Advertisement

Column: The Republicans' Obamacare repeal is one big lie

 
Published June 22, 2017

WASHINGTON

The Senate health care bill is a blatantly cynical and political plan to reward the rich, hurt the poor and give Republicans the chance to claim they protected the middle class — or at least those in the middle class who aren't too sick.

The Republican campaign to repeal Obamacare was always based on false promise (okay, a lie): that it was possible for all Americans to have better, cheaper medical care without raising taxes or reducing the incomes of doctors and the profits of hospitals and drug companies.

But you can't lower health care costs or extend coverage for some people without raising the taxes or premiums of everyone else. It's a zero-sum game.

Actually, in a country that spends roughly twice as much as other advanced countries for mediocre results, it would be possible to restructure the system to give most people more for less. But, alas, the Senate bill does almost nothing to restructure the way medical care is delivered, how much is consumed and how it is priced because to do so would have meant taking on the business interests that the Republicans are counting on to finance their re-election.

Instead, what we get is a financial shell game.

Take, for example, the centerpiece of the Republican effort, transforming Medicaid from a guarantee of free health insurance for the poor and disabled into a block grant to states to finance health care for whomever they want in whatever ways they see fit.

The way most states have been found to restrain Medicaid costs is to pay doctors and hospitals less than all other insurers pay. The result is that hospitals charge other insurers and patients higher rates to make up the difference, while the number of doctors who are willing to take Medicaid patients has shrunk.

So what will happen if Republicans succeed in turning Medicaid from an open-ended individual entitlement program for the poor into a slowly diminishing block grant to the states? There are three options:

• States could raise taxes on everyone else in order to increase their own spending on Medicaid.

• States could further cut reimbursement to doctors and hospitals and drug companies, resulting in yet even more cost shifting to everyone else.

• States could cut more people from Medicaid coverage, which will only send more poor people to hospital emergency rooms for free medical care, resulting in still more cost shifting.

In other words, there is no real saving. Zero-sum game.

Another feature of Republican plan gives states the right to opt out of Obamacare regulations that limit how much more insurance companies can charge older customers, who on average consume a lot more health care, than younger ones who tend to use relatively little. Existing regulations say insurers can charge only three times as much. Republicans would allow insurers to charge older people five times as much. The theory is that the lower premiums will induce more young people to buy insurance without having to resort to a government mandate, which will have the effect of stabilizing insurance markets.

Spend your days with Hayes

Spend your days with Hayes

Subscribe to our free Stephinitely newsletter

Columnist Stephanie Hayes will share thoughts, feelings and funny business with you every Monday.

You’re all signed up!

Want more of our free, weekly newsletters in your inbox? Let’s get started.

Explore all your options

But there is no magic here. In a regulated insurance market, every dollar of reduced premiums for the young will be offset by an increase in premiums for the old. Some will pay it (those will tend to be the ones with chronic illness), but some of the healthier and less affluent ones will decide they cannot afford it and go without insurance. And if they are unlucky and they do get a serious illness, they too will wind up in hospital emergency rooms, where the cost of their care will be shifted to everyone else. Again, the zero-sum game.

A third big change will be the form and size of the subsidies provided by the federal government to those working-class families without employer-provided health insurance who buy policies on the Obamacare exchanges. Republicans would replace the current premium subsidies with tax credits, the size of which would be adjusted for income and age but in total will be significantly less than Obamacare's premium subsidies. So working-class people will pay higher premiums and out-of-pocket costs for health insurance that is less comprehensive — or will go without — while the people who financed Obamacare through higher taxes will be paying less by about the same amount.

And who are these lucky taxpayers? According to an analysis by the nonpartisan Tax Policy Center, around 90 percent of the benefit would go to households with more than $700,000 in annual income — the top 1 percent.

If you were setting out to design a regressive piece of public policy — one that literally takes money from the poor and gives it to the rich — it would be difficult to design a policy more regressive than the bills to repeal Obamacare, and the Senate's is only somewhat less effective in this than the one already passed by the House.

Steven Pearlstein is a Washington Post business and economics writer. He is also a professor of public affairs at George Mason University. © 2017 Washington Post