Vol. 172 June 1, 2017 Why Republicans Dislike Obamacare (simplified)

June 2, 2017

“You pays yer money,
and you takes yer choice.”

 

 

The #1 reason is that the Affordable Care Act (ACA) expanded health insurance to at least 23 million voters in the name of Obama, a Democrat.

The #2 reason is that Obamacare is costing the federal government more than the Congressional Budget Office (CBO) predicted.

That is because more of the uninsured enrolled in Medicaid than predicted and less than predicted bought policies through the health insurance exchanges. I am sure that there are all sorts of complex economic reasons for that, but to my mind it seems pretty simple.  If Medicare is the Gold Card of health insurance, Medicaid is at least the Silver Card.  The Medicaid card is accepted by all hospitals and ERs (by law) and many physician specialists. Even some behavioral health services can be paid for with the card. Medicaid insurance is always state-funded, and each state develops their own program.”If you know one Medicaid program, you know just one Medicaid program.”

Obamacare increased federal subsidies to states that expanded people’s eligibility ( i.e.; by raising eligible income levels) for Medicaid insurance. Federal subsidies existed for the first few years, but Medicaid costs would eventually be borne by the individual states’ taxpayers. If you are the Republican governor of a state running for reelection every four years you’re probably not enthusiastic about that. However, one Republican Governor ( Romney of Massachusetts) had already expanded that state’s Medicaid eligibility to achieve nearly 100% insured. The present Republican Governor (Baker of Massachusetts) will be very unhappy if he loses the federal subsidies to Medicaid under Trumpcare.

Health insurance exchanges were supposed to recruit into the health insurance risk pool a lot of healthy young people not covered by employer-based plans. These healthy young people would need less health care than their elders, so their premiums would be a “net plus revenue” to the insurance companies. When that “net revenue” did not appear as large as expected several companies withdrew from the exchanges with much media attention. The “individual mandate” tax which was supposed to “incentivize” the uninsured to buy policies through the exchanges was apparently too low to work.

So, the essential elements of the Republican “replacement” of Obamacare are to:
1) roll back federally subsidized Medicaid expansion and
2) do away with the health insurance exchanges with their federal subsidy of premiums and the associated “individual mandate”.

Of course, Republicans propose to keep the more popular benefits like required coverage for pre-existing conditions and coverage for children up to age 26 living at home. Obamacare also established a new standard definition of “essential benefits” such as pregnancy and other maternal benefits and put a maximum cap on premiums for the elderly. One Republican proposal would define pregnancy as a “preexisting condition” and deny coverage. Watch for further developments in evolving Senate proposals.

The predictions of the CBO in the past (since Nixon created it on the way out the Oval Office door) have been more nearly correct than those of most other agencies and organizations. It’s reputation as bipartisan and objective remains intact. The publication of Republican “replacements” before the CBO’s analysis could be carried out clearly hurt the credibility of their proposals.

Multiple evidence-based studies and the experience of all other developed countries with government-based health insurance (does NOT have to be a “single payer”) have shown that providing universal health insurance in the long run saves money;
-by providing access to medical care for all citizens,
-by enhancing the cost-effective introduction of new technology,
-and by rationalizing the resource allocation of a defined budget.

We have a history of difficulty in taking the long view. For example, the initial enthusiasm for preventative/wellness programs exhibited by the early HMOs eroded considerably when they realized that the policy holder might not be with the same insurance company when the time came years later to reap the benefits of good health (less medical care expenses).  Certainly Governors, congressmen, and other public officials with short 2, 4, or 8-year terms have little incentive to always appreciate the long-term cost benefits down the road. (“No regulations to fight against climate change” comes to mind)

So as “they”say, being either the British magazine Punch in 1846 or Mark Twain in 1884 in “Huckleberry Finn”,
“You pays yer money, and you takes yer choice.” 


Vol. 167 March 15, 2017 AHCA (RepubliCare) Revealed

March 15, 2017

WINNERS: Young, Wealthy, Healthy, “Blue States” (urban millennials)
LOSERS: Older, Poor, Sick, “Red States” (rural working poor)

The American Health Care Act (AHCA) was developed by Paul Ryan (R) who has been publicly promising a Republican health care act since 2009!  He apparently does not want his name attached to this one. Neither does Trump. So I choose to call it “RepubliCare”.

The Congressional Budget Office’s “quick and dirty” analysis of the American Health Care Act (actually two bills still in committee) estimates that 14 million people will lose their health insurance in 2018 if it “replaces” the Affordable Care Act (Obamacare). Of all the projections, this one is probably the most crucial, since it will be a factor in the mid-term elections.

The CBO is a non-partisan, independent body created by President Richard Nixon in his last act before resigning in 1974. The CBO aids Congress in developing their own budget proposals, in objectively costing out their proposed bills, and in analyzing budgets developed by the Executive branch. The Commonwealth Fund (a liberal think tank) has determined that all financial projections of ACA costs were inaccurate, but that the CBO was closest to the actual. This current CBO report was done in association with the Congressional Joint Committee on Taxation. It is “quick and dirty” because the sudden appearance of the two bills surprised them. The CBO states it had insufficient time to project the cost effects on states and other “macroeconomic” effects, as required by the House of Representative rules for any “major legislation”.  The published projections actually represent the mid-point between low and high estimates, neither of which have been made public.

RepubliCare is projected to trim $337 Billion off the federal deficit over 10 years. According to the CBO most of the increase in the uninsured and the cost savings (federal only) would result from repealing the individual mandate, lowering the federal subsidies for low-income non-group policies, decreasing the federal subsidy to Medicaid by going to “block grants” to states, and stopping any expansion of Medicaid coverage after 2020.

CBO had three weeks to analyze the ACA. They had 5 days with RepubliCare. CBO 2010 projections of the ACA costs were lower than actual because 1) more people opted for Medicaid coverage than expected, 2) actual Medicaid costs per enrollee were higher than expected,  3) the individual mandate (currently a $695 yearly penalty for not buying health insurance) proved too weak an incentive for young people to buy insurance, 4) health insurance exchanges (the private insurers market place) attracted only about half of the projected number of people, and 5) the general economy improved slower than estimated (“did not match the Ronald Reagan Recovery curve.”)

Rather than boring you with repeats of the number of “millions losing health insurance per year” under RepubliCare, here are some “fun facts” about it you can use to punctuate chats with your friends and colleagues:

  • It is 66 pages long. (That calculates out to about 8.25 pages per year for the writing pace of Paul Ryan (R).
  • 6 pages are devoted to changes in Medicaid eligibility rules, including the interesting item prohibiting any Lottery winner from being eligible for Medicaid.
  • replaces the individual mandate ($695 penalty tax) with tax credits worth about 1/12th of the average yearly insurance premium (for anyone, of course, who has a taxable income).
  • eliminates the 2.3% tax on medical devices. (The Advanced Medical Technology Association is the only Massachusetts medical organization that has expressed support of RepubliCare so far)
  • eliminates the 10% tax on tanning stores (Probably a blatant try for support from Trump and ex-senator John Boehner (R). Actually, pale Paul Ryan (R) could use a visit or two, though universities and colleges across the country are limiting student access to tanning stores because of the increased risk of melanoma).
  • removes coverage for substance abuse and mental health services by 2020.
  • eliminates tax surcharge on insurance executives “earning” more than $500,000 a year.
  • eliminates tax on big pharma-manufacturing companies
  • delays implementation of 40% tax on “Cadillac” health insurance policies for high income people until 2025.
  • prohibits Medicaid reimbursement to Planned Parenthood for any of their services. (a major source of revenue for the 97% of preventative and non-abortion treatment services PP provides)
  • retains prohibition against denying pre-existing conditions (but imposes a 30% surcharge for such for 1 year).
  • retains coverage of children under 26 on parents’ policy.
  • retains coverage for contraceptive and maternity benefits.
  • retains prohibition of any surcharges on women’s policies (“gender equivalence”)
  • allows elders to be charged 5 times the premium of younger people. (AARP is all over this one as age discrimination) ACA allowed a 3:1 premium ratio.
  • increases maximum contributions to Health Savings Account (HSA) from $3,400 to $6,500. ( Great , if you are making enough money to save.)

Liberals, Democrats, many Republicans, many governors, hospitals, physicians, the AARP, and even conservatives don’t like the bill.

“The AHCA does what it was intended to do; it lowers federal spending and reduces the number of people with health insurance.” (Michael Chernew, MD, Harvard University)

“ It would repeal far less of ObamaCare than the bill Republicans sent to President Obama one year ago. The House Republican leadership bill does not replace ObamaCare. It merely applies a new coat of paint to a building that Republicans themselves have already condemned.” Cato Institute 

Republicans in Congress are claiming that the CBO did not cover the “whole” plan. “What was not covered was what else we are going to do in terms of ‘regulation reforms’, state Medicaid rules, and future bills.”

I believe we are being asked to buy a hastily produced “pig in a poke”, an even bigger pig in a bigger poke than Obamacare.


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