Originally published at Third and State April 21, 2017.
News reports indicate that, as many of us had feared, the Republicans in Congress and President Trump have not given up on their effort on health care, not only to repeal and replace the ACA but to institute a per capita cap on Medicaid spending.
The new plan, as we will explain in a moment, is even worse than the last one. But before we get to the details, we need to stop and ask, “why are we here again?” Knowing the answer to that question is critical to understanding what the Republicans propose.
Why Health Care: Avoiding the Loser Label
There are basically two reasons the Republicans are seeking a mulligan on health care. The first is that Trump and the Republicans promised to repeal the ACA and don’t want to look like losers to their hard-core, right-wing voters and to the Washingtonians who are inching closer to the view that neither Trump nor Paul Ryan nor Mitch McConnell have any idea how to run a government. They need a win.
But that answer is neither necessary nor sufficient. For there are other wins possible. Given that the debate over the first Republican repeal and replace plan showed that a majority of the country stands opposed to 24 million people losing health insurance and higher health insurance costs for seniors and those with low-incomes, one would think that the Republicans would be looking for other wins. They might, for example, make a deal with the Democrats to improve the ACA, rename it TrumpCare, and then declare victory. Doing so would reveal that much of their campaign against the ACA was disingenuous. But inconsistency and even dishonesty are evidently not the problems in politics they once were. Compared to much else Ryan and McConnell, let alone Trump have said, how hard difficult would it be for them to get away with a claim to have transformed the ACA? Indeed, Trump could honestly say that only he could have cut a deal that brought Democrats and Republicans together to set the ACA straight. The right wing of the party would scream and holler about that deal. But it is apparent that they are going to do so about many things, from raising the debt ceiling to passing a continuing resolution to almost any version of tax reform. Trump, Ryan, and McConnell are going to have to learn to govern without 20 or 30 of their House members. Why not start now?
Why Health Care: Tax Cuts for the Corporate Elite
So if we are going to understand why the Republicans are back with a new health care plan, we are going to have to look deeper. And fortunately, a new report from Health Care for America Now and Americans for Tax Fairness, helps us understand what is really at stake. For the truth of the matter is that the Republicans need to enact a health care bill in order to provide tax cuts to corporations and the rich. Eliminating most of the taxes increased by the ACA will save the very rich $275 million over ten years and also provide large tax breaks to insurance companies ($145 million over ten years) and drug companies ($25 billion over ten years). (And that same top-heavy distribution of tax breaks is found in Pennsylvania , too.) But those tax cuts are not the only ones the Republican seek.
Remember the biggest spending reduction in the first Republican health care plan did not come from eliminating the Medicaid expansion and reducing subsidies for health care purchased in the exchanges. The biggest spending reduction came from instituting per capita caps on the traditional Medicaid program which, over ten years, would save $880 billion nationally and $18 billion in Pennsylvania over ten years while forcing states to drastically cut Medicaid health care and long-term living benefits and limit those who are eligible for them.
Why do Republicans seek such cuts? Because they need them to use the reconciliation procedure to avoid a filibuster on their plan to enact tax “reform” that contains deep tax cuts for corporations and the one percent. Under Senate rules, tax changes can be enacted through the reconciliation procedure – which requires 51 rather than 60 votes – only if they do not increase deficits over ten years. In other words, tax reform through reconciliation has to be revenue neutral. But a revenue neutral plan won’t give Republicans the tax cuts for the rich and powerful they want. So they need deep cuts in health care spending – far beyond that which is required by repealing the ACA alone – to balance tax cuts for the wealthy and corporations. In a different version, the Republican health care plan saved $150 to $300 billion over ten years that Trump, Ryan, and McConnell planned to use to pay for their tax plan.
So that’s why health care is back on the agenda. It has nothing to do with helping Americans get health care, let alone with helping them stay healthy. And it has everything to do with tax cuts for the core Republican constituency – the corporate elite.
And that’s also why the Republicans have decided to try to build a majority, not by winning over their more centrist members but, instead, by appealing to the far right. The result, though, is a bill that, as the details are revealed, will seem even more appalling to most of us than the one rejected a few weeks ago.
The New Plan Has All the Bad Features of the Old One
To begin with, what we are likely to see are the worst elements of the old plan in the new one. Again, the Medicaid expansion will be slowly strangled. Again, traditional Medicaid will be subject to per capita caps on spending. Because of those caps, federal reimbursements will not grow as fast as health care costs. Together, these two provisions will result in a huge reduction in the number of people with health insurance, approaching 24 million nationally and about a million in Pennsylvania .
And Some New Ones, Too
The new elements in this plan make it worse than the old one. While the Republicans may technically keep the essential benefit requirement, they will allow states to seek waivers from it and those waivers will be automatically granted. The results will be disastrous. Eliminating an essential benefits requirement effectively ends the prohibition on annual or lifetime limits on insurance. And while they will keep the popular ACA requirement that insurance companies offer insurance to anyone regardless of their medical condition, they will allow states to seek waivers from the regulation, called community rating, that prevents insurance companies from using preexisting conditions as a basis of setting insurance premiums. The result will not surprise anyone: people with severe or even moderate medical conditions will be offered insurance, but not insurance that they can afford.
Why would the Republicans embrace an idea that will appall so many? Because, they believe that it will reduce premiums for those who don’t have pre-existing conditions and, in turn, reduce the need for subsidies to make insurance affordable for them. Again, it is all about reducing health care spending so that money is available for tax cuts.
High Risk Pools
And what of the people – tens of million nationwide and over a million in Pennsylvania alone – who have serious pre-existing conditions and fear losing affordable insurance? There the Republicans claim to have an answer: they will offer federal funds to subsidize state high risk pools to make insurance affordable for all those folks who get health insurance through the exchanges now (or could in the future) but will not be able to afford it when community rating is abolished.
Could this work? The answer is yes, in theory, but certainly not in practice. And the reason it won’t work will be obvious if you give it ten seconds thought.
Providing good health care for all the people with and without pre-existing conditions who secure health insurance through the exchanges will cost a certain amount of money under any plan. And the amount is not going to change much regardless of what system is used to pay for it. People need the health care they need.
Under a single payer plan, tax dollars would pay for it all. Under the ACA, it is paid for by a combination of the premiums people pay, including the slightly higher insurance premiums paid by young and/or healthy people, the premiums paid by older and/or less healthy people and by the subsidies for insurance for all of them that are paid for by tax dollars.
And under the Republican plan, it would be paid for by lower premiums paid by young and/or healthy people, by slightly higher premiums paid by old and/or less healthy people and by the tax dollars that pay for subsidies in both the exchanges and the high risk pool.
the total amount needed doesn’t change much from one payment scheme to another. And thus there is no reason to think that there will be any savings in tax dollars if those high risk pools actually do what they are supposed to do and provide the same quality insurance to those who have pre-existing conditions as those who do not. Indeed, given that the Republicans want to reduce insurance premiums for young and/or healthy people and make insurance affordable for older and/or less healthy people in the high risk pools, the tax dollars needed to make the high risk pools work will have to be higher than that needed under the ACA.
The whole goal of the plan, however, is to reduce federal spending. The Republican plan only saves tax dollars if those high risk pools provide inadequate and overly expensive insurance for people with pre-existing conditions. And that is exactly what the Republicans intend to happen, and it is what will happen. Under the Republican plan, older, less healthy people will be cordoned off into health care plans of their own, paid for by individual states possibly with some, but certainly not enough, federal support. And as a result, their power to organize politically to protect themselves from inadequate, overly expensive insurance will be severely diminished.
And if you doubt that this will be the result, look at previous attempts to create high-risk pools , which were always underfunded and always left out most of those who needed their help.
Divide and Conquer
The Republican plan for high risk pools, then, parallels their plan to institute per-capita caps on Medicaid. It’s an attempt to divide and conquer the pool of people who need help from government by placing the states, most of which are like Pennsylvania in being both fiscally stressed and harder for lower and moderate income people to influence, in charge. And this plan is not different from what we already do in dividing the relatively well-off people, who get huge federal subsidies for employer-based insurance, from the relatively less-well off people who get insurance from the exchanges or Medicaid.
The Republicans have, time and again, pretended that we can provide health care to people without some shared, communal effort. But that’s never been true for those who receive decent health care now . And if we don’t keep extending that communal effort to the low and moderate income people who, before the ACA didn’t benefit from it, they will again be left out.
Thus, there is nothing about the Republican plan that is honest and straightforward. It is motivated not by improving health insurance, let alone health care, but by an insistence on reducing taxes on corporations and the rich. It is not designed to offer better health care but, rather, to divide the American people and weaken the political forces that are the only guarantee that we will support providing quality affordable health care to people with pre-existing conditions.
The Republican health care plan is thoroughly dishonest. It’s an equivocation hidden behind a false front underneath a dodge.