How the GOP’s Obamacare alternative is designed to fail
Evidently fed up with accusations that their “repeal and replace” plan for Obamacare has consisted of a whole lot of “repeal” and not even a tiny bit of “replace,” Senate Republicans last week unveiled an actual, detailed healthcare reform proposal.
The Patient Choice, Affordability, Responsibility, and Empowerment Act (“CARE”) bears the names of Sens. Richard Burr (N.C.), Tom Coburn (Okla.) and Orrin Hatch (Utah). It preserves some of the things people like about the Affordable Care Act--insurance for those with pre-existing conditions, for example--but does so in a way that’s guaranteed to fail most of those affected. Among other things, it eliminates minimum coverage standards written into the ACA, including items like maternity coverage, which will inevitably make insurance more expensive for women relative to men.
The proposal incorporates some provisions that are bound to doom it even among Republicans, as well as others that are already known to be ineffective. Some healthcare experts have been kind to the measure, perhaps out of desperation to find something nice to say about Republican healthcare policy. (“A real set of initiatives, rather than a flimsy set of slogans"--Jonathan Cohn, The New Republic.) But health economist Austin Frakt is probably on the money when he observes, “It’s clearly designed to serve the objectives of the campaign(s)—2014 and then, perhaps, 2016—not as an effort to engage in good faith negotiation with Democrats on health policy.”
The measure isn’t yet a full-fledged bill, but more of a white paper for discussion; it hasn’t been “scored,” or costed out, by the Congressional Budget Office. But since the senators put so much effort into the CARE Act, let’s give it a closer look.
The sponsors claim that it encompasses “common-sense, patient-centered reforms that reduce health care costs and increase access to affordable, high-quality care.” Whether it will reduce costs is debatable; but if it does, it will do so by making “affordable, high-quality care” less accessible.
According to an analysis by the nonprofit Center for Health and Economy endorsed by the bill’s sponsors, much of the premium reduction claimed for the measure comes from steering Americans into narrow provider networks--limiting their choices of doctors and hospitals. It also expands the range in which insurers can adjust premiums for age from the ACA’s 1-to-3 (they can’t charge their oldest enrollees more than three times their youngest) to 1-to-5.
Those two provisions perpetuate two issues with the Affordable Care Act most often cited by its critics: people discovering they can’t see their previous doctors or go to their choice of hospitals; and older enrollees being confronted with sticker shock at the premiums on exchange-issued individual plans. The CARE Act acknowledges that narrow provider networks are a fact of life in the healthcare market, and allows higher premiums for older consumers than the ACA.
The CARE act also saves a heap of money for the U.S. Treasury by capping tax deductions for employer-sponsored insurance. That’s supposed to yield more than $1 trillion over 10 years through what, according to GOP orthodoxy, would be the equivalent of a tax increase. Further savings of nearly $200 billion would come from “Medicaid reform.” That amounts essentially to block-granting states with federal funds and allowing them to design their Medicaid programs themselves.
Since we already know that states with a high proportion of uninsured citizens and substandard public healthcare programs have been averse to expanding Medicaid to serve their residents, this is a formula for more (or less) of the same.
The sponsors assert that the ACA’s Medicaid provision, through which the federal government covers more than 90% of the cost of expanding the program to cover more low-income uninsured individuals, places federal taxpayers “on the hook for 90 cents on the dollar of care provided to working adults above poverty.” They say “this is unfair to the low-income mother with children, or the elderly blind person.”
Whatever could they mean? Those people are among those who benefit most from Medicaid; since the federal assistance is covered by income tax, it’s financed largely by upper-income taxpayers, not by low-income mothers with children.
The GOP plan cuts off premium subsidies at 300% of the poverty line, compared to 400% for the ACA. That means millions of Americans would be left without financial assistance provided by Obamacare. The Republicans would bar financial assistance to all non-citizens, even those here legally; since nearly 20% of the uninsured are non-citizens, that’s another huge exclusion.
What about the most important consumer protection in the ACA--the outlawing of exclusions for pre-existing conditions? The GOP version of this linchpin of affordable care is a provision guaranteeing renewable insurance for everyone who can maintain their coverage for at least 18 months--let it lapse within that time frame, and you can be stranded without any reasonably priced coverage at all.
This is certainly the most cynical provision in the CARE Act. The most important reason that people go uninsured is because they can’t afford coverage. Those who lose it, often because of a job loss, could be doomed to fall further behind the reach of coverage under the GOP plan because they would have to pay for their own medical expenses in the interim--and those can be ruinous. In 2012, according to the Kaiser Family Foundation, three-quarters of the uninsured were without coverage for more than a year. The sponsors will argue that the dire consequences of lapsed coverage will encourage people to keep their insurance come hell or high water, but those who simply can’t afford insurance in the GOP world will be badly stuck.
In sum, the CARE Act is a bill of rights for health insurers and an unaffordable invoice for millions of uninsured and underinsured Americans. The analysis by the Center for Health and Economy says that by 2023 it would cover 244 million people; but the Congressional Budget office says the ACA will cover 256 million.
From the GOP standpoint, the bill’s virtue lies in those words “choice,” “responsibility” and “empowerment,” which are Republican shibboleths. But it undermines the affordability and accessibility of health insurance in countless ways, and it should be shunned like a bad disease.