Archive for March, 2017

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Why I Would Vote No On The AHCA As Is…

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On Thursday, the House of Representatives will bring to the floor the Republican health care reform plan, set to repeal much of the Affordable Care Act.

The confusingly named American Health Care Act has been much criticized; this was as expected on the political Left, but quite viciously as well from the Right. I myself have extensively discussed why I am confused and angered by much of the bill.  From my previous post, I continue to believe the following is the worst mistake of all:

My biggest complaint about this bill is that there really is no governing philosophy in its writing. It neither pleases conservatives nor moderates. It makes half measures to increasing patient choice, but retains taxes such as the Cadillac tax, while at the same time maintaining the employer based health insurance system. It doesn’t maximize Federal support for the poor, nor does it full adopt the free market. It surely does some good things, such as expanding HSA/FSA and moving to a refundable tax credit system, but never fully seems ready to jump in with both feet in a full free market model of national health care. The muddle created by the GOP here makes it very difficult to make a sound, concise argument regarding specifically what their goal is. The President, Speaker Ryan, and the rest of Congress are likely to have a tough road ahead to make this sale to the American people.

Since that time, Republicans have been amending and altering the bill in small ways to try to make it more acceptable to the larger electorate. Some of the attempts, such as the so-called “Manager’s Amendment”, attempts to make the bill better to convince wary Republicans. Other attempts, such as the now labelled ‘Buffalo Buyout’, are simple classic horse trading of Federal dollars for votes, that have muddled the Beltway swamp for years (anyone remember the Obamacare “Cornhusker Kickback?”).

However, the amendments have failed to resolve my earlier complaint. What is the goal of this bill, Republican Party? Is it to make health care more affordable for the individual? Is it only to increase patient choice?  Is it to decrease federal spending? Decrease taxes? Or is it only a political tool to reverse Barack Obama’s signature achievement?

Even at this late date, I can’t answer that question. Proponents of the bill have made all the above claims, but actual reading of the bill fails to back up their claims.

Here is an example: let us take one key problem with the AHCA: does it really decrease cost for individuals?  The answer is very likely ‘No’, at least for most people. For example, one of the most glaring problems with the AHCA is that it will significantly increase net premiums for low-income Americans in their fifties and sixties. Health care pundit Avik Roy has talked extensively about this glaring defect:

For example: a 50-year-old childless adult making 200 percent of the Federal Poverty Level—$24,120—would face net annual premiums of $1,520, on average, under the ACA. Under the AHCA, she would see net annual premiums of $4,078, a difference of $2,855.

Now, this problem is solvable, and Roy provided the easiest solution: equalizing the tax treatment of employer-sponsored and individually-purchased health insurance. This has been a long stated goal of conservatives, in fact.

So you would expect the Republicans in power would use this solution, and happily go along their merrily way.

You would also be very wrong. Instead, Republicans failed to confront this cost issue for near elderly people (though there is a vague ‘promise’ of additional Federal spending that, as of the moment, still is absent from the final bill).

The added amendments did further increase tax cuts; but at the same time, they also further limited one major reform regarding consumer driven health care, another issue that conservatives claimed they cared about, but current Republicans apparently don’t think is a priority; again, from Roy:

In the original bill, if you were eligible for a tax credit of $3,000, and you bought an insurance plan that cost $2,800, the remaining $200 would be deposited in a Health Savings Account under your name. That feature of the bill gave consumers an incentive to keep premiums down, because they would economically rewarded for doing so. But the Manager’s Amendment kills that provision, because pro-life groups were worried that such HSA deposits could be used to fund abortions.

So, in short, Republicans decreased patient choice because…they are afraid patients would make choices politicians won’t like. Sounds a lot like Democrats.

Here is another example of where this bill goes two steps backwards for every step forward. Republicans are for more ‘choice’, correct? But in the most recent change in the bill, they would diminish the free choice of Veterans. In the initial bill, Vets would have the choice to either participate in the Veterans Administration, or could opt out and participate in the free market insurance system under the AHCA. However, in the most recent re-write, they would be prohibited from using the insurance exchanges and subsidies if they were eligible for VA benefits.

I could go on and on about this bill, in never-ending detail. The questions from my initial post remain: do the Republicans even know why they are writing this bill? If their goal is more patient choice, great…I am on board. But please see above..their own amendments show that is not necessarily the case.Is their goal to make access to more cost efficient insurance models? Fine. But they don’t allow that to be the case either. So what are they trying to achieve? Is this simply all about politics?

In short, this bill removes major portions of Obamacare, but replaces them with new regulations and rules that could be in many ways every bit as costly and cumbersome as its predecessor, without actually improving health in this country. That, to me, is the definition of failure.

President Trump, Speaker Ryan and others are making the political argument that this must be done now, or never. I don’t agree with that either, and past history is a good landmark in showing why they are wrong. Go back to the chronological history  ACA debate of 2009-2010, and you will see the debate was fraught with failures, starts and stops, and even moments when it appeared the process was on life support. And yet, the process continued. The GOP could continue this debate in much the same manner, if they have the political will to do so.

One final point; if you accept this bill as is, this plan virtually guarantees a decades long struggle around health care at the Federal level. Sure, the GOP will repeal some of the mandates, and most of the taxes. But the next time Democrats come to power, who here believes it won’t take them long to reverse course? Trump and company are guaranteeing that Obamacare, in some manner or form, is the law of the land for the foreseeable future, except we will have varying degrees of taxation, subsidies, and regulation dictating funding depending on which party rules the White House and Congress. That is a horrible situation for this country to be in, and this may be the one scenario in which the GOP could be building a regime that is actually worse than maintaining Obamacare…imagine that.

Republicans should go back to the drawing board. This plan is not worthy of passage in the House. Furthermore, everyone knows this plan is D.O.A. in the Senate.  There is at this point zero chance it gets 50 votes. It is always possible they could pay off enough Senators to get to 50 votes, but that is the same kind of corrupt bargain that Democrats used to get the ACA passed in the first place. Republicans should decide among themselves what their goals for reform really are, and build a plan around one singular philosophy. Pick one; any one.  Simply tinkering with Federal regulations and mandates as they are currently trying to do is not enough.

I am not alone at all in my dissatisfaction. FreedomWorks today came out against the AHCA, and is asking its followers to ask their Representatives to vote against the bill. The Freedom Caucus and Heritage Foundation, among others, have leaned the same way. I tend to agree with all of them.

In short, I see no reason to vote for this bill at this time. Patience and steadfastness is required at this time. Conservatives should hold to their beliefs, and fight for the greater good. The House should reject this bill, and try again.

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American Health Care Act: GOP Repeal And Replace Proposal

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After many years of promising a full replacement bill, and after months of haggling behind closed doors, the Republicans in Congress have submitted the first draft of their legislative language to repeal and replace the Affordable Care Act (Obamacare).

Speaker of the House Paul Ryan and others released the language of the bill earlier this afternoon, and the full bill can be read here. The bill is massive in scope, and has tremendous repercussions for the health care marketplace, if it is passed as currently written.

Here are just a few of the key provisions of the bill:

  • The individual mandate and employer mandate are repealed in its entirely, and are retroactively repealed for 2016. In its place will be a continuous coverage rule; this stipulates that anyone who fails to maintain health insurance coverage, and has a gap of greater than two months, will pay a 30% penalty when and if they resume their health care coverage. This was a major request by insurance companies, who wanted to make sure people could not game the system. However, there is an open question whether this new rule will be as effective as the individual mandate in forcing people into the health care market.
  • The bill does NOT repeal the Cadillac tax, one of the more hated tax provisions of the original Obamacare bill.  However, other taxes are eliminated (some in later years), such as taxes on tanning booths, prescription drugs, small business tax, and taxes on net investment income.
  • The bill defunds Planned Parenthood. Additionally, no tax credits can be used to purchase any abortion insurance services.
  • Medicaid expansion will continue until 2020, at which point the program moves to a per enrollee formula. At that point, block grants would replace the current funding mechanism. The grants are slated to grow at the rate of health inflation, not standard CPI. This is an important caveat, as the rate of inflation is higher, and thus, this would likely be more costly in the long run.
  • The minimum benefit regulation is repealed starting in 2020. However, the bill does retain many of the minimum basic services guaranteed under the ACA.  It does repeal the actuarial value requirements for cost sharing.
  • In lieu of the current subsidy regimen, there will be refundable taxable credits available to all persons who do not have access to other insurance markets (whether that be employer supplied insurance, Medicaid, VA, or Medicare). The tax credits will range from $2,000-$4,000 per person, and are age adjusted (instead of income adjusted). Credits phase out for higher income people ($75,000 for individuals, $150,000 for couples). This income credit will grow by CPI + 1% every year, with a family maximum of $14,000. In short, these credits will be less than is currently provided through subsidies, and in general, will be less beneficial to the poor and sick than the current system is.
  • Out of pocket costs are still capped.
  • Starting in 2019, the bill alters the age rating standards. Insurers can charge older patients up to 5 times as much as they charge young people (the current ratio is 3:1). This will decrease costs for the young, but ultimately increase costs for the older generation.
  • FSA and HSA will be expanded, allowing more money to be saved tax free.

There are many other provisions that the legislation refers to, but this gives a brief picture of the plan Republicans are currently proposing. In short, this is a plan that would provide more personal choice in types of insurance, but would provide less government assistance to obtain those services.

The tax credit scheme here will benefit the rich, the young, and the healthy, but will be more costly for the poor, the sick and the elderly. That is an obvious intentional trade-off made here, as the change in the age rating standards show.

Furthermore, some of the decisions here significantly limit the potential cost reductions going forward. For example, tying future Medicaid block grants to health care inflation may be sensible to maintain coverage, but will tremendously increase the long-term cost of the program. The cuts that do occur in this bill occur primarily after 2020, while much of the Obamacare funding remains at the current rates that exist today. So there will be little cost savings in any significant amount over the first few years of this replacement.

Politically, there are several landmines ahead. First and foremost is that this bill will almost certainly cover a few million fewer people than Obamacare currently does. Between the change in the Medicaid expansion program, along with decreased federal support for insurance premiums, the overall effect will be the rate of the uninsured is almost guaranteed to go up. Additionally, removal of the individual mandate likely destabilizes the already weak Obamacare exchanges, which may hasten their downfall.

Second, as stated above, some of the cost decisions lead to predictable trade offs. By increasing funding for Medicaid, the program is going to cost more. By increasing the tax credits from the level that Rep. Price originally proposed in his bill several years ago, there will be significant increased federal expenditures. These decision ultimately are going to lead to less savings overall once the CBO scores the bill. The question then becomes, is that level of cost savings worth the trade-off of millions more people becoming uninsured? There may be a logical argument for it, but the GOP, and especially President Trump, are going to have to be ready to make that argument to the American people. Already, small government conservatives like Sen. Rand Paul and Rep. Justin Amash are calling this ‘Obamacare 2.0′, which clearly draws a line in the sand where they think this debate now stands.

My biggest complaint about this bill is that there really is no governing philosophy in its writing. It neither pleases conservatives nor moderates. It makes half measures to increasing patient choice, but retains taxes such as the Cadillac tax, while at the same time maintaining the employer based health insurance system. It doesn’t maximize Federal support for the poor, nor does it full adopt the free market. It surely does some good things, such as expanding HSA/FSA and moving to a refundable tax credit system, but never fully seems ready to jump in with both feet in a full free market model of national health care. The muddle created by the GOP here makes it very difficult to make a sound, concise argument regarding specifically what their goal is. The President, Speaker Ryan, and the rest of Congress are likely to have a tough road ahead to make this sale to the American people.