The GOP architects working to repeal and replace the Affordable Care Act face the same challenges its Democratic Party creators did: Plans to provide access to affordable coverage for all Americans that could garner broad support won’t work. Plans that would work can’t garner broad support.
Health care in the United States is extremely costly, the issue of how coverage ought to be paid for is divisive, and attempts like Obamacare to provide coverage to all fall in that divide.
So what can Republicans do now that they control the federal government and are committed to ending Obamacare? Even as Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan begin to move legislation forward, the answers are unclear. The GOP and President-elect Donald Trump came to power promising better coverage provided less expensively. It’s far easier promised than delivered.
Providing health insurance for all is very difficult, so much so that federal and state governments took over furnishing health insurance for the two hardest-to-cover groups in 1965. Congress created Medicare, providing insurance for those older than 65, largely because health care for the elderly was becoming too expensive for private employers. And the federal government created Medicaid to provide coverage for the very poor.
And the two daunting challenges of providing coverage today are essentially the same two the nation began to address 50 years ago: How do we care for people who are too expensive to cover or too poor to afford insurance?
Two revenue streams weren’t implemented
The Obamacare plan is easy to understand. First, it is a massive expansion of Medicaid, raising the income threshold to qualify from a national median of $8,870 a year for a family of three to $27,821. In all, 31 states went for the deal, which put the cost increases almost entirely on Washington until 2020, and led about 14 million people to be added to the Medicaid rolls.
It also helps less-poor people who still can’t afford coverage, with subsidies to buy coverage from insurers. These expansions were to be paid for with a variety of tax increases. People with pre-existing conditions who do not have insurance through a job can buy reasonably priced coverage, subsidized primarily by forcing healthy young people to buy coverage or pay a fine. These young people’s rates are higher than the cost of insuring them. The overage is intended to pay for care for the sicker enrollees.
But two of the revenue streams — a “Cadillac tax” on plans that offered premium coverage and one on medical devices — were not implemented because they faced too much opposition. Meanwhile, the mandate persuaded far too few healthy young people to enroll because the fine was too low. A fine high enough to force enrollment could not have passed. Obamacare also allowed people 18 to 26 years old to stay on their parents’ policies, a popular policy threatened by the coming changes. Even so, about 28 million Americans still lack coverage.
Tinkering could cut coverage, but not its cost
The GOP now has the votes to repeal, but not the 60 senators it needs to replace. There is disagreement over the time frame for a new plan, with Trump and congressional leaders talking about different ideas and fuzzy timelines.
The biggest savings from a repeal would come from kicking the millions of new Medicaid recipients off the rolls. That would come at a huge political cost, and dramatic consequences to the lives of low-income Americans. And the GOP idea that it can continue to require insurance companies to cover people with pre-existing conditions without a funding stream to cover their losses is not grounded in reality.
Health care in the United States comes at a high cost. Doctors earn twice as much as the average in other industrialized nations; other American health care workers are also paid more than their peers elsewhere. Branded medicines generally cost twice as much here because of the powerful pharmaceutical companies, and health care administrative costs are four times as high per person. Private health insurance companies, hospitals and providers have to make profits. Nonprofits have to cover their costs.
The GOP is right when it says the ACA did not fix these problems. Democrats are right when they say no plan the Republicans have shared will either, including a 50-state insurance market, tort reform and state grants to replace Medicaid. It’s all tinkering. And it results in cutting coverage rather than cutting the cost of coverage.
In the short term, the question is how 20 million people who get coverage via Obamacare will do so after it’s gone. Nothing the GOP has offered is close to answering that question. But in the long run, the challenge is to create an affordable system that provides coverage and has broad political acceptance. And we can’t do that until we address the things that make our health care so expensive.
That’s what the ACA proved. And that is the hot potato Republicans are passing back and forth now.