Be Careful What You Wish For: Repeal of the Affordable Care Act Would Be Harmful to Society and Costly for Our Country
The new Republican leadership of the House of Representatives says repeal of the recently enacted Patient Protection and Affordable Care Act is their top priority. The Republicans pushing for repeal, however, conveniently ignore the enormous step backward that repeal would represent for health care in our country, for the income security of our citizens, and for the fiscal health of our government.
The Affordable Care Act is not just a law designed to cover the majority of our nation’s uninsured, moving us into the league of industrialized nations which guarantee universal health coverage for its citizens. The law also takes the crucial first steps toward reining in our runaway health care costs. It ends discriminatory insurance practices that leave many of our citizens one bad gene, or badly timed accident, away from personal bankruptcy. It does so while introducing insurance market competition that will lead to lower health insurance premiums for some, and better coverage for others, in the so-called nongroup insurance market where workers without employer-provided health insurance turn for coverage. The Affordable Care Act does all this while significantly reducing our enormous federal budget deficit over the next 10 years.
Opponents of the new health reform law claim we can have many of the beneficial features documented above while repealing the parts they don’t like. This is a misleading and dangerous assertion. In fact, virtually none of the accomplishments of the new law are possible without the entire law’s infrastructure coming into place. That’s why all of the harms of repeal documented in this issue brief below will take place if the new law were to be scuttled.
To understand the consequences of repealing the Affordable Care Act, we can turn to two sources of objective information. The first is the careful and comprehensive effort put in by the Congressional Budget Office to evaluate the law’s impacts, including their recent report summarizing the effects of repealing the new law. The second is the closest case study we have where major elements of the new federal law are already in place—the state of Massachusetts, which passed a similar reform in early 2006. So let’s now turn to the different harms repeal of the health reform would deliver up to the American people.
Repeal means more uninsured, and worse public health
The first noticeable feature of a world without the new health reform law would be the much higher share of Americans without health insurance coverage. Absent the Affordable Care Act, CBO projects that 54 million people in our country, or almost 20 percent of our nonelderly population, will be uninsured by 2019. The new law will cover 32 million of those uninsured, according to CBO, or about 60 percent, with much of the remainder undocumented immigrants who are ineligible for coverage. This is more than a projection: It is also the same percentage share of the uninsured in Massachusetts who have been covered by that state’s health reform effort.
Clearly, repeal of the new law would have enormous negative consequences for our nation’s public health. Numerous studies document the dire health implications of uninsurance. An earlier study by the Institute of Medicine estimated that, in the year 2000 (when 38 million persons were uninsured), there were 18,000 deaths per year due to uninsurance. This suggests that repealing the Affordable Care Act could lead to 15,000 more deaths per year due to higher lack of insurance.
Repeal means increased financial risk for U.S. households alongside distorted labor markets
The impact of repeal extends well beyond those households who are uninsured. Indeed, repealing the new law would reach any household who faces the risk of losing their employer-sponsored health insurance. This is because the Affordable Care Act will fix the fundamental broken system of nongroup insurance in the United States.
Currently, individuals who do not have access to employer-provided group insurance coverage face a nongroup insurance market that is discriminatory and expensive. In most states individuals can be denied insurance coverage because they are ill or have their pre-existing illnesses excluded from coverage. Individuals who become ill can face personal bankruptcy as a result. Even when nongroup insurance is available, in most states insurance is priced according to individual health, with the oldest and sickest enrollees paying many multiples of younger and healthier enrollees.
There is a fundamental unfairness to a system under which individuals can face financial ruin because they have the wrong genes, or cross the street at the wrong time, but don’t happen to have access to insurance through their employer. Moreover, such a system significantly distorts our labor markets by forcing individuals to stay in jobs that offer health insurance rather than to move to newer and more productive positions where coverage is not available. Millions of U.S. workers are not moving to better jobs for them or starting new businesses because there is nowhere to turn for insurance coverage should they leave their jobs.
The Affordable Care Act would fix this flaw in our system. Insurance companies would no longer be allowed to price discriminate or deny coverage based on health or pre-existing conditions, and price differentials by age would be lowered. Individuals would be free to move to the job of their choice or to become entrepreneurs without fear of facing uninsurance.
Repealing the new health reform law would leave us in a world of broken nongroup insurance markets, with the attendant financial risk for individuals and the continued distortion to our labor markets. Why? Because without the comprehensive framework of the new law, it is incredibly costly to make insurance fairer in nongroup markets.
If insurance companies must charge the same price to people whether they’re sick or healthy, for example, then many healthy people will view this as a “bad deal” and not buy insurance. This results in higher prices because only the sick would buy insurance, chasing even more people out of the market. The result is a “death spiral” that leads only the sick to purchase insurance at very high prices. Several states tried such community rating reforms in their non-group markets over the past two decades, and the results were sharp rises in insurance prices and rapidly shrinking market size. The only way to make insurance market reform feasible is to pair it with large subsidies to purchase insurance and an individual requirement for coverage, as is the case with the Affordable Care Act.
Direct evidence for this point comes from Massachusetts. In the late 1990s the state moved to a nondiscriminatory nongroup market, but without the subsidies and the individual requirement that are central to the Affordable Care Act. The result was a collapse of the state’s nongroup market, so that by 2006 the state had by far the highest nongroup premiums in the nation. In 2006, the state implemented their comprehensive reform, which added to the insurance market reforms extensive low-income subsidies to purchase insurance and an individual requirement for coverage. This resulted in a 40 percent reduction in nongroup premiums in Massachusetts over a period where such premiums were rising by 14 percent nationally. That’s just one reason why the new law is called the Affordable Care Act.
Repeal means a noncompetitive and expensive nongroup insurance market
Another reason the Affordable Care Act works to bring down costs is because without it, a typical health insurance policy is much more expensive in the nongroup market than in the group market, partly because nongroup insurance markets are less competitive than group insurance markets in many states. There is no common marketplace where individuals can compare the prices of all the options that are available to them in the nongroup market. As a result, existing market participants keep prices high and new firms are unable to promote lower costs as a tool of market entry.
The Affordable Care Act addresses this problem in two important ways. The first is by introducing competitive insurance exchanges in every state. Individuals would be able to shop more effectively, comparing their nongroup options in a competitive and transparent environment. This approach has already had a notable success in Massachusetts, where the introduction of the state’s Connector health insurance exchange expanded the use of nongroup insurance and promoted the entry of a major new low-cost insurer into the state’s nongroup insurance market.
Without the Affordable Care Act states are unlikely to be able to establish transformative and competitive exchanges for the purchase of nongroup insurance. Many states have tried over the past 20 years to establish insurance exchanges and they have virtually all either failed or had little impact. This is typically because insurers were afraid that individuals would choose to buy from the exchanges only if they were sick, which meant prices in the exchange were high and demand for exchange products was low. With low demand, exchanges could not establish the economies of scale necessary for success.
The success of exchanges under the new health reform law will be due to the fact that individuals will be both required to purchase insurance and that insurance purchase will be subsidized only through the exchange. This will promote exchanges on a scale necessary to succeed in promoting competition in state insurance markets.
The second way that the Affordable Care Act addresses the high costs of nongroup insurance is through the introduction of new tax credits to make health insurance affordable through the exchange. The typical middle-class family in the United States would now be provided financial support to ensure that they would not have to spend an unfair amount for the insurance they need to protect their family.
The upshot: Repealing the new law would mean returning to an era where individuals can’t effectively compare their insurance options, guaranteeing continued noncompetitive and expensive insurance in this market. And it would mean that individuals would face the full prices in these noncompetitive markets without the necessary tax credits to make insurance affordable. Repeal, in short, would be unfair, ineffective, inefficient, and costly.
Repeal means free riders would continue to exploit the health care system
Another fundamental flaw in our current health care system before passage of the Affordable Care Act was that individuals could “free ride,” remaining uninsured until they need care and then turning to emergency rooms. Emergency rooms are required by law to provide care to all regardless of insurance coverage. The associated uncompensated care costs of treating these individuals amount to a more than $40 billion a year tax on the insured in the United States
The Affordable Care Act ends this free riding by requiring that individuals purchase insurance if it is affordable for them (which it will be for most due to the subsidies described earlier). This personal responsibility requirement, originally the brainchild of Republican experts, would end the unfairness of a system where emergency room health care providers are required to treat everyone but individuals are not in turn required to pay their fair share of the costs of treatment. Repealing the new law would mean returning to a world where individuals can simply wait until they are sick to get treated, passing the costs on to the rest of society that is paying their share.
Repeal means the continued decline of private insurance
There was an enormous erosion of private insurance coverage in the United States over the past decade. Employer-sponsored insurance fell by 15 percent and nongroup insurance has not grown to keep pace. The result today is an increase in both the ranks of the uninsured and the publicly insured.
The Affordable Care Act arrests this decline and promotes private insurance coverage. According to the CBO, the new law will lead to a small erosion in employersponsored insurance coverage, offset by a rise in nongroup insurance coverage that is almost five times as large. Overall, private insurance coverage in the United States will rise by 15 million people due to the Affordable Care Act.
Repeal would provide no cushion for our citizens to offset this rapid decline in employer-sponsored insurance coverage. Fifteen million fewer U.S. residents would have private insurance than without the law. The Affordable Care Act is not a government takeover of the U.S. health system; it is a means of using reformed private nongroup insurance markets to more effectively fight the steady decline in employer-provided group insurance. Repeal means a fundamental retreat from the promise of private health insurance coverage for our citizens.
Repeal means higher and more rapidly growing budget deficits
The Affordable Care Act delivers a unique dose of fiscal responsibility in an era of rapidly growing federal budget deficits. The new law offsets its new spending with even larger reductions in other spending and revenue increases. As a result, CBO estimates that the legislation will reduce the deficit by more than $100 billion by 2019, and by more than $1 trillion in the decade after that.
What is not widely appreciated is that deficit reduction due to the new health law will rise over time. The cuts in excessive spending and increases in revenues are back-loaded, not front-loaded as with so many other recent pieces of legislation. This is illustrated by the fact that the most recent CBO estimate shows that repeal would raise the deficit by $230 billion over the next decade. And, because the net budget savings from the new health law will grow over time, repeal would raise the deficit by much larger and ever growing amounts into the future.
Repeal would therefore mean undoing the enormous fiscal benefits of this legislation. Offsetting a more than $100 billion hole in the budget deficit by 2019 would require significant cuts elsewhere in the budget or other increases in revenues. And it seems highly unlikely that Congress would enact spending or revenue changes that would increase so rapidly over time. That means even fixes that offset the short-term costs of repealing the new law would not address the enormous long-term hole it would leave in our budget.
Repeal means a critical step backward on cost control
Reforming insurance markets and covering the uninsured are actually the relatively easy lifts for the new health reform law when compared to the more daunting and fundamental challenge—reducing the rate of growth in health care costs, which threatens to bankrupt our government and our nation. U.S. spending on health care is very high and a source of great concern but it is the growth rate of medical spending, not its level, that ultimately determines our country’s financial well-being. Absent the Affordable Care Act, if current trends persist we will be spending an unsustainable 38 percent of our GDP on health care by 2075 because the growth of health care costs would continue to outstrip the growth rate of the overall economy.
Addressing the rapidly rising costs of medical care, however, faces two daunting barriers. The first is scientific: There is tremendous uncertainty about how to lower health care costs without sacrificing health care quality. There is a broad consensus that there is significant waste in our health care system. But there is little consensus about the best way to address that waste without risking the enormous gains in population health due to health care improvements in recent decades. The second barrier is political: There are major entrenched interests that are threatened by fundamental health care reform and who will strongly oppose any such efforts.
In the face of these barriers, our political process has found it difficult to make progress on significant cost-control efforts over the past several decades. The Affordable Care Act represents the most important step forward in cost control in at least 30 years. The new law pursues many different approaches toward cost control, studying them to see which ones work best. This is through provisions that:
- Reduce consumer demand for excessive medical care through the “Cadillac tax” on high-cost insurance plans.
- Reduce health care provider payments by appointing a depoliticized board to make up-or-down recommendations to Congress on changes to Medicare’s provider payments.
- Set up dozens of health care pilot programs to test various approaches to revamping provider-payment incentives and organizational structure.
- Invest hundreds of millions of dollars in new comparative-effectiveness research.
- Launch pilot programs to assess the impact of various reorganizations of the medical malpractice process.
None of these approaches is guaranteed to work but together they represent a significant step toward fundamental cost control.
Importantly, they represent steps that are unlikely to happen if the Affordable Care Act is repealed. None of these ideas are new; most have been around for decades. But it was through the overall push for health reform that Congress was able to finally put them in place. Absent such a unifying framework, the barriers which have blocked cost-control efforts in the past will continue to stand in the way of moving forward on cost-control efforts.
Bottom line: Repeal is a dramatic step backward
The debate over repeal of the Affordable Care Act is characterized by enormous misinformation and confusion. Opponents of the legislation exploit this for political gains. A legitimate debate over the Affordable Care Act and the future of health care in America must recognize the fundamental improvements to our health care system put in place by this new law. Repealing would lead to:
- A society with poorer health and ultimately more deaths from lack of medical care
- A continued unfair and expensive nongroup insurance market that leads to economic instability, medical bankruptcy, and a less efficient job market where individuals are afraid to move to more productive job opportunities
- Continued free riding by those who pass billions of dollars in care costs onto the insured
- A massive decline in private insurance coverage
- Huge and unsustainable increases in budget deficits reaching trillions of dollars over coming decades
- A fundamental step backward in our efforts to control the health care costs which threaten to bankrupt our society
The Patient Protection and Affordable Care Act is aptly named. Repeal would mean less health care protection for more and more Americans at higher and higher costs to themselves, their families, and our nation. We simply cannot afford to repeal the new law.
By: Jonathan Gruber, Professor of Health Economics at the Massachusetts Institute of Technology and a member of the Massachusetts Health Connector Authority: January 19, 2011
Pool Fools: Republicans Denounce Republican Health Care Plan
As pointed out by Jonathan Chait in his recent article in The New Republic on January 12, 2011, “When you combine the GOP’s intense opposition to Obama with its very weak commitment to any alternative policy architecture, you get this kind of wild, opportunistic flip-flopping”. Reference the following enlightening article by Timothy Noah:
Of all the arguments Republicans have been waging against Obamacare as the House of Representatives prepares to vote for its repeal, none is harder to take than their criticism of the federally subsidized high-risk pools the law created to provide immediate relief to the uninsured. In May, the House Republican Conference complained that these high-risk pools would be unfair to people currently enrolled in existing state-run risk pools because the latter group was paying higher premiums. In July, the House Republican Conference complained that implementation of this unfair federal program was being delayed. By January, the House Republican leadership was grousing (in a report titled Obamacare: A Budget-Busting, Job-Killing Health Care Law) that costs for this unfair-but-wrongly-delayed program were higher than expected even as participation in this unfair-but-wrongly-delayed-but-too-costly program was lower than it should be.
Republican health care policies, I noted not quite one year ago (“Pool Party“), typically segregate the healthy majority from the unhealthy minority in order to lower insurance premiums for the healthy. Never mind that that raises insurance premiums sky-high for the unhealthy. High-risk pools are the most efficient way to achieve such segregation and about the least efficient way to pay medical bills here on planet Earth. A health insurance pool consisting entirely of people too sick to qualify for private insurance is like a fire-insurance pool consisting entirely of pyromaniacs. The best that can be said for such groupings is that the hospitalizations (or the fires) probably won’t all happen in the same month. Health insurance high-risk-pool premiums are typically 125 percent to 200 percent above normal premiums, but even so, a government subsidy is typically required to cover costs.
Conservatives claim the problem is not the inherent contradiction in insurance pools consisting entirely of people who need lots and lots of health care, but rather in poor management by the Obama administration. The American Enterprise Institute’s Thomas P. Miller and the Ethics and Public Policy Center’s James Capretta have argued that the administration ought to narrow eligibility; increase the subsidy; and introduce “more effective incentives and tools for both patients and providers to make higher-value health care decisions,” i.e., pressure doctors and hospitals to lower costs and eliminate unnecessary procedures. But the first solution is preposterous in light of weak enrollment (in fairness, Miller and Capretta wrote before that became apparent); the second solution is perhaps necessary but expensive; and the third is a laudable goal that’s much more difficult to achieve with a sick population than with a healthy one. Taken together, these three solutions betray an extreme myopia about the inherent limitations on high-risk pools to begin with.
The poor performance of Obamacare’s high-risk pools aren’t an argument against Obamacare. They’re an argument in favor of it. High-risk pools are a Band-Aid to stanch a hemorrhage. Democrats don’t kid themselves that the Band-Aid will do much to stop the bleeding, which is why they don’t embrace it as a long-term solution. Republicans ought to stop pretending it can be one.
Original Article By: Timothy Noah-Slate, January 11, 2011
Historic Achievement For A More Perfect Union
President Obama speaking on passage of Historic Health Reform Bill
“Mr. Speaker, I ask unanimous consent to revise and extend my remarks in opposition to this flawed health care bill”….We heard this canned statement over and over and over again tonight. We heard about the “Cornhusker kickback, the Louisiana Purchase, the Gator aid. We heard that this bill, if it passes, will make Americans less free. We heard that members of the military would loose their health coverage, that abortions would be paid for, that Medicare would be slashed. We heard from John Boehner that this was not the time to create bureaucracies, that there was no transparency, that there was not time to read the bill, that the people do not want this bill. His remarks continued to accent his distress over the process. If I had not been watching and only listening to his remarks over the radio, one would certainly have gotten the distinct impression that he was a very, very angry man. The tone and inflections in his voice gave one to believe that John Boehner just might be a little bit concerned that history was about to pass him by.
Health reform has been talked about and debated dating back to Theodore Roosevelt’s Bull Moose party which called for health insurance for industry. In his first term, President Roosevelt appointed a committee which was to report a program that addressed old-age and unemployment issues, medical care and health insurance. President Truman proposed a single insurance system that would cover all Americans with public subsidies to pay for the poor.
During nearly every Presidential election cycle since those days, every candidate has campaigned on the slogan of “health care for all”. At the end of that cycle, nothing gets done and the cycle continues. We immediately resort back to the status quo. The numbers of uninsured rise, the cost of insurance premiums skyrocket, rescissions continue, out of pocket expenses increase, denials for pre-existing conditions fall off the scales and even children are dropped from coverage.
Well, the time for change is long overdue. Republicans, for too long, have played politics with the lives of all Americans. At every turn, they have denied, delayed, obstructed, lied outright and instilled fear in the hearts and minds of the populace. As Speaker Pelosi said tonight, “all politics are personal”. After tonight, there will be no more politics of fear, no more politics of intimidation, no more threats of personal destruction. All of the talk about process, and all of the whining from republicans with bruised egos, don’t mean a heck of a lot now. What matters to those with no insurance, to those who are uninsured and those who have been bankrupted or lost their homes because of medical bills, simply stated, are results.
Many had given up on health reform with the Senate election results in Massachusetts earlier this year. Many have talked wildly about the upcoming November elections. The insurance companies became emboldened and Sen. Mitch McConnell and Rep. John Boehner actually began to believe their own words. Their repeated echo’s of “No” with the brazen 30-60% premium increases by Anthem and other insurers, re-awakened a cautious Democratic party. I want to personally thank Sen McConnell, Rep. Boehner and the insurance companies for their inadvertent contributions to the cause of health care reform.
In November 2008, America elected a President who said that he would get health reform done. For this President, it was not just a “slogan”. He took flack from all sides…Republicans and Democrats alike. With a determined Speaker of the House in Nancy Pelosi, President Obama and the U.S. House of Representatives delivered for the good of the American people.
When the sun rises in the east tomorrow, the earth will still be turning on it‘s axis, the American economy will not have collapsed, America will still be free, and there will be no Waterloo….the only thing that will be different tomorrow is that historic health reform for all Americans was passed tonight. History is now on the side of the American people.
Closing Arguments-The Day of Reckoning
President Obama making the final arguments for Health Reform
My Saturday began on the West lawn of Capitol Hill, where conservative activists were mounting one final, desperate effort to block health care reform. They came by the thousands, carrying flags and pushing strollers, in a demonstration of genuine grassroots fervor. They chanted “Kill the Bill,” over and over again, in a vaguely menacing tone that, perhaps, foretold a bit of ugliness to come.
But the most remarkable thing about the demonstration was how little it had to do with health care. The signs said “Stop socialism,” “A government of laws, not men,” “Respect our constitution–preserve our republic.” Nobody talked about death panels. Instead, one speaker–a Chicago radio host, I believe–attacked the First Lady’s obesity initiative. “Michelle, keep your hands off my kids’ lunchbox!” Yet another protest sign seemed to capture the mood perfectly: “This isn’t about health care. This is about control.”
A few hours later, inside the Capitol complex, President Obama urged House Democrats to do precisely what the protesters feared: Pass health care reform. It was not the first time he’d given such a speech. Just before the House voted on its initial reform bill in November, he’d come to Capitol Hill. And, broadly speaking, his intent had been the same: To embolden the Democrats by making them enthusiastic about the cause, demonstrating his own commitment to it, and making clear the political virtues of success.
But, like the protesters, this time Obama seemed to dwell less on health care and more on the significance of the moment. He invoked Lincoln, and the importance of fighting for principle. And then he invoked the legacy of the New Deal and Great Society, reminding members that their purpose in office was not to win elections–it was to make life better for their constituents. His closing argument was not about policy or politics. It was about posterity. And it was good.
For the last week or so, ever since it’s become apparent a climactic vote on health care was approaching, I’ve also been thinking about closing arguments. For most of the past year–and, really, it’s been far more than a year–the argument has been most practical. What would the bill do? What wouldn’t it do? And it’s easy enough to make the case for reform on those grounds.
As readers of this space know, I like to think of reform as achieving three broad goals: Making sure anybody can get an affordable insurance policy, shoring up everybody’s coverage so that it provides real economic security, and transforming medical care in order to make it both more effective and less expensive. Those arguments got a lot stronger this week, when the Congressional Budget Office determined that the final reform package–including both the Senate’s health care bill and the proposed amendments to it–would provide coverage to 32 million additional people, strengthen the baseline for coverage, and reduce the federal deficit over time.
But there’s another argument for health care reform, one that is at once more subtle and more sweeping. The disturbing part of our health care system is the financial and physical suffering it causes. But the unjust part of our health care system is the way it distributes that suffering. There are things all of us can do to stay healthy–we can eat right, we can exercise, we can avoid excessive risks. But even when we do the right things, we remain vulnerable.
You can have the perfect diet, jog three miles every day, and wake up one morning to discover you have cancer. So now you face mortal peril. And if, on top of everything else, you can’t pay your medical bills, you face financial ruin, as well.
Chance, of course, is part of life. Americans, in particular, seem to accept that. But every now and then, we have decided that need for such expansion–that there was, even now, the kind of common vulnerability to chance that required the sorts of initiatives we had enacted in the past. It happened with the New Deal, when we created the modern welfare state, and then again with the Great Society, when we expanded it.
The signature programs of these eras, Social Security and Medicare, work because they address a vulnerability we all share. Everybody is at risk of getting old; and everybody is at risk of misfortune, physical and financial, when that happens. To protect against that misfortune–to insure against that misfortune–all of us contribute. We all give, in the form of financial contributions; and we all get, in the form of financial security. Together, quite literally, we are stronger than when we are apart.
The conservatives protesting on the Capitol lawn Saturday see things differently. Health care reform isn’t about contributing money for the sake of their own security; it’s about having their money taken for the sake of somebody else’s security. When they hear stories of people left bankrupt or sick because of uninsurance, they are more likely to see a lack of personal responsibility and virtue than a lack of good fortune. As my colleague Jonathan Chait has observed, theirs is an extreme version of a view common (although surely not universal) on the right: That individuals can fend for themselves, as long as they are responsible and as long as the government gets out of the way.
There’s obviously a balance to be struck between these two world views. But, broadly speaking, conservative ideas about responsibility and vulnerability have dominated political discussion for most of the last four decades. That will change on Sunday, if health care reform passes. The bill before Congress may be flawed. And the process that produced it may be severely flawed. But it is, nevertheless, an expression of the idea that we–as as society–are not prepared to let people continue to suffer such dire consequences just because they’re unlucky.
A few hours after Obama was speaking, the Capitol had nearly cleared out. Leadership staff were meeting in House Speaker Pelosi’s office while a few stray congressmen were giving floor speeches to a nearly empty chamber. By and large, though, members had scattered–a tell-tale sign that Pelosi was confident. If she’d still needed to do serious arm-twisting, she’d have held a series of votes to keep members on the Hill.
I walked the length of the building and then out to the east lawn where the conservative protesters, who spent the day visiting (and, on a few occasions, haranguing) House Democrats, had reconvened. The crowd was more subdued now. It was smaller, too–hundreds instead of thousands. The setting sun behind the capitol dome cast a long shadow over them, as night approached. But a new dawn would come soon enough. And with it, perhaps, a new era.
By: Jonathan Cohn-Senior Editor-The New Republic-March 21, 2010
Summited Out: The GOP Wants Capitulation, Not Compromise
Who won? It’s the exact same question people asked in 2008, after each of the presidential debates. I didn’t like it then and I don’t like it now. What’s “winning”–scoring more debate points, making fewer gaffes, or simply appealing to more voters? And aren’t all those judgments pretty subjective anyway?
But if Thursday’s event didn’t produce a winner, it was clarifying.
Health care reform, as I’ve said many times now, is really about achieving three basic goals: Making sure everybody has insurance, making sure coverage is good, and making sure that, over time, medical care will cost less. Thursday’s discussion revealed the stark differences between the two parties–not just over how to pursue these goals but also over whether they are even worth pursuing.
Making sure everybody has insurance is primarily a matter of providing access to policies, regardless of medical status, and then guaranteeing that people can pay for them, no matter what their income. The former requires re-engineering the insurance market–in particular, organizing the non-group market into insurance exchanges, through which insurers will sell regular policies at regular prices even to people with pre-existing conditions. The latter requires providing subsidies, based on people’s incomes, which in turn requires raising some money.
The Republicans made clear on Thursday they rejected both ideas. Re-engineering the insurance market requires too much government, they said, and providing subsidies requires too much money. The best they could offer were “high-risk pools,” which would provide thinner coverage–at higher prices–to people who couldn’t get insurance on their own. This means expanding coverage to only 3 million people, rather than 30 million, but the Republicans hardly seem to care. When Obama asked Wyoming Senator John Barrasso to speak to the problems of the uninsured, Barrasso responded by saying he wanted to talk about … the already insured. Not that Democrats mind talking about the already insured.
Reform’s second goal–making sure everybody’s coverage is good–is primarily for the benefit of people who have insurance today. Many of these people have coverage that won’t meet their needs, although they may not know it yet. Only when they get sick will they discover that their plans have loopholes, allow for exorbitant out-of-pocket costs, and leave them with little recourse if there are disputes over what’s covered. The Democrats propose to fix this by establishing a minimum set of benefits that all plans must cover, limiting the amount of out-of-pocket expenses insurers can pass along, and creating appeals mechanisms for consumers upset about denials.
This approach, too, is one the Republicans rejected on Thursday. Over and over again, Republican representatives and senators said the problem wasn’t insufficient regulation. It was too much regulation. They called for allowing people to purchase insurance across state lines–and allowing small businesses to form associations that would be exempt from existing state regulations. The effect of such changes, as the Congressional Budget Office has noted, would be to erode benefits–to weaken, not strengthen, the protection from medical expenses insurance now provides. Senator Tom Coburn praised this transformation, suggesting the great exposure would turn people into smarter consumers. Well, it might do that. Or it might simply mean people with medical problems face even more onerous financial burdens.
And what about making medical care less expensive? The Democrats’ approach is to try a combination of approaches: Eliminating waste, redirecting Medicare payments so that they reward efficiency, altering the tax treatment of insurance, and so on. They admit it will take time and that they are not sure which approaches will work best. But these efforts get at the root causes of rising medical costs–not just profit or administrative inefficiency, but also the tendency towards unnecessary over-treatment.
Republicans in theory should support many of these ideas, but, as usual, they had nothing good to say about them. Instead, they continued to pound the Democrats for cutting Medicare, even though the Democratic reductions are calibrated to make the program more responsive–and even though the Democratic reductions are far smaller than the ones Republicans have championed over the last 15 years (not to mention the ones Representative Paul Ryan still supports).
Instead, the Republicans’ great hope for reducing cost lay in de-regulation–which, again, succeeds only by shifting medical expenses back onto the people with medical problems–and malpractice reform–another idea that Democrats support but that, according to CBO, doesn’t actually account for that much spending.
The Republicans have their justifications–and, to be fair, if they are convinced government spending and regulation will do more harm than good, then they are right to hold these many views. But it is not as if their alternatives even come close to solving the problems Democrats would. Instead, Republicans seem to believe these problems are fundamentally unsolvable, at least in any manner they would find acceptable.
And this explains the message Republicans delivered over and over again on Thursday: Rip up the bill and start over. That’s not a plea for compromise. That’s a demand for capituation. And it frames the choice for Democrats pretty clearly. Either they will act alone, or they will not act at all.
By: Jonathan Cohn, Senior Editor- The New Republic Feb. 26, 2010
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