Tuesday, March 07, 2017

Four Points on the Proposed (T)Rumpcare (It's the Greatest!)

1.  We are now allowed a few sneaky peeks into what might (1)  become (T)Rumpcare:  the proposed substitute for the Affordable Care Act (ACA).  I agree with Andy Slavitt's tweet thread (25 tweets long) on its main points (2), in particular this:

The Republican opposition to ACA  was always about the way it was funded from extra taxes on the wealthy.  Those taxes would disappear in the proposed (T)Rumpcare plan:

“Households at the top of the U.S. income ladder would see taxes on their wages and investments drop under the House Republicans’ new health-care proposal,” the Wall Street Journal’s Richard Rubin notes. “As expected, the bill repeals a 3.8% tax on investment income and a 0.9% tax on wages. Both levies affect only the highest-earning households, those individuals making at least $200,000 and married couples making more than $250,000.”
“The Republican plan (also) includes a tax break for insurance company executives making over $500,000 per year,”  BuzzFeed’s Paul McLeod observes. “Companies can generally deduct employee salaries as a business expense but in 2013 the ACA capped the deductions on health insurance executive salaries at $500,000. The average compensation for top health insurance executives is in the millions. In 2014 the left-leaning Institute for Policy Studies found that this cap generated $72 million in additional tax revenue.” The draft explicitly eliminates the cap, so the more insurance companies pay their executives the less they will pay in taxes.

2.  What happens to "access?"  The proposed plan uses tax credits to make insurance appear affordable:

The Republican plan would offer tax credits ranging from $2,000 per year for those under 30 to $4,000 per year for those over 60. The full credit would be available for individuals earning up to $75,000 a year and up to $150,000 for married couples filing jointly. The credits would phase out for individuals earning more — for each $1,000 in additional income, a person would be entitled to $100 less in credit, meaning a 61-year old could make up to $115,000 and still receive some credit.
The income-based phase-out of the credit allows the GOP plan to be funded without taxes on employer-provided insurance that had been considered earlier in the drafting process.


Estimates from congressional budget analysts and the White House’s Office of Management and Budget kept showing that the credits would be both too small to provide enough help to lower-income people and too expensive overall for a GOP determined to slash federal spending that the ACA has required.

Rep. Jason Chaffetz (R-UT)  gave me the first belly laugh of the day when he was asked if the poor could still afford health insurance in that new shiny plan:

"Americans have choices. And they've got to make a choice. And so maybe rather than getting that new iPhone that they just love and they want to go spend hundreds of dollars on that, maybe they should invest in their own health care. They've got to make those decisions themselves," Chaffetz said on CNN's "New Day" when pressed on insurance for low-income Americans under the latest draft legislation to replace the Affordable Care Act.
This is the old Republican argument that the poor are not really poor if they can afford an iPhone and a television set and an old lemon for a car.  The argument also whispers to us that the poor plan poorly and that is why they are poor.  If they only planned more carefully, they would be rich like Chaffetz.

But of course a cell phone costs nothing like the dollar amount health insurance for a family, say, requires, and the purchasing costs of an iPhone are not monthly recurring events.  Paying the premia on one's health insurance are monthly expenses, and they will compete with the expenses for housing and food in the budgets of the poor.

This suggests that "access" to health care will shrink for the poor who are currently buying their policies in the ACA marketplace (3).  A Vox article explains how the new plan would affect Medicaid and especially the Medicaid expansion under the ACA.  Overall, then, individuals with lower incomes will have less "access" to health care.

The reason I have used inverted commas/quotation marks around the word access is that Chaffetz, for instance, seems to use it in some weird sense:

Later, Camerota asked one final time whether the Republican plan would result in more access but less coverage.
"Well, yes. Yes, I think that's fair," Chaffetz replied before adding the caveat that there hasn't yet been a full analysis of the bill.
That exchange made me dizzy.  How could we have more access with less coverage?  What does it even mean?  That everyone can have one fifty dollar health care visit a year, but nobody can spend 10,000 dollars in one year?   A health insurance policy that would contain a package like that is meaningless when it comes to health care.  Properly interpreted, access means that a consumer can get the services a particular health condition requires and can afford them.

3.  The plan would keep the very popular parts of the ACA:  Allowing children to remain on their parents' health insurance until the age of twenty-six and requiring that insurance companies do not discriminate against people with pre-existing conditions by denying them coverage or charging them more. 

But it would get rid of the individual mandate:  The requirement that every individual must buy coverage.

Why did the ACA have the individual mandate?  Because in its absence the self-centered rational choice for consumers would be not to pay for insurance while one is healthy and only sign up when one needs health care.  If enough consumers act like that, what happens to the average expenditures of those who are covered?

They will rise, insurance becomes less and less affordable, and more and more people will drop out of the insurance market because they can no longer afford the expensive premia. (4)

The individual mandate tried to stop that rise in the premia by requiring that the "good risks" also be in the risk pool.

The (T)Rumpcare plan dispenses with it.  Instead, consumers would be punished for letting their health insurance lapse (because of, say, losing a job).  Their health insurance premia would rise by thirty percent for the first year after they re-enter the insurance market.

That extra cost is intended to make staying insured more attractive.  But it's not going to do much about the problem the individual mandate was intended to cure.

That's because the incentive to re-enter the market at that higher premium is actually reduced for all those who are "good risks:"  the young and the healthy.  The group of individuals most likely to re-enter are the ones who have gotten sick.  And that means rising costs for all.

4.  Finally, the proposed (T)Rumpcare plan naturally has proper punishments for those who do not care about the forced-births rules for women.   Abortion coverage in private health insurance would most likely become altogether unavailable, and Planned Parenthood would be defunded:

There are many ways for federal lawmakers to “defund” Planned Parenthood, but this bill’s proposal is one of the most potentially devastating for the organization. It would bar Planned Parenthood from receiving hundreds of millions of dollars in federal Medicaid reimbursements — the majority of the organization’s federal funding.
In practice, defunding the organization takes money away from its mostly low-income patients, who might be forced to seek care elsewhere if the government stopped subsidizing their visits to Planned Parenthood. Low-income women will be hit especially hard, but all Planned Parenthood patients may be affected if clinics are forced to close as a result of budget cuts.

That Planned Parenthood is the main provider of reproductive health services for poor women doesn't matter, and neither does the fact that federal funds already cannot be used to pay for abortions.  It's the very fact that Planned Parenthood performs abortions which drives this defunding attempt.  Never mind about cutting off poor women's access to gynecological care.


(1) The plan might fail, because it is not ruthless enough for the Tea Party lot among the Republicans.  It looks too much like a very diluted ACA.  At the same time, it is worse for most consumers who currently buy their health insurance in the ACA marketplace.  Thus, opposition to the plan can come from at least two sides.

(2) A caveat here is necessary.  I have only begun reading what is available on the new plan and what is available is somewhat patchy.

(3)  And most likely to older consumers, because under (T)Rumpcare insurers could charge them much higher premia than is the case under the ACA.  That the tax credit rises with age probably would not compensate for the rise in the premia.

(4)  Think of what would happen in the car insurance market if not having car insurance was perfectly aok and if you could buy that insurance easily at the point when you've had an accident or your car is stolen.