Let’s Be Honest about Health Insurance

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The Republican plan to repeal and replace Obamacare is turning out to be a tough sell. The Congressional Budget Office has estimated that by 2026, 24 million fewer Americans would be covered under the replacement law than under the existing law. Like advertisers making dubious claims about a weak product, advocates for the legislation are doing their best to mislead the public about what it actually does.

One tactic they use is to cherry-pick the CBO numbers, touting the ones they like and ignoring the ones they don’t like. They have no problem accepting the figures on tax reductions and lower deficits, but they hate to accept any evidence of reduced coverage.

This week, Steven Ratner described and refuted ten untruths we have heard from the plan’s defenders. At the top of his list was HHS Secretary Tom Price’s assertion on Meet the Press that “nobody will be worse off financially in the process we are going through.” That would be amazing if it were true, but it is far from the truth.

One reason for Republicans to be less than candid is that they are trying to pretend that the bill fulfills two conflicting promises: the longstanding conservative promise to reduce the federal role in health care, and Donald Trump’s campaign promise to replace Obamacare with something better in terms of coverage and affordability. Fulfilling both would be quite an accomplishment. As it is, the proposed bill addresses the first promise–although not enough to satisfy extreme conservatives–but falls far short on the second. Reduced federal taxing and spending, yes; improved coverage and affordability, no way.

The logic of repeal and replace

We can debate the CBO’s specific numbers, up to a point, but the basic logic of their analysis is inescapable. Repealing Obamacare eliminates the taxes that were raised in order to fund it, and that dramatically reduces federal revenue. In order to avoid increasing the federal deficit, the government must cut health care expenses by at least as much as it loses in revenue. In fact, the bill saves the government money by cutting $337 billion more in expenses (over ten years) than it loses in revenue. That appeals to conservatives because it reduces deficits, and it can also justify further tax cuts later. Conservatives also like the fact that the tax cuts go mainly to people with higher incomes, while the spending cuts affect people with lower incomes. But does anyone really believe that the government can cut health care spending by $1.2 trillion and not hurt anyone?

The two main ways of cutting Obamacare’s spending are to reduce the number of people on Medicaid and to reduce assistance to people buying private insurance. The proposed replacement bill does both. It phases out the expansion of Medicaid to people with incomes a little too high to qualify for traditional Medicaid (incomes between 100% and 138% of the poverty threshold). It also replaces the existing subsidies for private health insurance premiums with tax credits that are worth only half as much, on the average. Because the new plan distributes the benefits differently, some people come out better. But more people come out worse, especially older, low-income people living in rural areas.

Republicans argue that they don’t entirely exclude anyone from coverage, since people can find some kind of plan even if they no longer qualify for Medicaid or no longer can afford their existing insurance. The bill allows insurers to offer plans that cover less of actual costs than Obamacare plans do. The new plans could have lower premiums but also higher deductibles. That is ironic, since the high deductibles of some of the existing plans offered on the insurance exchanges are already a common criticism of Obamacare. The new bill would probably make that problem worse.

The advocates of “repeal and replace” claim that everybody will have “access” to the health insurance market, without addressing the question of whether they can afford to buy what they need in that market. That’s like saying that everybody has access to a grocery store without asking whether they can afford to fill their cart with good food. They can also claim that people will have more “choice”, if that includes the choice to go without insurance, or the choice to buy an inferior plan that lets patients down when they need it.

Seduced and abandoned

Although they refuse to admit it, President Trump and Congressional Republicans seem willing to hurt many of their own supporters, especially with the cuts to Medicaid. The 32 states (including D.C.) that have implemented the expansion of Medicaid include 12 that Trump won: Alaska, Arizona, Arkansas, Indiana, Iowa, Kentucky, Louisiana, Michigan, Montana, North Dakota, Ohio and Pennsylvania. A decline in federal support will impact many people directly, as well as put additional strains on state budgets and health care systems. Many providers in those states have been breathing a sigh of relief because fewer uninsured people have been showing up with acute medical problems. They are not anxious to go back to those bad old days.

Although voting in the 2016 election was very racially polarized, health insurance is not a black or white issue. The people who stand to lose the most from the proposed legislation are people with relatively low incomes but not actually in poverty, since the poorest will continue to qualify for Medicaid. Those affected include a large segment of the working class, whether white, black or Latino. Older and more rural voters, who tended to be Trump supporters, also have more to lose. The thought may cross their mind that they’ve been had.

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