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The Tragic Demise Of Repeal And Replace – Pacific Research Institute

The Tragic Demise Of Repeal And Replace

Anyone committed to repealing and replacing ObamaCare will not mourn the death of the Senate’s “skinny repeal” bill this past Friday morning.

It retreated from nearly every health policy goal — from rolling back premium-inflating insurance regulations to modernizing Medicaid — that conservatives have championed since ObamaCare became law over seven years ago.

Worse, it was viewed by many as an example of free-market health reform. The bill wouldn’t have made insurance more affordable or accessible. Several senators voted for it only after receiving assurances from House Speaker Paul Ryan that his chamber wouldn’t allow it to become law.

It’s unclear what’s next for the GOP on health care reform. Sen. John McCain, R-Ariz., and others have pleaded for a return to “regular order,” with committee hearings, witness testimony, and a more deliberative bill-writing process.

If Republicans go that route, they should recommit to genuine free-market reforms that replace ObamaCare with policies that actually reduce costs, expand choice, and improve the quality of health coverage.

What would such a reform package look like? For starters, it would foster a more diverse, competitive insurance market by ending ObamaCare’s excessive regulations. These include the “essential health benefits” mandates requiring all health plans to cover certain treatments and services.

The EHBs effectively outlaw simple, low-cost coverage. Many young, healthy people don’t want coverage for these benefits, so they go without insurance and opt to pay the individual mandate fine of $695 or 2.5% of income — whichever is greater.

The Senate’s skinny bill — formally called the Health Care Freedom Act — kept the EHB requirements on the books. The bill also failed to ax ObamaCare’s community rating provision, which requires insurers to charge sick people the same rates they charge to healthy enrollees.

People with pre-existing conditions deserve affordable health care. But community rating is an inefficient and expensive way to cover them.

Few Americans are vulnerable to losing coverage because of pre-existing conditions. The 85% of Americans with employer-sponsored or public insurance already cannot be denied coverage because of pre-existing conditions.

The individual market is comprised of just 21.8 million people. That’s about 7% of the population. And not many of them have health conditions serious enough to threaten their ability to secure affordable coverage.

A 2010 congressional study estimated that pre-ObamaCare, insurers denied coverage to about one in seven patients because of their health status. A return to the status quo ante would mean that around 1% of all Americans would be unable to obtain individual market coverage without Obamacare’s community rating protections.

In other words, ObamaCare sent the health insurance market into a tailspin to address a problem affecting 1% of the population. Why are Republicans too timid to say so? America is a generous country. Surely, we could find a way to provide health care to childhood cancer patients without requiring working and middle-class families to pay hugely inflated premiums.

None of the House and Senate bills deviated from ObamaCare’s scheme of income-based insurance subsidies, which disincentivize people from working and earning more, lest they lose their benefits.

Nor did any of the bills put forth by the GOP seriously attempt to rein in Medicaid’s unsustainable growth.

The Senate’s Better Care Reconciliation Act, which failed last Tuesday, came closest. But that’s not saying much. That bill would not have reduced federal spending on the able-bodied childless adults who enrolled as part of ObamaCare’s expansion of the program in 31 states and the District of Columbia until 2021. Medicaid’s growth rate, meanwhile, wouldn’t have been ratcheted down to the rate of general inflation until 2025.

Conservatives rightly worried that those reforms would never take effect, since they would have required Republicans to hold the White House and Congress through 2024 — no sure thing.

Republicans promised for over seven years that they’d repeal and replace ObamaCare, if the voters delivered them control of Congress and the presidency. The voters responded last fall. Yet GOP lawmakers have consistently failed to hold up their end of the bargain. Even a win for the “skinny” bill, or for the Better Care Reconciliation Act, or for the House’s American Health Care Act, would’ve fallen short of genuine repeal-and-replace. As the president might put it, “Sad!”
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Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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