The Republicans have finally gotten around to coming up with an alternative to Obamacare. Unfortunately, it doesn’t look like it will work at all.
Ever since President Obama and the Democrats vowed to reform America’s health care system, Republicans have been voicing their opposition. Initially their opposition consisted of overheated rhetoric and a whole lot of scare mongering about things like “death panels.” At the same time they’ve also often promised to roll out their own plans to make health care more available and affordable to every day Americans. Since Obamacare was signed into the law the talking point repeated again and again by Republican politicians was that they wanted to “repeal and replace” Obamacare.
While Republicans have done a lot on the repeal side, they’ve voted 40 times in the House of Representatives so far to overturn the historic health care law, they’ve been woefully short when it comes to offering an alternative to replacing it. Indeed, Mitt Romney’s health care plan was almost the definition of vague. As Ezra Klein pointed out last spring:
Romney’s plan spans 369 words. He would “promote alternatives to ‘fee for service.’” Which alternatives? It’s a mystery. He would “end tax discrimination against the individual purchase of insurance.” That can mean any of a couple of huge policy changes. It could mean, for the first time ever, that employer-provided health plans are taxed — a massive tax increase. It could mean that all spending on health insurance is made tax free — a giant, and expensive, tax cut. Which is it? Romney doesn’t say.
Most other policy statements about health care from Republicans aren’t much better and are often filled with vague statements about “choice” or “markets” while saying little when it comes to concrete policy proposals that could be judged on their merits.
This might be about to change. Last week Emma Dumain in Roll Call reported that the large, influential and very conservative Republican Study Committee is working on a health care bill to be rolled out in the House of Representatives this fall. The Committee has 173 members in the House of Representatives as well as long standing ties with influential conservative advocacy organizations making it a major player when it comes to the Republican agenda. In addition, many of its members also hold positions in the Republican Majority’s official leadership structure. In short, the Committee’s announcement is a good indication that we will finally get a look at what the GOP’s idea for the “replace” side of their slogan is.
Unfortunately it looks like we might be trading in vagueness for completely unworkable policy. To be sure the Republican Study Committee has refused to release specific language or details about their plan, but from what they have said the plan seems to be a distraction at best and an invitation for policy disaster at worst. According to the Committee’s chairman, Steve Scalise of Louisiana, their plan includes guarantees that people with pre-existing conditions can’t be shut out of buying health care, “We address that to make sure that people with pre-existing conditions cannot be discriminated against.” At the same time their plan also calls for getting rid of Obamacare’s mandate that everyone who doesn’t have health insurance purchase a policy. Scalise promised that the bill wouldn’t, “put in place mandates that increase the costs of health care and push people out of the insurance that they like.” Unfortunately for Scalise this plan will never work.
The Obamacare bill (or more formally the Patient Protection and Affordable Care Act) that was signed into law on March 23, 2010 is a big complicated law meant to do a variety of things. Its main focus of expanding access to health care among those without insurance and lowering America’s ever increasing health care costs rests on what some like to call a “three legged stool.” The first leg of Obamacare is the requirement that insurance companies stop charging different prices for people based on the past medical history, instead they have to charge at a more general level or “community rating.” This is great for people with pre-existing conditions but it causes a major problem for everyone else. Why? Well because folks could just not buy health insurance until they get sick. A trend like this both reduces the pool of money insurance companies can use to pay for treating sick people while also dramatically raising the amount of money they have to pay out for covering treatment. This results in rising insurance premiums which in turn lead more people to opt out from buying insurance, making the problem even worse.
The solutions to this problem, which some call the “adverse selection death spiral,” is to require that everyone buy health insurance. Since insurance is basically just a financial tool that of spreads the risks we all face in life among a broad group of people, if you pass a law requiring that everyone buy insurance or pay a penalty, you should have a broad enough base of people paying into the system to stop any “death spiral.” This is of course exactly what the individual mandate in Obamacare does. The final leg of the stool is subsidies to make sure that less well-off folks can afford to buy their required insurance. Each one of these three “legs” is vital for this model of a health care system to work. Without a mandate you get the death spiral. Without the community rating, people in poor health have to buy insurance they could never afford and without the subsidies the poor are required to buy insurance that they can’t afford.
So why is the Republican Study Committee proposing something that economists and health care policy specialists say will never work? I have no idea. To be fair, health care policy is complicated and without more specifics it’s hard to tell exactly how Republicans plan to get around this problem. But if they really are going to propose letting Americans get the goodies of things like of community ratings while getting rid of the unpopular but necessarily things like the individual mandate for health insurance their policy simply won’t work. And while it might be good that they are finally purposing their own ideas for tackling national problems rather than just opposing President Obama’s proposals in lockstep, they shouldn’t get credit for rolling out an unworkable proposal. That is if they ever getting around to rolling it out.
Photo House GOP Leader/Flickr