Thursday, July 14, 2016

The GOP Health Care Plan. Or What Happens If "Obamacare" Is Repealed

Paul Ryan unveiled the Republican Alternative to the Affordable Care Act (ACA) in June.  

It consists of a ragtag bag of old ideas the Republicans have offered for decades, with just a few things added that they would keep from the ACA:  Keeping adult children on their parents' health insurance to the age of 26,  and a very modified version of the ban on denying insurance to those with pre-existing conditions.*

But many of the proposals in this "plan" are old hat, too focused on pretending that people can rationally and logically choose among the many complicated and misleading** health insurance policies which would crop up if some form of the Ryan plan became reality.  They are also too focused on trying to find ways to kill both Medicaid (which covers the care for certain groups of the poor and also nursing home care for many elderly) and Medicare (which covers most of the rest of the care for those over sixty-five), and utterly too focused on trying to both reduce the number of people who actually have health insurance*** and on shifting money up in the income distribution, away from the poor and straight into the pockets of insurance companies.

The basic problems the Republicans face when trying to kill ACA, aka Obamacare, are several. 

The first one is that the Ryan plan is no plan at all, as even the conservatives themselves admit

The second one is that ACA has been  very successful in getting most Americans covered for health care expenses, and to step back from that could be impossible.  It's always harder to strip away benefits people have become accustomed to than to not create those benefits in the first place.

The third one is this:

On this last point, New York’s Jon Chait explained a while back, “The reason the dog keeps eating the Republicans’ health-care homework is very simple: It is impossible to design a health-care plan that is both consistent with conservative ideology and acceptable to the broader public. People who can’t afford health insurance are either unusually sick (meaning their health-care costs are high), unusually poor (their incomes are low), or both. Covering them means finding the money to pay for the cost of their medical treatment. You can cover poor people by giving them money. And you can cover sick people by requiring insurers to sell plans to people regardless of age or preexisting conditions. Obamacare uses both of these methods. But Republicans oppose spending more money on the poor, and they oppose regulation, which means they don’t want to do either of them.” 
The Republicans' basic approach doesn't work, either, because it is based on  certain simplistic assumptions about the power of consumer choice and the nature of the medical care markets.  Those assumptions might be somewhat relevant to buying tomatoes at a farmer's markets (Are these tomatoes as good quality as those at the next booth?   If so, how do the prices compare?), but have very little to do with both the complicated aspects of buying health coverage and with the lack of information almost all patients have when it comes to determining what care they need and how excellent a particular provider's care might be.

Doctors and hospitals are not tomatoes, and if consumers cannot judge the quality of care then knowing the prices is meaningless, too.   Add to that the fact that consumers know if they want tomatoes or not, but most of us don't know what health care we might require.  That, too, needs a visit to the provider to determine.

Still, Paul Ryan flogged his previous plan (or an earlier version of this plan) under the name The Patients' Choice Act, which we are to interpret as something very different from The Government Forcing Health Care Down Our Throats Act, also known as Obamacare.  Like throwing off our shackles and marching together into the sunset singing the conservative equivalent of the Internationale.

Except that we would be marching not into the sunset but into the places where the uninsured, the high-risk and those too poor to be able to afford health insurance congregate.

The good thing is that we can delay that march by making sure that the Republican Party doesn't have the majority to turn this rickety plan into an even more rickety reality.  We can do that by exerting Citizens' Choice, which is by voting.

*  Modified, because if I had a pre-existing condition and if I then let my coverage lapse I could be denied new coverage after that or I could be required to pay humongous amounts for it:  The-One-Strike-And-You -Are-Out policy. 

Well, I would be put into a separate high-risk pool then, to be covered by whatever amount politicians would be willing to allocate towards it. Removing high-risk individuals from the marketplace increases the profits of health insurance companies and probably reduces the care those individuals can get because:
By concentrating sick people into these high-risk pools, the premiums are super high — about two times the cost of regular insurance — and the plans typically have fewer benefits and much higher deductibles. At such high costs, people must be subsidized to buy high-risk insurance. This is expensive: The Republican plan calls for $25 billion in funding. And it covers few people. Analyzing a similar plan, the CBO estimated that only 3 million people would be covered. That is a bad deal, especially considering that the ACA has now covered 20 million Americans.

**  The plan would allow the sale of rubbish policies, those which look very affordable but only because when you do get ill they pay for the band-aids and the aspirin, the rest is out-of-pocket. 

It would also encourage the sale of insurance policies across state lines.  Why would this be bad you might ask?  It's not all bad, of course, but there are real negatives to that old plank in the Republican platform:

Critics of the across-state-lines plan worry about negative consequences of letting insurers shop for the state regulator of their choice. Just as many businesses tend to incorporate in Delaware, or credit card companies have headquarters in South Dakota, insurers may end up congregating in whatever state offers the most lenient regulations. That could mean that customers who get sick could be harmed because there are few comprehensive policies available, or because consumer protections are weak when things go wrong.

***  - High-risk people would swim in their poorly-funded pool, which means their insurance coverage would be less than it is now. 

- The Ryan plan strongly pushes increased use of Health Savings Accounts (money consumers save themselves, with tax advantages that make them different from usual savings accounts)  and higher deductibles (the share consumers must pay out-of-pocket before their insurance starts paying for anything within a certain time period, usually a year).  Both these initiatives mean that insurance would pay less and that out-of-pocket costs would be higher, which means less coverage overall.

- The plan would also reduce tax subsidies for those who get their policies through their employers.  That makes health insurance more expensive and less likely to be offered at all, given that the reduction in the tax subsidies is also proposed for the employers who then would have fewer incentives to offer health insurance at all.

- Rubbish policies would be allowed, and consumers who have bought those because they are "affordable"  would find how little coverage they have only after they fall ill.

- If inter-state insurance sales are strongly encouraged, insurance companies might settle in states with the least regulations of their activity, and that could allow them to limit what the policies cover as well as make it possible for the companies to deny payment for more services actually rendered.  All those nice things the ACA requires to be covered would, once again, become optional.

- Finally, the poor would have drastically reduced access to health care coverage, because the Ryan plan's preferred alternative would turn the Federal assistance to states' Medicaid programs into block grants, and block grants are inflexible and drop in value over time:

The CBPP study observes that the real problem with block grants is their inflexibility. When a program is converted from federal funding to block grants, the initial grant is typically pegged to the most recent spending on the program, but there's rarely any mechanism to revisit the funding as conditions change or in light of population growth.
That's why the resources deteriorate over time.

The poor are also much more likely to end up with the rubbish policies, because the initial price tag is much lower, and the Ryan plan's emphasis on more out-of-pocket spending by consumers would hit the poorest consumers the hardest.

Whether the promised (but not quantified) tax credits the plan would offer to those who aren't covered by their employers or eligible for Medicaid would be sufficient the reduce the suffering to the poor is impossible to define, because of that non-quantification.