On Monday, the Congressional Budget Office came out with their long awaited assessment of a congressional GOP proposal to replace the Affordable Care Act. The CBO said the American Health Care Act (AHCA) — currently in the form of two bills, each approved by a different House committee — would reduce the deficit by a paltry $337 billion between 2017 and 2026.
The CBO report does not even address how the cost of Medicaid and its subsequent struggles will be shifted onto the states. States can’t make Medicaid more cost-effective because they are prevented from addressing the monopolies and crony capitalism that keep drug prices and other medical costs high.
Instead of castigating the CBO, why don’t congressional Republicans deal with the real cost-drivers in American health care?
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The report also found additional changes to subsidies in the nongroup market and under Medicaid would increase in the number of uninsured people to 21 million in 2020 and then to 24 million in 2026. The reductions in insurance coverage between 2018 and 2026 would stem in large part from changes in Medicaid enrollment — because some states would discontinue their expansion of eligibility, some states that would have expanded eligibility in the future would choose not to do so, and per-enrollee spending in the program would be capped. In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.
The legislation would tend to increase average premiums in the nongroup market prior to 2020 and lower average premiums thereafter, relative to projections under current law. In 2018 and 2019, according to CBO estimates, average premiums for single policyholders in the nongroup market would be 15-20 percent higher than under current law, mainly because the individual mandate penalties would be eliminated, inducing fewer comparatively healthy people to sign up.
The CBO’s assumption, which I think is correct, is that people will buy catastrophic policies which will be cheaper than the tax credits. Self-employed individuals would only buy insurance if the total cost was less than the tax credit provided by the new plan. If they can’t find such coverage, they would likely buy a new form of insurance that this law may create: a policy that would pay for health insurance premiums if the user ever got sick enough to need them.
Such insurance would likely be very cheap, as the maximum exposure to the insurance company is only 130 percent of the premium for a standard health insurance policy. In the end, the only people buying health insurance will be those who can buy it for free using their tax credits and really sick people for whom insurance premiums are cheaper than their medical bills. But as insurance companies lose money on the latter group, they will be forced to raise their premiums on the former. This puts us right back in the fiscal death spiral we have with Obamacare.
Premiums will surely rise well above the amount of the tax credits — resulting in more people dropping out of the system. Unless the amount of the tax credits rises substantially, which will cost a fortune, all health insurance companies will eventually go out of business. They and the Democrats will demand that these subsidies be increased. The end result will be a collapse in heath care in the U.S., only it will be President Donald Trump, not President Obama, that gets the blame.
Let me put another legislative fiction to rest. There is no “Phase 2 or 3″ in the offing. The fulfillment of candidate Trump’s promises on health care will never realistically get 60 votes in the U.S. Senate. But when the Democrats don’t provide the necessary votes, congressional Republicans can at least fall back on finger-pointing.
Why don’t we give a truly free market solution a chance to work? Why is it that the insurance companies have been quiet during all this. Is it because they are the true authors of the AHCA as a recent New York Times article suggested.
If President Trump doesn’t abandon the AHCA, it could come at enormous political cost. The president and the GOP will surely lose the Congress in 2020 — if not 2018.
President Trump and this country would be better served if we went back to the drawing board. Stop restating the obvious that the ACA is failing and then giving us the false binary choice of accepting the AHCA or see the ACA bankrupt America. The ACA proved that crony capitalism is depriving Americans of cost-effective health care. The AHCA actually makes matters worse and is unfixable. The CBO just told us something real conservatives knew.
Instead of castigating the CBO, why don’t congressional Republicans deal with the real cost-drivers in American health care? End Big Pharma’s endless patent extensions and end the predatory pricing schemes that make drugs unattainable for prices in other OECD countries. Stop subsidizing the insurance companies. Lower the actual uncovered costs of health care so that it can be more like auto insurance. The AHCA doesn’t change the business model of American health care — it just applies a different shade of lipstick to this pig. Real conservatives know this isn’t the best we can do. And they know we must do better now.
Dr. Ramin Oskoui, a cardiologist in the Washington, D.C., area, is CEO of Foxhall Cardiology PC and a regular contributor to LifeZette.