objections and he may well favor some changes to accommodate them. Conservatives find willing negotiating partner in Trump, not in Paul Ryan, on Obamacare repeal, Melissa Quinn, dailysignal.com, 3/9/17.
Conservative tweaks to ensure passage in the House would make the AHCA tougher to pass in the Senate, where conservative Republicans are distinctly in the minority and the margin for error is small. This is shaping up to be a dicey legislative battle, and the outcome may depend on how much “political capital” the president is willing to use. Trump threatens GOP: Back health[care] bill or get primaried, David Drucker, Washington Examiner, 3/10/17.
If negotiations don't reach fruition as the bill readies for a floor vote, Republican insiders said, watch Trump's tweets and travel schedule for signs that he's dispensed with the carrots and brought out the stick to try to get wayward members on board. Party insiders say the president at that point could choose to make an example of one or two resistant Republicans [e.g., Rep. Mark Meadows of western North Carolina] to send a message.
The AHCA has yet to be scored by the Congressional Budget Office, but this “nonpartisan” group will soon opine as to (1) how this legislation would affect projected budget deficits (a reduced deficit outlook is presumably a prerequisite for use of the reconciliation process), and (2) what effect it would have on the number of Americans with HCI coverage. The reliability of such scoring is open to question – we never took the projection of budget savings from the Affordable Care Act at face value – but the CBO’s findings could play an important role in the AHCA debate.
C. Assessment - Policy merits of a hotly contested legislative proposal tend to be subordinated by the political dynamics. The action in this case may wind up resembling what happened in 2009-10 when the Affordable Care Act entered the home stretch and the real arm twisting began. Raising the ante: America’s future is at stake, 3/29/10.
Opponents of GovCare fought the good fight, as is shown in this picture of the “Code Red” rally in Washington on Saturday, March 20. *** But the other side had the votes, and they chose to ignore polls, by-election results (e.g., Scott Brown’s win in Massachusetts), letters, calls, and demonstrations that indicated the public was not on board. The House passed the Senate bill (officially the Patient Protection and Affordable Care Act) in a Sunday session on March 21. GovCare was signed into law by the president on March 23. A House “corrections” bill was sent to the Senate, passed via the reconciliation process albeit with changes that necessitated another vote in the House, and should be signed by the president soon. So the battle is over, and GovCare is the law of the land.
Conservative objections to the AHCA are legion, however, and if they are well taken this legislation would hardly enhance the GOP’s political prospects let alone improving the US healthcare system. Accordingly, let’s review some of the points that have been made.
#The AHCA has been labeled by critics as “half-baked” Obamacare, Obamacare Lite, and even a “stinking pile of garbage” (Rep. Thomas Massie).
#The bill is aimed at the wrong issue, namely perpetuating healthcare subsidies for those receiving them versus reducing healthcare costs for everyone by reducing the disconnect between consumption of and payment for healthcare services. Congressional Republicans’ Obamacare replacement won’t cut it, Michael Tanner, Cato Institute, 3/8/17.
The federal government already subsidizes roughly 87 percent of U.S. health-care spending, either directly or indirectly. These subsidies hide the true cost of care from consumers, making them less price-sensitive and more likely to overconsume. Without consumer pressure, providers have little incentive to reduce costs or improve care. And, compounding this third-party payment problem, Republicans appear ready to drop or scale back plans to cap tax subsidies for employer-provided insurance plans.
#The artificial incentive for Medicaid expansion would remain in effect well beyond 2020. The House GOP leadership’s healthcare bill is Obamacare Lite or worse, Michael Cannon, Cato Institute, 3/7/17.
The House leadership’s bill would not even start to repeal Obamacare’s Medicaid expansion until 2020, more than two and a half years from now, and even then would repeal it only one enrollee at a time. In 2020, states could no longer enroll new able-bodied adults into the Medicaid expansion. Yet the federal government would continue to pay for each and every continuously covered able-bodied adult who enrolled in the expansion before then. And it would do so at the enhanced Obamacare matching rate, in perpetuity, until an enrollee leaves the program.
#Vulnerability to rising premiums and a death spiral in the individual HCI markets would not be cured. Michael Cannon, op. cit.
Since this bill does not repeal the community-rating price controls, repeals the individual mandate, shifts the benefits from Obamacare’s tax credits up the income scale, and tasks states with devising new bailout schemes of uncertain timing and efficacy, the threat of death spirals will remain. *** Premiums will continue to rise. Republicans will take the blame for all of it, because they will have failed to repeal Obamacare, or learn its lessons, when they had the chance.
#HCI coverage would likely be reduced due to watering down of the individual mandate and replacement of current subsidies with a smaller tax credit. Why does the GOP want to push its own version of Obamacare? John Hawkins, townhall.com, 3/11/17.
. . .Avik Roy, a Republican who has written a book about the problems with the Affordable Care Act, speculates that 20 million Americans will lose coverage under the GOP’s version of Obamacare.
#Deficits might be reduced overall, but that’s not a certainty – particularly as the hard decisions are postponed until 2020. Speaker Ryan, this is not what conservative reform looks like, Philip Klein, Washington Examiner, 3/9/17.
The bill would keep Obamacare largely intact between now and 2020, and presumes that Republicans would have the political will to let spending cuts go into effect during a presidential election year. Assuming they do, after 2020, it still makes allowances for enhanced Obamacare-level spending to cover individuals who signed up for expanded Medicaid by that time. And it replaces Obamacare's subsidies to purchase insurance with a new federal subsidy scheme. In addition, the bill introduces new spending that wasn't even in Obamacare.
D. Path forward – SAFE previously suggested a moderate “repeal and replace” approach on grounds that outright repeal of GovCare wouldn’t be politically feasible, but we rejected the apparent inclination to pass a bill that would make a few symbolic changes at the outset and leave most of the heavy lifting until later. GovCare won’t really be repealed, and that’s fine, 12/5/16.
What we would like to see . . . is a serious effort by Republicans to agree on the program they want, unify behind it, and get the bill enacted before the warm glow of the election results is forgotten.
It doesn’t have to be a perfect plan, there’s no such thing in politics, just a plan that would be clearly better than what exists now. And the Trump approach (health savings accounts, sale of HCI policies across state lines, block grant Medicaid coverage) might be a good place to start even if many details remain to be filled in.
A key premise was that an all-in-one bill could be enacted through the reconciliation process, whereas a second bill could be filibustered in the Senate and would therefore require some Democratic support to be enacted. But it’s now being said that non-budget provisions cannot be included in the AHCA – sorry but the Senate parliamentarian is very strict about these things - so a second bill (subject to filibuster) is unavoidable. Paul Ryan faces GOP unity bid on Obamacare, James Antle, Washington Examiner, 3/11/17.
In order to use reconciliation, everything in the bill must be germane to the budget. For this reason, Obamacare taxes and spending can be repealed, but a lot of the regulatory changes free-market healthcare reformers want to see cannot be a part of the initial legislation.
Sorry, but it seems that the Senate rules are being used as an excuse to water down the initially proposed changes to GovCare, and could therefore have a big effect on the provisions that are ultimately enacted. Here’s how one observer put it (we don’t endorse the tone of his rhetoric). Ryan and co. caught in twisted pretzel of lies to preserve Obamacare, Daniel Horowitz, conservativereview.co, 3/10/11.
The bottom line is that the parliamentarian has no right to subject every individual provision of the bill to the “Byrd Rule” (requirement to have a budget effect) instead of looking at the entire bill in totality as a net budget cut. Ryan is simply lying when he says we can’t repeal guaranteed issue and community rating, which have a much greater budgetary impact than almost anything else he does include in the bill.
Whether Horowitz is right about the interpretation of the Byrd Rule or not, the Senate filibuster may well have outlived its usefulness. Justified as a safeguard for full discussion of consequential proposals, it has come to be routinely used to obstruct the legislative process. Accordingly, the time may have come for Senate Republicans to use the “nuclear option” (following a precedent set by Senate Democrats in 2013) to abolish the filibuster altogether. A big cut to regulatory red tape (see concluding portion of Part II), 2/6/17.
It would then be possible to package all the currently contemplated GovCare changes into a single bill, which could be debated, amended and voted on by the two houses of Congress without the distraction of worrying about a filibuster.
To make up for the time required to make this transition and also move ahead on other legislative priorities (e.g., tax reform and developing a budget), the House could consider meeting for more time in April than is currently planned. Paul Ryan defends 8 workdays in April – blames Senate for “do nothing” Congress, Victor Skinner, theamericanmirror.com, 3/9/17.
#You “hit the nail on the head!” Ryan has made the GOP look like the other guys! The “take it or leave it” philosophy won’t fly. There are some major flaws in the present bill. Ryan needs to ask for help. – SAFE director
#Ryan has to go. – SAFE director
#I completely agree that the GovCare bill should include all necessary provisions upfront. Remember what happened to Reagan. Also, it increases trust in government when you are upfront and communicate honestly and effectively and the results speak to all the American people. – SAFE member (DE)