What Might the Republican Health-Care Reform Endgame Be?: Tuesday Focus/The Honest Broker for the Week of April 12, 2014

April 8, 2014

It is unclear whether Paul Ryan understands what he is doing or not. But if he does, he is laying it all out there–that the Republican health-care endgame is as follows:

  • If you are already sick, have the wrong genetic markers, or are poor, the plan is for you to beg at your church for money to pay your health care bills.

  • Health insurance is to be reserved only for those from the middle class who lack adverse genetic markers and who have no preexisting conditions.

  • Why? Because freedom!

I swing back and forth between thinking that Paul Ryan understands, thinking that he does not understand, and thinking that he just isn’t thinking about it but, instead, simply taking whatever step looks most solid without raising his eyes…

Republicans, see, are still committed to requiring states to allow the purchase of health insurance from companies in other states. That means the end of any state’s ability to regulate its own insurance industry, as some state will decide to be for health insurers what Delaware was for large corporations.

Republicans, see, are still committed to ending the tax preference for employer-sponsored health coverage. That means that employer-sponsored insurance for large corporations that can promise a representative population to insurers will no longer be the rule.

And Republicans are committed to stopping redistribution from the “makers” to the “takers”. And who are the genetically disfavored, the poor, and those with preexisting conditions but “takers”?

Thus if you pull out from the wall the brick that is guaranteed issue, community rating, and a mandate to purchase, the wall collapses. And Ryan wants to pull out the brick. Only if your employer decides to assume the role of a government and offer employer-sponsored health insurance to its employees even after the Republicans have removed the big financial reason for employers to do so will you be able to buy health insurance if you are poor, unlucky in your genetic markers, or suffer from a preexisting condition.

How poor? How unlucky? How suffering?

We do not know. It would be interesting to see how robust a private-sector health insurance market would survive if we were to adopt Paul Ryan’s dream and eliminate all effective state and federal regulation and rules-setting for health insurance. I don’t think it would be very pretty. It would teach health economists a lot if we were to do the experiment.

All this is well-known. It was for these reasons that Mitt Romney, when he decided to be serious about health-care reform, went for the individual mandate to purchase health insurance–what was then called the Republican “responsibility principle”: standing up and taking responsibility for paying (a share of) the bills you incur. And it was Democrats in Massachusetts in 2005 who whimpered about how an individual mandate to purchase, if not accompanied by a large-enough subsidy pool, can turn into a very regressive and burdensome tax.

It still seems to me that we have a choice between single-payer world and Romney world. We have wound up half-and-half, largely because insurance companies don’t see a lot of money from collecting premiums from the Medicaid and near-Medicaid or paying bills for the Medicare population. But Ryan and today’s post-Governor Romney Republicans want a third option. But what is it, other than telling people to beg at their churches if they want medical treatment and are either not rich, not genetically pure, or not currently disease-free?

And let me say, as I have said before, that it did not have to be this way. Republicans are supposed to be all about structuring the competitive free market so that it will work and do its job. In the case of a market riddled with adverse selection and moral hazard like the health insurance market, properly structuring the competitive free-market requires doing whatever is necessary to squelch adverse selection and moral hazard. That means community rating, guaranteed issue, and a mandate to purchase, or some reasonable facsimile of those three. The position of the Democratic wing of the Democratic Party on healthcare reform was that the market failures identified by Arrow were too great for us to be confident that any set of regulations could properly structure a competitive free market. Thus we needed, at the very least, a public option escape-valve, just in case the private-insurance market could not sustain itself at near-universal coverage.

Thus Obamacare–nationwide RomneyCare–without any public-option escape-valve could have been spun as and in fact was a conservative Republican policy victory: as the plan that President Romney would have proposed, albeit with Medicaid privatization rather than Medicaid expansion at the low-cost end of the market.

And now a number of people–Republicans and others–are watching and trying to figure out what the Republican healthcare endgame is going to be. Things that strike me as worth reading:

Karoli: Paul Ryan Admits Pre-Existing Conditions Exclusions Would Come Back After GOP Repeals ACA: “Paul Ryan has a message for all of us who are now free of the bondage of pre-existing conditions exclusions…

…”Suck on this.”

Washington Post:

House Budget Committee Chairman Paul Ryan (R-Wis.) says in a new interview that it would be too costly for Republicans to reinstate some of the more popular provisions of Obamacare if and when the law is repealed, but that Republicans should look for alternatives….

If you look at these kinds of reforms, where they’ve been tried before — say the state of Kentucky, for example — you basically make it impossible to underwrite insurance. You dramatically crank up the cost. And you make it hard for people to get affordable health care.

And this is reason number umpty-zillion why it’s imperative that we toss these jerks out of office forever. He really believes this…

Ross Douthat: Jindalcare and the G.O.P. Dilemma: “Instead of the sort of easy unraveling…

…that some Republicans had convinced themselves was in the offing… the only way the things conservatives dislike about Obamacare will ever change or go away is if conservatives actually unite around reforms or a replacement that sustains some of the current law’s coverage expansion…. My sense is that some Republicans half-agree…. The health care reform proposal rolled out by Louisiana Governor Bobby Jindal this week offers a specific example of how this perspective cashes out…. Jindal’s proposal explicitly starts with the 2008 baseline, and promises not to tax or spend a dollar more. His proposed reform would convert the open-ended deduction for employer-provided insurance into a flat deduction, extend the same deduction to people outside the employer market, and channel $100 billion over ten years to the states to provide for high-risk pools and other measures to help cover people with pre-existing conditions…

Note that $100 billion over 10 years is $10 billion a year, and divided by 40 million uninsured is $250 per uninsured per year. That’s not going to do much at all. But $100 billion sounds like a big number–in the largely date-free zone that is New York Times op-ed page world, at least.

Douthat continues:

If you replaced Obamacare with Jindalcare in 2017, you’d see a coverage expansion relative to the Bush era, but a large number of the newly-insured would lose coverage without any immediate prospect of regaining it…. Jindal was pressed on why he chose to offer a tax deduction for individuals to purchase insurance rather than a refundable tax credit…. lower-income Americans don’t pay enough taxes for the deduction to be valuable…. He said that he decided on the deduction approach because relying on tax credits would be so costly that it would require tax increases…. He said that whatever amounts of money conservatives were willing to allocate to address a problem, Democrats would always be willing to spend more, so conservatives cannot get into a bidding war….

Politically, I don’t think there’s any question that Jindal’s argument — go back to the pre-Obamacare baseline, expand coverage modestly relative to that — would play well with at least part of the G.O.P. electorate in a primary campaign…. But… for most center-right health policy experts and opinion-makers, the assumption has taken hold that coverage levels must be sustained or even increased under any comparable reform. They believe the argument in favor of universal coverage has been lost, and that any plan which kicks people off of an entitlement program is doomed to fail, politically….

My expectation is that with Obamacare in place, the psychology of loss aversion changes this calculus…. Voters will feel… morally uncomfortable supporting a candidate who promises to strip other people’s coverage… over the next few years, even voters who dislike Obamacare and aren’t getting subsidies are likely to internalize the idea that they now have an additional backstop in the event of job-loss or illness…. It’s actually slightly crazy for Republicans to bet this way given the other options available to them….

Some version of a more catastrophic-focused reform could actually enroll somewhat more Americans in some kind of basic coverage than Obamacare, at a substantially lower cost…. Which in turn would offer Republicans an opportunity to effectively outbid the Democrats on enrollment while significantly underbidding them on spending…. And to pass up that unusual opportunity in favor of a probably-doomed fidelity to a nearly decade-old baseline … well, I suppose it would be very much like the Republican Party I’ve come to know and love so well.

Brian Buetler: Paul Ryan’s honesty problem: How he just exposed GOP’s true Obamacare intentions: “Democrats are jumping all over Paul Ryan…

…for telling Bloomberg TV that if Republicans repeal the Affordable Care Act, they won’t reimplement Obamacare’s popular requirement that children can stay on their parents’ health insurance plans until they’re 26….

Before the ACA, most states didn’t guarantee coverage to the ill, or prohibit price discrimination against them. Ryan’s correct that guaranteeing coverage and prohibiting price discrimination is a recipe for much higher premiums, but only because he omits the individual mandate…. Republicans really don’t believe that insurers should be prohibited from discriminating against the ill. He and other Republicans will vaguely claim to support setting up state-based high-risk pools for people with pre-existing conditions. Coverage ghettos of a sort for the ill. That would be better than nothing if they were genuinely committed to financing them. But financing them would cost hundreds of billions of dollars a decade, and the one time House Republican leaders tried to come up with a tiny fraction of that cost for Obamacare’s transitional high-risk pool program, conservatives rebelled and the legislation failed.

Steve M: What Paul Ryan Said Was No Accident: “I can’t believe Ryan…

…”accidentally revealed the truth.” I can’t believe he said more than he intended to say. Republicans — and Ryan in particular — aren’t ashamed of the fact that they reject guaranteed coverage, or reasonably priced insurance for people in high-risk categories. On the contrary, they’re quite content with the fact that they leave a lot of people vulnerable. You have to understand the philosophy of modern conservatism, a key tenet of which is that it’s wrong to provide something good to everyone….

If we–the people favored of God–deign to help them out with our Christian charity, then we’re virtuous people, and God loves us. But arranging society so that such people are helped routinely is just a way of ensuring that the sinful and undeserving will be rewarded. Paul Ryan is addressing his remarks to people who share this worldview. They’re called “the Republican base.” He knows they agree with him. What he said was directed at them — and not by accident.

Paul Krugman: Rube Goldberg Survives: “Obamacare has made a stunning comeback from its shambolic start….

The original target of seven million signups, widely dismissed as unattainable, has been surpassed…. You don’t find many Obamacare opponents admitting outright that 7.1 million and counting signups is a huge victory for reform. But their reaction to the results — It’s a fraud! They’re cooking the books! — tells the tale…. So why are many reform supporters being diffident, telling us not to read too much into the figures?… The Affordable Care Act is… a Rube Goldberg device… to do something inherently simple. The biggest risk to reform has always been that the scheme would founder on its complexity…. Now, the complexity shouldn’t be exaggerated…. And it has to be as complicated as it is. There’s a reason Republicans keep defaulting on their promise to propose an alternative to the Affordable Care Act: All the main elements of Obamacare, including the subsidies and the much-attacked individual mandate, are essential if you want to cover the uninsured….

It’s a system in which many things can go wrong; the nightmare scenario has always been that conservatives would seize on technical problems to discredit health reform as a whole. And last fall that nightmare seemed to be coming true….

And, yes, it’s also a big political victory for Democrats… a system that is already providing vital aid to millions of Americans, and Republicans — who were planning to run against a debacle — have nothing to offer in response. And I mean nothing…. So my advice to reform supporters is, go ahead and celebrate. Oh, and feel free to ridicule right-wingers who confidently predicted doom…. Rube Goldberg has survived; health reform has won.

Ross Douthat: Health Care Without End: “SO you think it’s finished?…

…So you think now that enrollment has hit seven million, now that the president has declared the debate over repeal “over,” now that Republican predictions of a swift Obamacare unraveling look a bit like Republican predictions of a Romney landslide, we’re going to stop arguing about health care, stop having the issue dominate the conversation, and turn at last to some other debate instead?… It’s never over…. But for the foreseeable future, the health care debate probably isn’t going to get any less intense… years, decades, a generation: a grinding, exhausting argument over how to pay for health care in a society that’s growing older, consuming more care, and (especially if current secularizing trends persist) becoming more and more invested in postponing death….

Obamacare has stabilized itself without fully resolving any of its internal problems. The liberal victory lap last week was half-earned…. But… it may fall short of universality by a much larger margin than the law’s supporters hoped…. So even with the new Medicaid enrollees and the twentysomethings added to their parents’ plans, the number of newly insured could end up around three or four or even five million short of the 13 million that the Congressional Budget Office predicted for Obamacare’s first year…. Repeal may really be a dead letter, in other words, but don’t be surprised to wake up in 2020 to endless arguments about a reform of the reform of the reform….

It’s important to note, of course, that this “worse” will be the result of betterment: our political debates will be consumed by health care because of all that medicine can do for us, and we’ll be arguing about how to sustain what earlier generations would have regarded as a golden age. But there’s a reason that golden ages can diminish into twilight–because the demands of the present can crowd out the needs of the future, and because what’s required to preserve and sustain is often different, in the end, from what’s required to grow.

Scott Lemieux: The Republican Offer On Health Care Remains Worse Than Nothing: “Paul Ryan would repeal the ACA and not even replace its most popular provisions…

…using logic that makes clear that he opposes doing anything for the many millions of uninsured this would create:

Democrats are jumping all over Paul Ryan for telling Bloomberg TV that if Republicans repeal the Affordable Care Act, they won’t reimplement Obamacare’s popular requirement that children can stay on their parents’ health insurance plans until they’re 26…..

If you look at these kinds of reforms, where they’ve been tried before — say the state of Kentucky, for example — you basically make it impossible to underwrite insurance. You dramatically crank up the cost. And you make it hard for people to get affordable health care.

People who follow health care reform closely will correctly note that there’s nothing new here….

Bobby Jindal makes no pretense of caring about the millions of people he would deny insurance to:

To be sure, there is more to Jindal’s plan than to repeal Obamacare and then drink cocktails made from the tears of the uninsured. But there isn’t much more. Jindal proposes to tinker with the tax treatment of health benefits, but without going far enough to either provide real funds to purchase insurance to individuals or to disrupt employer-based insurance. There’s the usual bit about letting insurers sell plans across state lines…. He urges a focus on cost containment, which was a mantra of Republican opposition to the bill in 2009 and 2010, and had faded since health-care inflation has fallen to a 50-year low. Citing cost containment as the rationale to repeal a law that has at best created, and at worst coincided with, the most positive cost containment news in modern history is more than a bit perverse.

Having said that, I’m not sure that we should consider the most recent Republican candidate for vice-president and a current Republican governor looking to run for president to be representative of Republican positions on health care reform. Perhaps more relevant are dead senators from Rhode Island, governors in states with huge Democratic supermajorities, stuff like that there.

April 8, 2014

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