With Repeal And Replace On Hold, A New Path Forward For Health Reform


The drive to repeal and replace Obamacare appears dead. The latest attempt to roll it back — a bill authored by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La. — never even got a vote.  And the September 30 deadline for passing a healthcare overhaul with a simple Senate majority under the budget reconciliation rules has come and gone.

But there is plenty the Trump administration and Republicans in Congress can do to dismantle, or least defang, Obamacare’s most disastrous components.

Repeal-and-replace forces can start by scrapping its least popular provisions, like the Independent Payment Advisory Board. This body of 15 presidential appointees is charged with cutting Medicare spending if the program’s growth exceeds a federally mandated rate.

Certain actions, such as increasing beneficiaries’ premiums or raising taxes, are off-limits. So IPAB’s reforms will inevitably involve cutting reimbursements for medical devices, treatments, and services — and thus restricting access to care for millions of seniors.  Congress has to propose alternative cuts within a matter of months if it wishes to override the board’s decisions.

In other words, IPAB empowers 15 unelected bureaucrats to ration care for some of the nation’s most vulnerable patients, while making it extremely difficult for Congress to stop them.

Fortunately, Republicans and Democrats alike have long opposed IPAB. Neither President Obama nor President Trump has even appointed anyone to the board. And last week, the House Ways and Means Committee passed a bipartisan bill abolishing the board.  It’s time for the full House to take up the cause.

Permanently repealing Obamacare’s job-killing 2.3% excise tax on medical devices could also command bipartisan support. Over the tax’s first three years — 2013-2015 — the medical device industry lost nearly 29,000 jobs.

The tax has been suspended for 2016 and 2017. But it’s scheduled to come back into force in 2018. If it does, a fresh round of job cuts could be in the offing.

In 2013, 79 senators voted in favor of a non-binding resolution registering their opposition to the device tax.  This year, they should make that resolution binding.

Next on the chopping block should be Obamacare’s cost-sharing reduction, or CSR, subsidies. Insurers receive these subsidies as reimbursement from the federal government for reducing out-of-pocket costs for low-income patients.

The program exemplifies one of the many flawed strategies at the heart of Obamacare — force insurers to offer money-losing policies, then bail them out with taxpayer money.

The CSRs, which are expected to total $10 billion next year,  also happen to be unconstitutional.  Congress never appropriated the money to pay for them.  So the president would be justified in turning off this spigot of taxpayer funds at any time.

Sadly, some Republicans are fighting to protect this insurance company giveaway. Sen. Lamar Alexander, R-Tenn., is working with Sen. Patty Murray, D-Wash., on a deal that would extend the CSRs for two years, in the name of “stabilizing” the insurance markets.

They claim that ending the CSRs will send exchange premiums skyward. But those who claim the cost-sharing subsidies are also eligible for tax credits that cover most, if not all, of their premiums. Those ineligible for subsidies to help cover those higher premiums could just shop for coverage off the exchanges, which are unlikely to be affected by the discontinuation of the CSR program.

Further, there are other, more constitutionally friendly ways to lower premiums — like repealing Obamacare’s health insurance tax. An analysis from former Congressional Budget Office Director Douglas Holtz-Eakin estimates that, over ten years, the tax raises insurance costs for the average family by roughly $5,000.  Scrapping that tax would put money right back in consumers’ pockets.

The Trump administration can also take direct action to reduce premiums. For instance, the Department of Health and Human Services can alter Obamacare’s “medical loss ratio” rules, which require insurers in the individual and small-group markets to spend at least 80% of premium revenue on “activities that improve health care quality.”

The administration can expand the definition of those “activities” to include things like fraud prevention and wellness programs. Spending on supposedly administrative initiatives like these can reduce premiums by wringing waste out of the system or keeping people healthy and out of the doctor’s office in the first place.

All of these reforms are live options for Republicans committed to building a vibrant, more competitive healthcare market. True repeal and replace may have to wait, but the effort to clean up Obamacare’s mess can start now.

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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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