Menckens Ghost

More About: Obamacare

Political Realities of Replacing ObamaCare

Dear Thinker:

Below is the Wall Street Journal's lead editorial of today on the
political realities of replacing ObamaCare.  It is spot-on in its
assessment that the Ryan plan is about the best that can be achieved
politically, and that failure to enact it will lead to something worse
than ObamaCare.  It gives me acid reflux to say this, because the state
of medical care/insurance in America is an abomination that runs counter
to my economic and social principles--principles that I tried to get
adopted with respect to medical care/insurance decades ago and
have writing about for just as long, including in the WSJ.

The cold, hard reality is that the market for medical care/insurance
became half-socialized a half-century ago, by means of Medicare and
Medicaid.  This means that whatever reforms are put in place for the
remaining half, the industry will still be half-socialist.  It's the
same with scores of other industries.  Another cold, hard reality is
that half or so of Americans don't have enough savings to last for more
than a week in the event of an emergency, let alone to be able to afford
medical care/insurance without a subsidy.  The time to address both of
these realities was 50 years ago, not now.  But thinking that far ahead
is not the way that governments or people work.

By the way, the American Medical Association, which is an association of
rent-seekers that craves subsidies, is against the Ryan plan.  This
means that the plan must have some good elements to it.

Regards,
Mencken's Ghost

  What Are the GOP Alternatives?


    By all means fix the House health bill's flaws, but the other
    political strategies won't work.

March 8, 2017 6:51 p.m. ET

Progressives are lining up to assail the GOP's health-care bill, though
many on the political right seem to be even more unhappy. A little
internal division is inevitable in any reform campaign worth fighting
for, but the alternative strategies these conservative critics are
suggesting are less than persuasive.

To repeal and replace ObamaCare, Republicans must manage a mix of
policy, political and procedural variables that are more complicated
than usual. Compromises are necessary to earn 218 votes in the House and
then a simple majority among the 52-member Senate GOP conference under
the budget reconciliation process, which can bypass the filibuster but
limits the scope of what the bill can contain. Call it the art of the deal.

The Democratic position of obstruction is simple and purely political:
Oppose everything to add to the pressure on Republicans and hope the
bill fails. Legislative defeats early in a new Presidency tend to beget
more defeats. Then Democrats hope to win a majority back in 2018 and fix
ObamaCare on their terms with Donald Trump, or wait until 2021.

Judging by the reaction on the right to the House bill, this might work.
Hours after the release of the legislative text, detractors were already
portraying policy nitpicks as historic betrayal. So let's look at what
they'd do instead.


The House Freedom Caucus and some Senators prefer to revert to the
repeal bill that Republicans passed in 2015 to test the limits of
reconciliation. That measure would eliminate funding for ObamaCare's
Medicaid expansion and the exchange subsidies roughly two years after
enactment. After this so-called clean repeal, they say, Republicans can
debate replacement options and form a consensus later in this
Congress—maybe.

But stand-alone repeal is unlikely to pass the Senate, not least because
Republicans ran on repeal and replace, not repeal alone. Senators and
most of the House also recognize that repeal—without the cushion of the
replacement provisions for a smoother transition—will capsize insurance
markets and accelerate ObamaCare's collapse. The market won't revert
automatically to 2009 because that market no longer exists.

Instead, insurers and state Medicaid programs will have to recalibrate
everything on the fly, with little time to prepare and adjust amid
maximum market disruption. Governors in the 31 states that expanded
Medicaid won't be allies if the feds blow a hole in their budgets. The
flight of insurers from the exchanges will increase as executives flee a
dying business, and any insurers of last resort that remain will surge
premiums to compensate.

Nearly a third of U.S. counties are now served by merely a single
insurer. It could fall to zero. Republicans would own every horror story
about cancer patients losing coverage and the poor thrown off the
Medicaid rolls. Democrats suffered politically when ObamaCare caused a
wave of insurance cancellations in 2013.

But let's give the critics the benefit of the doubt and say repeal-only
could get 50 Senate votes. Then what?

The GOP would have to move a replace bill with less political capital
and a threshold of 60 Senate votes absent reconciliation. Good luck
getting Chuck Schumer and the Democrats to agree under regular order to
the reforms in the current House bill, which include block grants for
Medicaid, expanded health-savings accounts and funding for high-risk
pools. Republicans would go into 2018 having repealed ObamaCare without
a replacement.

An argument for regular order is that the reconciliation rules are too
restrictive to pass a full repeal or true free-market reform, so better
to write legislation from scratch. But that option also puts repeal and
replace at the mercy of eight Senate Democrats, who even if amenable
would drive the bill to the left.


        ***

Liberals and the media have flipped from claiming Republicans had no
ideas on health care to claiming those ideas will end civilization, but
conservatives ought to know better. Since 2015 House and Senate
Republicans collaborated on a consensus replacement, which was published
during the campaign as the House's "Better Way" plan. Anyone who's
surprised hasn't paid attention.

Especially odd is the conservative opposition to tax credits for people
who buy individual insurance. These were previewed in the "Better Way"
and are a regular feature of all major GOP plans over the years, from
Coburn-Burr-Hatch (2014), Ryan-Kline-Upton (2015) and Tom Price's
Empowering Patients First Act, which has existed in some form since
2009. We prefer tax deductions to credits, but that ship sailed a decade
ago.

Mr. Price, now Health and Human Services Secretary, eventually found 84
GOP cosponsors in the last Congress. They include North Carolina's Mark
Meadows, the chairman of the Freedom Caucus and a leading if born-again
tax credit critic. Did he read Mr. Price's bill?

The policy dilemma for conservatives is how to move to a richer market
for individual insurance that doesn't receive the tax subsidy that
employer-sponsored insurance does. You can begin to equalize that
treatment either by adding a subsidy for individuals or reducing the one
for companies. In an ideal word we wouldn't have a subsidy for either.
But that isn't today's health market.

The House bill's tax credits and health-savings accounts are an attempt
to equalize the tax treatment over time for individuals, and it's a
shame Republicans took out the cap on the tax exclusion for business.
Conservatives should fight to restore it. But at least the House bill is
progress toward the kind of market-based, patient-centered coverage
conservatives say they want.

Some on the right now say that doing nothing is better than the House
bill, claiming they can let ObamaCare deteriorate further and blame
Democrats for creating it. But voters aren't stupid. They know they
elected a unified Republican government that promised repeal and
replace. Voters will conclude the GOP is either feckless or pulled a
bait and switch.


        ***

Entitlements by their nature are difficult to roll back once they've
gained a constituency, which is one reason we opposed ObamaCare. But the
GOP has to try. By all means Members should attempt to fix the House
bill's flaws, including the three-year delay in Medicaid reform and the
too-generous inflation formula for funding the states, among other things.

But conservatives should keep in mind that failure will have a cost, and
the irony could be that they block repeal because the replacement has
flaws. Are those flaws really worse than the ObamaCare status quo?

Health-care reform is a test of whether Republicans, having been handed
the gift of ObamaCare's failure, can show voters that they can do better
with conservative principles. The health-care market is at a crossroads.
Either it heads in a more market-based direction step by step, or it
moves toward single-payer step by step. If Republicans blow this chance
and default to Democrats, they might as well endorse single-payer
because that is where the politics will end up.

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