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Normally we resist harping on an issue from one week to the next, but recent developments in the Republican attempi to repeal Obamacare merit our attention.  On Monday the Congressional Budget Office (CBO) dropped its highly-anticipated analysis of the House Republicans' healthcare plan, arming all sides with results that can back up their favorite talking points on healthcare.  The report estimates that the Republican plan would result in 14 million less people with health coverage next year, but would also reduce federal spending by $337 billion.

That being the case, you may be asking, as we did, why Paul Ryan and the Republicans appear to be "patching up" Obamacare instead of repealing it outright.  The reason is political necessityRepublicans simply don’t have the needed votes.  If Congress attempted to repeal the Affordable Care Act through the typical legislative process, Democrats would be able to block it with a filibuster.

To get around this hurdle, the GOP is using a process called “budget reconciliation” to roll back the health law.  Reconciliation is the same strategy the Democrats used to circumvent the minority party and pass the Affordable Care Act in the first place.  It involves passing a budget resolution related to spending, revenues, and federal debt limit issues.  Under the resolution that passed last week, this legislation also includes provisions to undo major portions of Obamacare. 

President Obama sold Americans on the idea that health care was an entitlement by signing the so-called Affordable Care Act into law seven years ago this week.  If nothing else, it has taught us that once an entitlement becomes law, public demand for it is irrevocable.  House Ways and Means Committee Chairman Kevin Brady apprised the options for Republicans: "We can act now or we can keep fiddling around and squander this opportunity to repeal Obamacare and begin a new chapter of freedom for the American people."  House Republicans plan to bring the healthcare bill to a vote on the Senate floor this Friday.    

Whatever political conniving it takes, free market replacement is essential for a workable healthcare system. So writes Philip Klein in this week's follow-up column on repealing Obamacare.  And, yes, we would still like to hear your views on this important legislation at hampday1@verizon.net.

--HP  

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CBO score makes the case for full repeal and free market replacement

by  Philip Klein*  [Filed 3/14/17]

 

In an effort to blunt Democratic attacks, House Republicans designed a healthcare plan that kept most of Obamacare's regulations in place and preserved some of its spending.  The hope was that when it came time for the Congressional Budget Office to review the legislation, the bill would be more competitive with Obamacare on coverage than a full repeal coupled with a purer free market alternative.   Now that the CBO has released its highly-anticipated estimate of the GOP alternative, it has obliterated that argument.  Based on what we know now, the truth is that not only would full repeal coupled with a free market replacement be more satisfying to conservatives, it would likely be found by the CBO to cover more people.  And we don't have to speculate much on this.

In 2015, CBO evaluated a straight full repeal of Obamacare, without any replacement, and it found that coverage would actually be slightly better than what it would be under the House Republican plan being pushed by Speaker Paul Ryan.  Whereas the Ryan plan would, according to the CBO, leave 51 million uninsured in 2025, two years ago, the CBO projected under a full repeal (without a replacement), 50 million would be uninsured.  Now, it's quite possible that the CBO would score full repeal differently now, given a different set of underlying assumptions.  But it's hard to see how the basic picture would change much.

How could that possibly be? How could a Republican plan that spends hundreds of billions of dollars offering tax credits to individuals and winds down Obamacare over several years cover no more people than a straight, immediate, full repeal would have?  The reason is that the Republican replacement preserves many of Obamacare's regulations that drive up the cost of insurance.  So, in essence, the GOP alternative would be asking people to purchase expensive Obamacare plans, with less financial assistance.  In contrast, while full repeal would offer no assistance, because it would get rid of Obamacare's regulations, it would make insurance cheaper.

So, if the baseline assumption is that full repeal only covers about the same number of people as repeal and the House Republican replacement, it's fair to say that adding free market elements to full repeal—such as large health savings accounts or deductions toward the purchase of insurance—would help boost coverage numbers somewhat.  Given the importance that the CBO places on the individual mandate and the fact that any repeal would significantly reduce Medicaid spending, it's clear that the CBO would still say that full repeal plus a market-based alternative would cover a lot fewer people than Obamacare.  However, even if a free market replacement covers only a few million people under the CBO model, it would still be covering more than what House Republicans have come up with.

The reason why this is significant is that in 2015, when I published my book Overcoming Obamacare, about the debate within the right of center policy community on health policy, the big split was that those who wanted a purer free market plan argued that instead of trying to get into a bidding war with Democrats over coverage, they should focus on reducing costs and creating more choice and competition.  The response from those who wanted a more moderate approach was that Republicans had to at least be competitive with Obamacare on the coverage front to have a politically palatable plan.  But if, with all the nods to Obamacare in the Republican alternative, it still leaves over 50 million people uninsured and gives Democrats the talking point that 24 million people will lose coverage, it seems that the argument has been decided completely in favor of the purer free market approach.  If Republicans are going to get hammered on coverage numbers, they may as well do it for the type of plan that is philosophically coherent and consistent with conservative principles; a plan that would actually usher in the kind of choice and competition that Republicans are always claiming they want; that could actually have a big upside surprise on coverage if individuals benefit from free market innovation that the CBO cannot model for.

The biggest argument against this is a practical one—that changing regulations couldn't be done through reconciliation, which allows legislation to pass through the Senate with a simple majority provided that its provisions are strictly budgetary.  But nobody could say that for sure unless Republicans try—and Obamacare's regulations have a very direct budgetary impact.  As the CBO writes regarding the increasing premiums under Obamacare, "most subsidized enrollees purchasing health insurance coverage in the nongroup market are largely insulated from increases in premiums because their out-of-pocket payments for premiums are based on a percentage of their income; the government pays the difference."  In other words, any changes in policy that affect the price of premiums is going to increase federal spending.

Now, some could argue that this is not a direct enough effect to pass muster with the Senate parliamentarian and thus get enacted through reconciliation.  But the House bill makes other regulatory changes, such as allowing insurers to charge older people five times as much for insurance as they charge younger people (changing the ratio from 3:1 under Obamacare).  It also creates a new mechanism to incentivize people to purchase insurance, by issuing a 30 percent premium surcharge on individuals who go more than two months without insurance within a year then try to buy it.  It's unclear why Republicans felt comfortable testing the limits of reconciliation in those areas but not with Obamacare's regulations that impose a clear burden on the federal budget.

Instead of trying to game out the eccentricities of the Senate and predicting the moves of the parliamentarian and of moderate Senators, House Republicans should be focusing on passing what they promised—legislation that fully repeals Obamacare and replaces it with a true free market alternative.

 


*Philip Klein is managing editor of the Washington Examiner.  A graduate of George Washington University with a master's degree in journalism from Columbia University, he formerly served as a Washington correspondent for the American Spectator and a reporter for Reuters news service.  Klein is the author of Overcoming Obamacare: Three Approaches to Reversing the Government Takeover of Health Care.  This commentary was posted Tuesday, March 14, 2017 ©The Washington Newspaper Publishing Co. LLC.

 

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