A day late and a dollar....
The Republicans have finally gotten serious about health care reform. The bad news for them is that they are four years too late.
Earlier today, Senators Hatch (R-UT); Burr (R-NC); and Coburn (R-OK) released the details of their Patient Choice, Affordability, Responsibility and Empowerment Act (a.k.a. “Patient CARE Act). Hatch, in particular, is no stranger to health care issues, having co-sponsored the State Childrens Health Insurance Program back in 1997.
The bill largely follows the outlines of a health care reform proposal developed by a group of conservative policy wonks dubbed the “reformocons.” In an article published in Commonweal’s print edition in December, I questioned whether the wonks would find Republican politicians willing to carry their water. I am happy to have been proved wrong, as the return of Republicans to the actual work of legislating is a welcome development.
The bill genuflects in the direction of the Tea Party faithful in its first article, which repeals the Affordable Care Act in its entirety. Sort of. Except for all the provisions dealing with Medicare. And the provision allowing children to remain on their parents’ health insurance plan until age 26. Oh, and several of the insurance regulations too. Did I mention there are subsidies to help people buy insurance? And….well, you get the idea.
This is not to say that the bill does not make major changes to the Affordable Care Act. It eliminates the standard benefit package, the individual mandate, and the federal health insurance exchange. While there are subsidies, they are channeled through the tax system and are less generous than the ACA’s. It also makes significant changes to the federal Medicaid program, giving states considerably more flexibility to redesign their programs but also shifting more of the financial risk from the federal government to the states.
What is striking, however, is how much this “repeal and replace” proposal concedes to the essential structure of Obamacare. The bill retains the ACA’s prohibition on lifetime caps on insurance coverage and requires that insurers allow individuals to enroll in a new plan without premiums being adjusted for their health status as long as they have been continuously covered for more than 18 months. While the bill eliminates the individual mandate, it contains a “soft mandate” in the form of strong incentives for individuals to remain continuously covered or risk losing the aforementioned protection from being re-rated when switching plans.
The overarching vision that underlies the bill is the shifting of more responsibility and risk to individuals. Rather than comprehensive insurance coverage (which they believe is largely responsible for the United States’ excessive rate of health care cost growth), the drafters would clearly prefer a world in which more individuals were covered for truly catastrophic health care costs, but paid more routine costs out of pocket using medical savings accounts.
To give the reformers their due, they do not shrink from trying to move the current employer-based system in this direction. One of the most significant reforms in the bill would make a much larger portion of employer-provided health insurance taxable as income to employees as compared to the ACA. While embraced by many economists on the left and right, such a change will bring significant disruption to the employer-based system. Employers will be in the uneviable position of having to either scale back health benefits or see their employees face hundreds of dollars in tax liability on “income” they can’t spend.
Many questions can be raised about whether the bill will work the way the drafters hope. Greater competition among health plans will not bring costs down unless we are willing to confront the challenge of local hospital and health system monopolies. Health Savings Accounts are usually modelled on IRAs, which have largely failed as a device to get lower and moderate-income families to save more for retirement. Malpractice reform (a cause I support) is a good idea for many reasons, but most studies have found that “defensive medicine” has little impact on the nation’s health care costs.
Nevertheless, I give the authors of the legislation an “A” (well, perhaps a “B”) for effort. The proposal is a serious one. The problem, as I suggested earlier, is that it is four years too late. The absolute earliest that this bill could be passed into law is 2017. By that time, tens of millions of people will have obtained coverage under the provisions of the Affordable Care Act. At that point, the political costs of “repeal and replace” are likely to be more than even many Republicans will want to bear.
If Republicans are dissatisfied with this state of affairs, they have no one to blame but themselves. Back in 2009, the Democrats were desperate for Republican support to put a bipartisan imprimatur on the ACA. If the Republicans had been willing to bring a proposal like this to the table, the result could have been a productive dialogue about the appropriate balance between individual and collective responsibility when it comes to health care. There is much to be said for directing more of the resources that currently flow into health care into other productive uses.
But that was the road not taken. The Republican leadership, led by Senator Mitch McConnell (R-KY), decided that the party’s best course was intransigent opposition. They placed a large bet on the 2012 election that failed to pay off. Now the bill comes due.