Republicans Cave On ObamaCare
The Republican's ObamaCare replacement plan looks depressingly like ObamaCare. (EPA/Newscom)
Health Reform: Seven years after vowing to repeal ObamaCare, Republicans have labored to produce plan that replaces ObamaCare with …. ObamaCare.
The plan released Monday — called the American Health Care Act — has some good parts. It repeals ObamaCare's multitude of largely hidden but no less destructive taxes on health insurance plans, medical devices, flexible spending accounts and so on. It gets rid of ObamaCare's individual mandate and the job-killing employer mandate.
It expands the amount of money that can be contributed to Health Savings Accounts, the one health reform that has actually worked to lower costs. It's age-based, refundable tax credit for individual insurance is an improvement over ObamaCare's unpredictable, Rube Goldberg subsidy scheme.
But, as Vox.com's Sarah Kliff noted: "A curious thing has happened to the Republican replacement plan as it has evolved through multiple drafts: it has begun to look more and more like ObamaCare itself."
We'd go further and say that this bill would end up putting Republicans on record as supporting all the key elements of ObamaCare: federal interference in state insurance regulations, the awful Cadillac tax (which it delays again), and the Medicaid expansion (which it keeps in place for another three years before promising to reform the program).
But the biggest problem with the GOP plan is that preserves the beating heart of ObamaCare — the "guaranteed issue" mandate. Under ObamaCare, insurance companies can't deny coverage in the individual market to anyone who is sick, or charge them more. Premiums can only vary based on age.
This sounds nice, and plays well with the public. But it doesn't work, as states that experimented with this reform discovered. At least, it doesn't work without a huge amount of government interference, cross-subsidy schemes, huge taxpayer subsidies, and some kind of mandate to prevent people from gaming the system. As ObamaCare proved, it doesn't work with those elements, either.
Previous Republican replacement plans did away with this unworkable regulation, while offering more targeted protections for those who can't get insurance because of a costly pre-existing condition.
Not any more.
"Americans should never be denied coverage or charged more because of a pre-existing condition," the bill's summary states. This was precisely President Obama's argument for ObamaCare.
As a result of this epic concession, the federal government would still be in the business of dictating premiums nationwide, although on terms somewhat more friendly to the insurance industry. For example, while ObamaCare only let insurers charge the old three times more than the young, the GOP plan would let them charge five times more.
The healthy would still have a powerful incentive to game the system, knowing they can wait and buy insurance until after they get sick.
So, in an attempt to prevent this gaming, GOP plan replaces ObamaCare's straight-out individual mandate with a more backhanded one. Instead of paying an income-based penalty to the IRS for not having insurance, people would pay a 30% premium surcharge to insurance companies.
While ObamaCare's mandate penalty failed to get the young to buy insurance — which is why premiums have been skyrocketing — the GOP plan would make it even less likely. Under the Republican plan, a healthy person could avoid buying coverage for years without penalty. Then, after he gets sick, he could buy insurance — guaranteed, and at an at artificially low premium — and pay only a modest one-time surcharge.
"ObamaCare is so poorly constructed it is literally an anti-selection machine," explains industry analyst Robert Laszewski. "The Republican proposal is worse."
In January, President Obama predicted that the GOP would only end up tweaking ObamaCare, and then call it something else. "It may be called something else. And as I said, I don't mind," he told George Stephanopoulos. "If in fact the Republicans make some modifications, some of which I may have been seeking previously, but they wouldn't cooperate because they didn't want to — make the system work, and relabel it as TrumpCare, I'm fine with that."
Conservatives scoffed at Obama's hubris the time. But it looks like Obama was right.
If this is the Republicans' idea of an ObamaCare replacement plan, it would be better to leave ObamaCare in place, and let Democrats take the blame when it inevitably fails.