By John C. Goodman
Originally posted at Forbes, March 2016
It’s been six years since the passage of the Affordable Care Act (Obamacare). You would think that in all that time Republicans could surely come up with something better. Yet in the race for the presidency, they haven’t.
None of the GOP presidential candidates has a credible plan to replace ObamaCare. That is, none of them has a plan to seriously deal with the problems of uninsurance, pre-existing conditions and health care costs. The repeal of ObamaCare without any plan to deal with these problems will make all three problems worse. The minute you repeal Obamacare:
- 20 million people lose their health insurance.
- Millions of people with pre-existing conditions are suddenly vulnerable.
- Medicare reverts to its previously high cost spending path.
On the first two, see the Slate piece entitled “Ted Cruz to the sick: drop dead.” It could have legitimately used the same title for Trump or Kasich.
Since they don’t have a replacement plan, how likely is it that any of the candidates and the Republicans in Congress would actually abolish ObamaCare? Zilch. Zero. Nada.
The only candidate that did have a credible replacement plan was Marco Rubio. (See Health Plan: Rubio Gets it Right.) The Rubio/Ryan plan would have:
- Insured the uninsured with a refundable, defined-contribution tax credit – thus offering nearly universal coverage.
- Eliminated the tax incentives to over-insure and over-consume health care through employer-provided plans and held Medicare to its current (ObamaCare) spending path through the Ryan budget.
- Somehow dealt with pre-existing conditions, but admittedly in an undefined way.
That doesn’t mean that other Republican candidates’ plans are worthless. There are some good ideas. But good ideas are going nowhere unless a sensible replacement for Obamacare is part of the mix. Let’s look at the proposals briefly.
The Cruz Health Care Plan. Ted Cruz has endorsed three ideas:
- Creation of a nationwide marketplace
- Expansion of Health Savings Accounts
- De-linking health insurance from the workplace
The idea of allowing insurers to sell insurance across state lines has been advanced by just about every Republican candidate. There is just one problem. Insurers can already sell across state lines. United Healthcare is headquartered in Minneapolis. But it is able to sell insurance in all fifty states. Ditto for Aetna (headquartered in Hartford) and Anthem (headquartered in Indianapolis).
What “across state lines” often means is that insurers should be able to sell insurance in any one state that is governed by the insurance mandates imposed by some other state. For example, I live in Texas – a state with 57 separate health insurance mandates at last count. If insurers in Texas could sell a policy with Idaho’s mandates (only 13) the insurance would be less expensive. But no company has to cross state lines to do that. Texas Blue Cross could do it if Texas allowed it to do so.
While this idea might lower premiums somewhat, its benefits have been way over sold. See the analyses by Margot Sanger-Katz and John Graham.
Liberalizing the arcane and complicated rules governing the various accounts that allow consumers to save for future health expenses is definitely and idea whose time has come, as I argued in Health Affairs some time ago.
I assume that “de-linking” health insurance from the workplace means that laws prohibiting employers from buying individually owned, personal and portable health insurance for their employees are gone. Also, I assume people will get the same tax relief for individually purchased insurance as they now get at work.
Those are also good ideas. But since almost half the population doesn’t pay income taxes, that reform by itself will still leave millions of people uninsured.
Trump’s Health Plan. As far as I can tell, Trump endorses the Cruz plan and adds three more ideas:
- Requiring transparency: providers must post their prices
- Block granting Medicaid to the states
- Allowing people to import lower-priced drugs from other countries
Providers already post their prices in every health care market where patients are mainly spending their own money (at walk-in clinics, for example); and where third parties pay the bills every third party payer has a different fee and “prices” don’t mean anything. People can already import drugs (from Canada, for example) for personal use. Block granting Medicaid is a good idea, but hardly a new one — Republicans in Congress have endorsed it for years.
Regardless of the merits of these ideas, Trump, like Cruz leaves three questions unanswered. What happens to the 20 million people who would lose their insurance if Obamacare is repealed and the 33 million or so that are currently uninsured? What happens to people with pre-existing conditions? And what happens when Medicare resumes its high-cost spending path?
Kasich’s Health Plan. Kasich basically has no health plan. He says in Ohio private and public health plans are emphasizing primary care and providers are encouraged to work in teams. That may or may not be good. But it doesn’t answer the big policy questions.
I’m still waiting for one of the remaining candidates to jump on Rubio’s idea of a fixed sum tax credit for health insurance – the same subsidy for everyone in the country. As I pointed out in a previous post, this would probably add at least $2,000 to the take-home pay of the average family.
It’s almost a free lunch.
This article was originally posted at Forbes on March 28, 2016.