If at first you don’t succeed, screw it up even more.
Senate Republicans unveiled their newly tweaked, please-please-vote-for-this healthcare bill Thursday, and in their attempts to make it more politically palatable to a handful of conservative lawmakers, they’ve served notice that millions of Americans are in danger of financial catastrophe if they ever get sick.
The biggest fly in the soup is a gimme to Texas Sen. Ted Cruz, who is determined to pretend that separating the healthy from the ill won’t exacerbate market dysfunction and raise costs for those who need insurance most — which it will, as every healthcare economist could tell him if the Republicans had held a single hearing on their legislation, which they didn’t.
The revised GOP bill includes Cruz’s proposal that insurers be permitted to offer cheaper, skimpier plans that fall short of what the Affordable Care Act defined as basic coverage, as long as they continue to offer at least one plan that meets the Obamacare requirements.
The upshot, of course, is that younger, healthier people would flock to the cheaper plans, leaving the costlier, more comprehensive policies to the sick.
That, in turn, would create two separate risk pools: healthy people and those requiring medical care. Without healthier people’s premiums to offset claims submitted by the ill, insurers would have no choice but to raise rates for the sick.
And voila, we’re back where we started prior to Obamacare, with coverage in the individual insurance market once again unaffordable for people with pre-existing conditions and treatment once again inaccessible to all but the wealthiest Americans. The sick once again would flood emergency rooms, and hospital bills for everyone would rise to accommodate those increased costs.
All in the name of lowering insurance costs for healthy people, who need coverage least.
“The first version guts Medicaid, and now this version does the same for exchange marketplaces,” he told me. “Republicans should be ashamed.”
I spoke with more than half a dozen healthcare economists Thursday, and every single one of them, regardless of political ideology, acknowledged that the latest Republican proposal would cause more harm than good.
“From everything I can see, this would be a huge step backward,” said Christopher Ruhm, a professor of public policy and economics at the University of Virginia. “It would increase the number of uninsured, particularly people with pre-existing conditions.”
He called repeated claims from President Trump and Republican leaders about the imminent collapse of Obamacare “a con job on the American people.”
“The system is actually working fairly well,” Ruhm said, noting that the number of uninsured is at a record low and people with pre-existing conditions are no longer excluded from individual insurance markets. “What would be best is if we fixed the system and made it even better.”
I know, I know: Premiums have risen on the Obamacare exchanges, and if you’re healthy, that seems unfair.
The problem is that the law’s so-called mandate was too weak and allowed many healthy people to forgo coverage. That drove up costs for everyone else as insurers grappled with an unexpectedly high number of claims from people with medical conditions.
“It’s fair to say some healthy folks feel burdened,” said Michael Geruso, an assistant professor of economics at the University of Texas at Austin. “What they overlook is that the point of insurance isn’t to pay when you’re sick. It’s to pay when you’re healthy. That’s what keeps costs down.”
The revised bill still takes a chainsaw to Medicaid funding, which would result in millions of people losing insurance, according to the Congressional Budget Office.
But in an attempt to put a friendlier face on a stunningly heartless piece of legislation, the bill allocates an extra $70 billion, on top of a prior $112 billion, to help subsidize coverage for people with pre-existing conditions.
This is the equivalent of offering a gauze pad to treat a broken back.
The harsh reality is that the sickest 10% of the nation account for almost two-thirds of the more than $3 trillion in annual healthcare spending. Remove healthy people’s premiums from the funding equation and you’re left with a massive financial problem.
And remember that ineffective mandate that undermined the effectiveness of Obamacare? It’s eliminated entirely under the Republican bill, meaning that there’s no incentive for anyone to sign up for coverage until they need it.
That means instead of an insurance market composed of a balanced mix of healthy and sick people, you have a market made up primarily of the sick. This is what’s known in healthcare circles as a high-risk pool.
“What we’ve learned from the examples of states is that high-risk pools can only work if they’re heavily subsidized,” said Neeraj Sood, director of research at the USC Schaeffer Center for Health Policy and Economics. “They always run out of money.”
At the federal level, he said, “the amount of subsidies would have to be huge.”
Undeterred by his bill’s willful ignorance of healthcare realities, Senate Leader Mitch McConnell declared Thursday that “this is our opportunity to really make a difference on healthcare.”
For everyone else, that is.
The Senate bill contains a provision exempting members of Congress from the plan.
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