Senate healthcare do-over looks iffy

Reader feedback at end.

As discussed last week, liberals have condemned the American Health Care Act (AHCA) in no uncertain terms. Now we’ll see that conservatives aren’t keen on this bill either, and that it lacks strong public support.

House Republicans passed the AHCA on May 4 by a very narrow margin, and the primary impetus was to get out of a political box. Having been promising for years to “repeal and replace” the Affordable Care Act (ACA or GovCare), deferring action after finally getting the votes to make good on their promise would make the GOP look ineffectual.

The AHCA would arguably improve the healthcare system over time, notably by slowing the projected growth of Medicaid outlays. This bill doesn’t promise any concrete deliverables for healthcare consumers, however, which GOP candidates could tout in the mid-term elections next year. Health[care] insurers: Rate hikes likely under Trumpcare plan, Tom Howell, Washington Times,
5/10/17.

• Anthem, which [has already] requested a 34 percent [rate] increase in Connecticut, said if “cost sharing”] payments [provided under the ACA] aren’t guaranteed [to be continued] by early June, it will have to raise rates, trim its offerings or exit the Obamacare markets altogether.

• Insurers seeking increases from Maryland regulators, meanwhile, cited Mr. Trump’s wavering commitment on the individual mandate requiring Americans to get insured or pay a tax. “Failure to enforce the individual mandate makes it far more likely that healthier, younger individuals will drop coverage and drive up the cost for everyone else,” said Chet Burrell, president and CEO of CareFirst Blue Cross Blue Shield.


Perhaps Senate Republicans can devise a better healthcare bill, but one wonders what such a bill would look like or whether they could muster enough votes to pass it. The only certainty is that the legislation will seek to shore up the foundering marketplaces for individual healthcare insurance (HCI) policies in some fashion.

I. Criticism from the right – Here is an illustrative sampling of conservative commentary about the AHCA. Poorly designed – politically clumsy – murky – defensive.

#POORLY DESIGNED - For those seeking lower healthcare costs, the AHCA would be a bust. Changes to slow the growth in federal Medicaid outlays would be delayed, notably by keeping the window for raising the income ceiling for Medicaid enrollment open until 2020, and might well be reversed before going into effect. As for state waivers of ACA requirements (such as the rule against denying HCI due to preexisting conditions), it’s unclear how many states would request such waivers or whether future administrations would continue to honor them. Obamacare repeal effort stumbles into Senate, plagued by philosophical incoherence, Philip Klein, Washington Examiner,
5/4/17.

The result is a plan that repeals and replaces the law in a piecemeal manner and disrupts the insurance market in ways that health[care] policy enthusiasts are still trying to figure out. Republicans are engaging in a debate over how many people they can cover and whether the bill does as much or more than Obamacare for individuals with pre-existing conditions, rather than producing a bill that would reduce costs. They've surrendered on philosophy and managed to vote for a politically unpopular bill anyway.

Far from curing malfunctions in the HCI marketplace, which have put insurance firms under pressure to hike premiums and limit coverage, the AHCA would make them worse. Premiums would predictably keep rising, and the results would only make sense in political terms. GOP healthcare bill is not repeal – it is Obamacare Lite, or worse, Michael Cannon, Cato Institute,
5/4/17.

. . . Republicans, Democrats, and the media all have an incentive to pretend the AHCA would repeal Obamacare. Republicans don’t want their base to know they are reneging on their promise of repeal. Democrats want to frighten their voters into opening their checkbooks and turning out at the polls in 2018. The media love to sell ads.

Denial of HCI based on preexisting conditions was a rarity before the ACA was enacted, i.e., this “reform” legislation exacerbated the very problem that it was supposedly enacted to solve, Perhaps the time has come to reintroduce solutions that were in vogue before 2010. Obamacare’s pre-existing failure, Jeffrey Singer, Cato Institute,
5/2/17.

Several states, such as Wisconsin and Maine, set up subsidized high risk pools that worked well to provide these people with insurance at a rate that was not out of reach. The market was also responding with the appearance of health status insurance, a product that basically insures younger, healthier people against the risk of someday being unable to obtain new health[care] insurance because they developed a pre-existing condition. The policy then pays the premiums for their new insurance. United Health Care already was out with such a product in 2008. Allowing people to form association health[care] plans, much in the way that large companies become self-insured, would also help ameliorate this problem by giving greater numbers of individuals access to group health[care] coverage. But Obamacare made those solutions irrelevant and unavailable.

#POLITICALLY CLUMSY - In principle, Republicans should repeal the Affordable Care Act, lock, stock and barrel, and then propose a series of provisions to secure some offsetting benefits in an efficient and transparent manner. Reforming the existing structure is a hopeless task, which ensures Republicans will “own” the resulting system. House Republicans take ownership of failing Obamacare with Trumpcare vote that doesn’t repeal Obamacare, Ben Shapiro, dailywire.com,
5/4/17.

#MURKY - Few Americans say patients with very costly medical conditions should be expected to pay the foreseeable excess costs out of their own pockets or forego treatment, so what are the alternatives? (1) Shift the excess cost to other HCI buyers, as the ACA does. (2) Shift most of the excess cost to taxpayers via subsidized high risk pools. (3) Have the government cover the care of high risk patients directly. Each approach has pros and cons; neither party has addressed them forthrightly. The vexing question of “preexisting conditions,” Michael Tanner, Cato Institute, Cato Institute,
5/10/17.

In their endless quest to be a little bit pregnant on the topic, Republicans have crafted a bill that manages to borrow the worst aspects of all the above models, and their unwillingness to be frank about the tradeoffs involved deserves all the derision it has received. But if Democrats have a better answer, we have yet to hear it.

#DEFENSIVE – Clearly the AHCA provisions are deeply flawed; why couldn’t the Republicans come up with something better? Perhaps they have spent too much time playing defense, and forgotten how to craft positive policies and legislation. Why Republicans can’t replace Obamacare, John Goodman, forbes.com,
5/1/17.

Premiums are too high. Deductibles are too high. Doctor and hospital networks are too narrow. Millions are gaming the system by staying uninsured until they get sick or by stopping their premium payments in the ninth month – knowing that they won’t have to pay medical bills for the rest of the year. Insurers are leaving in droves. One third of the counties have only one insurer left. After Blue Cross leaves, in most cases there will be none. So, why can’t Republicans do anything about it?

II. Eroding public support – Legislative action should not necessarily be based on the shifting and often hard to read tides of public sentiment, but politicians pay attention to opinion surveys and polling indicates that Democrats are winning the messaging war on healthcare. Republicans confront health[care]-bill backlash, Stephanie Armour & Kristina Peterson, Wall Street Journal, 5/8/17.

GOP leaders and the Trump administration are urgently trying to tamp down a backlash from Democrats and some Republicans who say the House legislation rolling back and replacing much of the Affordable Care Act would imperil coverage for millions of Americans.

One might have expected a bump in support for the GOP approach on healthcare reform after the AHCA was passed by the House, but public opinion shifted in the opposite direction. Voters who approved of the bill fell from 42% to 38%, while voters who disapproved of it rose to 44%. And voters seemed skeptical that this legislation would provide significant benefits if enacted. Support for GOP health[care] bill declines, Steven Shepard, politico.com,
5/10/17.

Fewer believe the bill will make the healthcare system better (26 percent) than believe it will make it worse (41 percent). Only a quarter think it will make the quality of care better, while 36 percent think it will make it worse. Just 19 percent think the bill would increase the number of Americans with health[care] insurance — far fewer than the 46 percent who think fewer Americans would have insurance.

Another poll indicated that 48% of respondents felt the AHCA was a bad idea compared to only 23% who were supportive. The results varied by party affiliation, but even among Republicans only 52% said this bill was a good idea. By 2-1 margin, Americans think GOP health[care] bill is bad idea, Tom Howell, Washington Times,
5/15/17.

Meanwhile, approval of the Affordable Care Act (GovCare) – after years of majority disapproval – is on the rise. “Half of voters now approve of the 2010 Affordable Care Act, while 42 percent disapprove.” Support for GOP health[care] bill declines, op. cit.,
5/10/17.

What’s going on, it seems to us, is that Americans “want to have their cake and eat it too” when it comes to healthcare. Thus, they favor unlimited healthcare for everyone, provided the bulk of the cost will be paid by someone else – which is basically what Democrats promised to get the Affordable Care Act enacted in 2010 and what Republicans have said in making the case for “repealing and replacing” it.

There is no way such a promise can be kept, however, as most people probably realize at some level. Government mandates and subsidies dull the incentives for patients and healthcare providers to voluntarily limit their consumption of healthcare services, thereby boosting demand and driving up cost. Either the American public will pay for the applicable subsidies (e.g., via rising taxes) or the government will limit its healthcare outlays by imposing de facto rationing.

Absent evidence that the AHCA would fundamentally improve matters, Americans are understandably cooling on the prospect of another overhaul of the healthcare system.

III. Senate do-over - The AHCA reportedly faces a complete rewrite in the Senate, and some 13 Republican senators have been enlisted to work on the Senate bill, versus have it developed by one or more of the standing committees. Even if there are no committee proceedings, however, all senators will have an opportunity to offer amendments on the bill once it is introduced on the Senate floor. Senate Majority Leader Mitch McConnell has said there is no timetable for completing the exercise. Senate GOP plans secret health[care] debate that may take months, newsmax.com, 5/10/17.

Basically, the working group faces a choice. It can develop a bill that would (A) address some of the Democratic complaints about the AHCA, basically abandoning the promise to “repeal and replace” GovCare, or (B) downplay government controls over the healthcare system while introducing more choices and competition. There is no way to make both sides happy.

Approach A seems more likely. First, there isn’t much evidence of public support for a more conservative bill. Second, Republicans control the Senate by a 52-48 margin, which would suffice to pass a healthcare bill under the reconciliation process if they all stuck together but leaves little margin for error. More than two GOP defectors could doom any healthcare bill put forward, and many Republican senators are moderates versus genuine conservatives.

Some Republican senators have been publicly staking out positions on the healthcare bill, and a spirited debate appears to be going on. Here are some examples:

WORKING GROUP has been reviewing the expansion of Medicaid to higher income levels in opt-in states. The AHCA would keep this feature alive until 2020, after which a state could choose between a block or a per capita cap. Conservatives would like to unwind the expansion faster, while centrists want to do it slower. Senators get tough reality check on Obamacare repeal, Robert King, Washington Examiner,
5/17/17.

ROB PORTMAN (R-OH), LISA MURKOWSKI (R-AK), et al. expressed concerns about scaling back Medicaid funding for their states. The Senate’s turn to ponder healthcare, Peter Morici, Washington Times,
5/9/17.

SEN ORRIN HATCH (R-UT) was asked whether the Senate bill would follow the House bill and repeal all taxes imposed by the ACA. His noncommittal response: “It’s going to be negotiated.” Other senators have reportedly expressed concern that repeal of these taxes “could jeopardize the prospects of helping the uninsured obtain coverage.” GOP senators: Obamacare taxes aren’t necessarily going away, Sahil Kapur, bloomberg.com,
5/9/17.

SEN. BILL CASSIDY (R-LA) protested proposals to roll back ACA regulations for HCI unless a state has affirmatively opted to keep them, claiming that such provisions would violate pledges of the president that coverage of people who are currently insured and/or have preexisting conditions would not be taken away. Key GOP senator says Obamacare repeal plan violates Trump’s pledge, Kimberly Leonard, Washington Examiner,
5/16/17.

SEN. JOHN HOEVEN (R-ND) said repeal of the individual mandate (to acquire HCI or pay a “tax”), which would be immediate under the AHCA, might be deferred for some time, e.g., until 2020 according to one source. Obamacare’s individual mandate could stick around, Robert King, Washington Examiner,
5/17/17.

SEN. TED CRUZ (R-TX) has urged expansion of the Senate bill to include provisions that were excluded from the House bill on grounds that they weren’t sufficiently budget-related for the reconciliation process and should be reserved for a second bill (which predictably would fall through the cracks). Ted Cruz shops one-and-done bill to repeal and replace Obamacare, Susan Ferrechio, Washington Examiner,
5/9/17.

A member of the Senate Republican healthcare working group [Cruz] is working to build support for an alternative to the House-passed Obamacare repeal bill, one that allows for cross-state insurance purchases, and includes medical malpractice reform, health savings accounts and the expansion of association health[care] plans.

IV. Assessment - Some observers believe this story may have a happy ending, at least in the longer term. GOP healthcare sausage is good for you, Holman Jenkins, Wall Street Journal, 5/6/17.

We’ll say it again, now for the Senate’s benefit: Apply a few GOP-style fixes and Obamacare, or something like it, becomes a solution to America’s health-care muddle. You could phase out every other federal program, including Medicare, Medicaid and the giant tax handout to employers, and roll their beneficiaries into Obamacare. Congress could start making rational judgments about whom to subsidize and whom not to subsidize. Do all seniors need a handout, or only the poor ones? And surely no Congress would re-up to the current employer tax benefit, which gives its biggest handout to the highest earners while producing all the pathologies the employer-centric payment system is heir to.

Others say GovCare has gone too far to stop, making the inevitable endpoint a “single payer” system. [Charles] Krauthammer predicts single payer healthcare in less than 7 years, foxnews.com,
5/4/17.

"[Republicans] have sort of accepted the fact that the electorate sees healthcare as not just any commodity, like purchasing a steak or a car," Krauthammer explained. "It's something now people have a sense the government ought to guarantee." He went on to predict [possibly reflecting his own policy preferences], that the country will never go back to a market-based system.

Here’s our take. For all its imperfections, the AHCA would improve the current healthcare system somewhat. And the Senate could develop a better bill, if Republicans unite behind the goal of bringing down healthcare costs and clearly articulate how they propose to do so. If the primary focus becomes maintaining (and eventually growing) the HCI expansion that has occurred under the ACA, however, then Dr. Krauthammer will be proven right.

**********FEEDBACK**********

#You cannot cover preexisting conditions and call it insurance.  It is welfare, pure and simple.  The assigned risk pool, with premium contributions based on income, is the best way to handle the problem. The private insurers will need to shift the cost of insuring these high-risk applicants by adding their contributions to the cost of premiums paid by more healthy applicants. Government funding is also required, because society has decided that access to healthcare is a right. I thought it was something you earned - silly me. – SAFE member (DE)

#Politics as usual, with all the players getting their pound of flesh. – SAFE director

#I think Republicans in both houses face an uncertain 2018 election. Finding a popular solution to meet the healthcare needs of everyone seems “iffy” at best. – SAFE director

#Any thoughts on this note, which I received from Senator Bob Casey in Pennsylvania? – Retired financial manager
“The CBO numbers of the GOP’s health care bill just came out, and they prove what we already suspected: This bill is a disaster for everyday Americans. House Republicans rammed this bill through without a second thought about its harmful effects on the American people. But now we know it will strip 23 million Americans of their coverage, slash billions of dollars from Medicaid and gut protections for people with preexisting conditions if it passes the Senate. *** I’m fired up to fight this bill with everything I’ve got – and I need to hear from you before the Senate votes. Do you have a minute to let me know how you feel about the GOP healthcare bill?"

RESPONSE: Senator Casey is repeating a key Democratic talking point, probably the top one on their list.  House healthcare bill draws heavy flak, 5/15/17. However, the CBO prediction of what would happen because of the House bill is unreliable.  First, they don’t know how people would react if they were allowed to sign up for lower cost options instead of being told that only plans approved by the government count as healthcare insurance (HCI).  Second, they don’t know what would happen to HCI coverage if the government insurance exchanges started going under because no insurance companies were willing to keep participating at a guaranteed loss.  Congress, be bold on Obamacare, Washington Examiner, 5/26/17.  The House bill is not going anywhere, and Senate Republicans may not come up with a better replacement.  If they fail, the ultimate answer will be a bailout for the HCI exchanges - and the healthcare system will keep heading south.

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