GovCare won't really be repealed, and that's fine

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While the Affordable Care Act of 2010 was taking shape, SAFE maintained that this legislation (commonly known as Obamacare, although we prefer to call it GovCare) was aimed at the wrong target – increasing the healthcare insurance (HCI) coverage rate from about 85% of Americans to as close to 100% as possible.

SAFE’s reform proposals were directed at a different goal, namely bringing down the excessive costs of healthcare, which are due in large part to government intervention in healthcare markets (setting rules and providing subsidies rather than permitting the free market to work). In search of real healthcare reform,
May 2009. Here’s an overview of SAFE’s plan:

1. Scrap proposals to use the government’s clout (and taxpayer money) to mandate near universal healthcare. The problem with healthcare that needs fixing is not the number of Americans without insurance per se, it is soaring costs that penalize everyone.

2. End the tax exemption for employer-provided healthcare benefits with the idea that private sector and government employees should make their own arrangements for healthcare services and insurance. In any case, those whose employers provide healthcare plans should not continue to receive this unjustifiable tax preference.

3. Encourage the use of catastrophic coverage insurance combined with Health Saving Accounts to cover outlays for routine healthcare services. As an exception to item 2, premiums for such plans should be payable out of pretax income or tax deductible, which would put all taxpayers on an even footing. Also, to break the state-by-state stranglehold on healthcare insurance (precisely what treatments should be covered, etc.), people should be permitted to purchase coverage from insurance companies located anywhere in the country.

4. Have the states take full responsibility for their Medicaid and CHIP [HCI for children] programs, with the federal government supporting the programs with block grants. Once established, the aggregate amount of federal grants would be indexed for inflation, but not allowed to continue growing in real economic terms.

5. Repeal the federal statute requiring hospital emergency rooms to admit all comers, which inflates hospital costs and has been much abused, while supporting other measures (such as walk-in clinics) to more efficiently respond to the medical needs of the poor and disadvantaged.

6. End traditional Medicare coverage for all seniors retiring after a given date, e.g., January 1, 2012 [now January 1, 2019], providing capped funding for private insurance coverage of future retirees.

7. Cap punitive damage awards for medical malpractice, which are driving up insurance premiums and inducing doctors to order every medical test known to man whether needed or not.


Considerable effort was invested in attempting to promote the SAFE healthcare plan. See, e.g., these notes about a session hosted by Senator Tom Carper, which SAFE directors Jerry Martin and Bill Whipple attended A conversation about healthcare, 9/9/09.

As it happened, the drafters of the Affordable Care Act took the opposite approach – creating new federal rules over healthcare and additional subsidies instead of moving toward a more market-oriented system. And while it gives us no joy to say so, the new GovCare provisions (basically filling the coverage gap for adult workers whose employers don’t provide HCI; children; the indigent, veterans, and seniors were already covered although in some cases people weren’t signing up for HCI coverage they were entitled to by law) don’t seem to be working very well.

Healthcare insurance coverage more nearly universal as a result of passage and implementation of the Affordable Care Act, but the increase resulted primarily from raising the income eligibility ceilings for Medicaid versus persuading Americans whose employers don’t provide HCI plans to purchase individual policies on government-run exchanges. Premiums have been soaring for policies of lesser value (higher deductibles, smaller networks of healthcare providers), although lower income individuals can continue to afford coverage due to hefty government subsidies, and insurance companies that initially participated in the exchange business are starting to drop out. GovCare troubles reflect a more basic problem, 8/22/16.

One of the top promises Republicans made on the campaign trail this fall was to repeal and replace Obamacare (or GovCare). Here’s a sample of the pitch from a Donald Trump rally, Gettysburg, PA, 10/22/16.

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The elements of a replacement plan identified were health savings accounts (so people can decide how to spend their healthcare dollars), purchase of healthcare insurance plans across state lines (so insurance companies will face more competition), and letting the states (rather than the federal government) manage Medicaid funds. Senator John Barrasso (R-WY) made the same basic points in the Republican weekly address on December 3.

Hmm, sounds promising, but as the saying goes “the devil is in the details.” Not only is there no bipartisan consensus about replacing GovCare, but Republicans haven’t agreed among themselves as to what should be done. Even President-elect Trump has zigged and zagged, e.g., by advocating the full repeal of GovCare yet promising to retain two of its key features (no denial of insurance coverage due to preexisting conditions, and young adults allowed to remain on their parents’ policies until they are 26).

If Republicans don’t watch out, their repair and replace effort will go awry, which given their control of both houses of Congress and the White House wouldn’t do much to demonstrate their ability to govern. Here is our take on the situation, in three parts: (1) Republican proposals, (2) Democratic position, and (3) some modest suggestions for the path forward.

1. Republican proposals – Passage and implementation of the Affordable Care Act, on top of previously established programs (Medicare, Medicaid, etc.), has created expectations of subsidized healthcare coverage for all Americans (not just the indigent). Such expectations can’t be readily extinguished, and full repeal of GovCare could create a political firestorm that most Republican leaders are unwilling to risk.

Many people dislike specific aspects of GovCare (notably the individual mandate, which requires the solvent uninsured to obtain government-approved HCI or pay a fine), but that doesn’t mean they want to scrap the system. Only a quarter of Americans support full Obamacare repeal, Tom Howell, Washington Times,
12/1/16.

It would seem inopportune to push for a complete overhaul of government healthcare programs at this point. Republicans did not propose sweeping changes to Medicare, Medicaid, etc. before the elections, and such changes could hardly be said to enjoy a national mandate.

Thus, despite the “repeal and replace” rhetoric, the goal will be changes to GovCare (and perhaps related provisions of other healthcare programs) designed to (a) make this program run more smoothly (stabilize premium levels, encourage insurance companies to stay the course, etc.), without (b) depriving anyone of government subsidies or other advantages that they currently enjoy.

Assuming a GovCare reform plan could fully satisfy both criteria, which seems doubtful, it would still take some time to develop the plan and build bipartisan consensus as to its merits. Meanwhile, there is pressure on Republicans to move quickly – if possible during Trump’s “first 100 days” – on their “repeal and replace” promise. This has given rise to the idea of repealing GovCare up front, with an extended transition period, and then taking considerably longer to craft the provisions of the replacement program. GOP may delay Obamacare replacement for years, Rachael Bade & Burgess Everett, politico.com,
12/1/16.

With buy-in from Donald Trump’s transition team, GOP leaders on both sides of the Capitol are coalescing around a plan to vote to repeal the law in early 2017 — but delay the effective date for that repeal for as long as three years. *** The idea is to satisfy conservative critics who want President Barack Obama’s signature initiative gone now, but reassure Americans that Republicans won’t upend the entire healthcare system without a viable alternative that preserves the law’s popular provisions.

Taking credit for solving a problem that remained to be addressed shouldn’t impress anyone. The GovCare mess would continue growing, thereby raising the cost of an eventual solution. And the ability of the Democratic minority to block conservative reforms would be enhanced, a point that requires some explanation.

Republicans envision repealing GovCare by a majority vote in the Senate. This would be accomplished via the arcane reconciliation process, which involves passing a budget that assumes fiscal savings from repealing GovCare and then presenting a bill for the repeal (which if everything is done just right can qualify as budget-related legislation that is not subject to filibuster and therefore doesn’t require a 60% supermajority to pass).

If replacement provisions were included in the repeal bill, the package could presumably be passed via the reconciliation process. But separate replacement legislation could be filibustered, and would therefore require 60 votes in the Senate.
Ibid.

“We’re not going to pass another 2000-page bill like the Democrats have,” [Senator John] Cornyn [R-TX] said. “The way to realistically address this is to go step by step, to build consensus, get 60 votes and pass those various pieces.” Gathering those 60 votes will prove difficult, so the GOP hopes the transition period and end-date on Obamacare will also give Republican lawmakers leverage with Democrats by forcing them to come off the sidelines and participate in rebuilding the healthcare system, even after opposing GOP efforts to tear it apart.

2. Democratic position – Before the elections, Hillary Clinton and her supporters proposed to address the problems of GovCare by providing more government support, e.g., creating a public option that would provide a vehicle for additional government subsidies on HCI policies sold on exchanges. Or if necessary, they were open to a single payer healthcare system in which the insurance companies would be cut out of the action entirely. GovCare troubles reflect a more basic problem, 8/22/16.

Clinton’s . . . healthcare proposals would . . . contribute to higher government outlays for healthcare – which already consume over one-quarter of the total federal budget. We are not convinced of the need for even more government spending on healthcare programs, and this consequence has been shamelessly glossed over by proponents of an expanded government role.

Since the elections, Democrats have been staking out a defensive posture, which will boil down to attacking and attempting to block any Republican efforts to loosen the government’s grip over the healthcare system. For example:

•Trump’s designated nominee as Health and Human Services (HHS) secretary – Rep. Tom Price (R-GA) – was attacked as an extremist. Tom Price, a radical choice for health secretary, New York Times,
11/30/16.

Mr. Trump and many Republicans have talked vaguely about plans to repeal the health[care] reform law but suggest they might keep some popular parts of the law. Mr. Price makes no such noises. The detailed legislation he introduced most recently in 2015 would destroy the reform law and is a good indication of his philosophy in managing the nation’s largest health[care] programs: cut benefits and leave millions with no healthcare at all.

•Senator Chris Coons (D-DE) for one has been quoted as having second thoughts about the Senate rule change pushed through by the Democrats in 2013, pursuant to which appointments (except for Supreme Court justices) are no longer subject to filibuster. Video (1:00),
11/29/16.

•Although Republicans have not proposed any immediate action re Medicare, they have been accused of plans to turn it into a voucher program. [Senate Minority Leader Chuck] Schumer: Republicans are “plotting a war on seniors,” Susan Jones, yahoo.com,
11/30/16.

Schumer said Republicans tried to privatize Social Security after the 2004 elections: "And now, after the 2016 elections, it seems that they're intent on trying the same trick on Medicare. Just as their efforts failed then, they will fail now. We say to our Republicans that want to privatize Medicare -- go try it, make our day."

Have any Democrats acknowledged the manifest shortcomings of GovCare (saying the program “isn’t perfect” doesn’t count), and offered suggestions for fixing them? If so, we haven’t read about it. The game plan seems to be to wash their hands of responsibility for this program and go into attack mode.

3. Some suggestions – If Republicans are more intent on political posturing than making constructive changes and Democrats don’t seem to recognize that any changes are needed other than providing more funding, what could possibly go wrong?

If the Republicans repeal GovCare and then start working on replacement provisions, which would be subject to filibuster and therefore require 60 votes in the Senate, the eventual replacement provisions aren’t likely to be materially better than current law. It’s not smart to begin business negotiations by surrendering whatever leverage one has, and it’s unclear why a different conclusion should apply in the political realm.

The result might be that GovCare was repealed in name only, and that the replacement program involved at least as much government control and cost as the current program.

What we would like to see instead is a serious effort by Republicans to agree on the program they want, unify behind it, and get the bill enacted before the warm glow of the election results is forgotten.

It doesn’t have to be a perfect plan, there’s no such thing in politics, just a plan that would be clearly better than what exists now. And the Trump approach (health savings accounts, sale of HCI policies across state lines, block grant Medicaid coverage) might be a good place to start even if many details remain to be filled in.

Here’s an intriguing variation on the theme, developed by Sen. Bill Cassidy (R-LA) and Rep. Pete Sessions (R-TX). Their plan seems to minimize ideological flashpoints by avoiding absolute requirements, e.g., the individual mandate would be repealed but people without HCI coverage would be automatically enrolled – hopefully at lower cost than at present – unless they opted out. Liberals might stomach this Obamacare repeal, Joel Gehrke, Washington Examiner,
12/2/16.

It certainly wouldn’t hurt to attract a few Democratic votes, as the Cassidy-Sessions proposal might do, but that should not be a prerequisite. The point is to design a plan that is straightforward, makes sense, and will appeal to the American public.

In closing, here’s our request to the political leaders on both sides: Get this one done!

*********FEEDBACK**********

I think the GOP won, in large measure, because the public wants GovCare gone.  Doctors and hospitals are not getting paid; people are paying a penalty; and independent health insurance agents are out-of-business. This is an unmitigated disaster. – SAFE director

[Republican] stooges reciting the party line. – SAFE director


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