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This Health Care Proposal is a Train-Wreck

Via the NYT,  The G.O.P.’s High-Risk Strategy for Health Law Repeal:

Under the proposed House legislation, individuals would no longer be subject to a penalty if they go without health insurance, a politically popular change that would be retroactive to 2016. But they would still enjoy the protections of the Affordable Care Act: Insurers would have to offer a suite of essential health benefits, could not deny them coverage because of pre-existing conditions and could not impose annual or lifetime caps on coverage.

Insurers would be free to raise their premiums to meet these requirements, but because current policies are locked in for the year, voters would not see the effects until 2018. If young, healthy Americans flee the market, freed from the mandate, premiums could soar next year.

Insurers say this is a recipe for havoc. Eliminating the penalties used to enforce the mandate that most Americans have insurance “would add to short-term instability in the market,” said Marilyn B. Tavenner, the chief executive of America’s Health Insurance Plans, a lobby for insurers.

Instead of the current tax penalty for failing to secure coverage, the bill would introduce a penalty for purchasing insurance after letting coverage lapse: To encourage people to maintain “continuous coverage,” insurers would impose a 30 percent surcharge on premiums for people without coverage for 63 days or more.

So, this keeps some of the more expensive elements of the PPACA (e.g., pre-existing conditions), but removes the mechanisms that makes it a viable policy (i.e., the mandate).  Plus, it keeps a penalty of sorts, but now as a revenue enhancement for insurers and does so in a way that will incentivize the young and healthy to forgo insurance.

I am more than happy to state that the PPACA is imperfect, but how anyone could support this train-wreck of an alternative is beyond me.

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About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. Liberal Capitalist says:

    ACA (Obamacare) was a good deal for the average American.

    We can’t have any of that happening, right? Not enough of a chance to siphon money from those that can least afford it. (it’s the “American Way!”)

    So, we go back to a “Buyer Beware” and a “you’re not covered for that” system.

    7 years of pseudo-conservatives (read that as “racist”) having a hard-on of repealing “Obamacare” with vile language and fevered spittle… they could put in the bill that you would have to sacrifice your first born to meet the annual deductible, and 30% of the country would still cheer for it over the ACA.

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  2. DrDaveT says:

    So, this keeps some of the more expensive elements of the PPACA (e.g., pre-existing conditions), but removes the mechanisms that makes it a viable policy (i.e., the mandate). […]
    I am more than happy to state that the PPACA is imperfect, but how anyone could support this train-wreck of an alternative is beyond me.

    I think you’re still giving too much credit to Republican politicians. You think they want a law that can work.

    They don’t.

    They want this plan to fail, so that they can say “See, I told you that universal coverage is unaffordable. We were right all along, and libruls are trying to bankrupt the nation.” Then they can revert healthcare in America back to what it was when Ronald Reagan strode godlike through the halls of power.

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  3. Gustopher says:

    If you skip health insurance for several years, you won’t notice the surcharge until you buy into the system. With the mandate, you feel that pain each year.

    The mandate doesn’t cause a lot of pain, and people may still opt out because of that, but it is a constant minor pain.

    (I would prefer a penalty that is indexed to the cost of reimbursing hospitals for uninsured emergency room visits, which is waived if you either have health insurance, or have paid more than that for emergency room visits. Just wipe out the free rider problem, and start hospitals on a path of charging for the services, rather than charging a huge markup to cover those who cannot pay)

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  4. Tyrell says:

    This is one problem with the mandate (penalty tax): the very reason that a lot of them did not sigup for the Obama Care (AHA) was that they did not qualify for a subsidy, yet they could not afford private coverage or the AHA plans, which run hundreds of dollars a month for one person: and that for a plan with a very high deductible and co-pays. So these people are already struggling financially and are hit upside the head with a penalty from the IRS ! Maybe I am not seeing this right or missing something about this.
    Another problem I encountered in looking into the AHA was that our local doctors were not on their list. “If you like your doctor, you can keep them” (President Obama).

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  5. Gustopher says:

    Also, as Martin O’Malley would say, we need to get this train to switch lanes before the train wreck.

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  6. Gustopher says:

    @Tyrell: the people who do not qualify for subsidies, and cannot (or will not) afford health insurance are getting a significant benefit at the cost of everyone else. Emergency rooms are not allowed to turn people away based on ability to pay (with a variety of caveats).

    Where we place the subsidies, and how we taper them off (too many government programs cut off suddenly, providing a huge incentive to earn just less than the maximum qualifying income level rather than just more — I’m not sure what the Obamacare subsidies do), are entirely reasonable questions to debate. But there will always be some people on the edge, and it’s going to be hard.

    We either want people to contribute to the cost of their health care, or we don’t. The subsidies are a best approximation of where people cannot, or where it would be cruel to force them.

    I personally have problems with forcing the poor into high deductible plans (bronze plans), when they aren’t going to be able to afford the deductibles — medical bills are one of the (if not the) leading causes of bankruptcy. If I had my druthers those plans would only count as insurance for people who have liquid assets more than N times the deductible.

    But, we work with what we have, and we strive to make things less worse. A lot more people who cannot afford $5,000 in medical expenses are going to find a way to afford it if it happens than $150,000 in medical expenses.

    And the same thing applies for people just above the subsidy line — more can afford it than cannot, although it might hurt a little.

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  7. Gustopher says:

    @Tyrell:

    Another problem I encountered in looking into the AHA was that our local doctors were not on their list. “If you like your doctor, you can keep them” (President Obama).

    Welcome to the real world. Most people with jobs have a small number of choices for insurance plans and no say in what those choices are. Your doctor might be in network one year, and then out the next, depending on what the company is offering.

    Yes, it was stupid of Obama to promise more than he can deliver, and more than corporate America delivers for most people.

    Again, the goal should always be to continuously make things less worse, rather than fretting about whether it is perfect on day one.

    (I am lucky enough to be in a field with roughly 0% unemployment, so I can switch jobs if the health insurance offered changes too much year over year. Few people are that lucky, and those who are generally get pretty good health insurance options, because the employers want to hang onto their employees)

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  8. Hal_10000 says:

    IF you’re going to have guaranteed issue, you need a coverage mandate. That’s the way math works.

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  9. DrDaveT says:

    @Hal_10000:

    IF you’re going to have guaranteed issue, you need a coverage mandate. That’s the way math works.

    If you want the system to still look like “health insurance”, yes. The other option is to admit that healthcare is a public good, and fund it directly out of general tax revenues like the military or air traffic control.

    [Insert off-stage screams of “Socialism!” here…]

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  10. Gustopher says:

    @DrDaveT: That’s just an automatic, government supplied mandate.

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  11. David M says:

    As I saw elsewhere, this is as good an illustration of the GOP priorities as you’re ever going to get. The reason to vote on this bill before the CBO scores it, is because the score is irrelevant to the bill. The number of people who will lose insurance simply doesn’t matter, which is why the GOP is alternately ignoring the CBO score (saying it doesn’t matter) and preemptively discrediting it.

    What does matter is the tax cuts for the wealthy.

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  12. MarkedMan says:

    @DrDaveT:

    They want this plan to fail, so that they can say “See, I told you that universal coverage is unaffordable.

    For some years I’ve been referring to the modern Republican establishment as the Blue Tarp Party. They have lost all ability to meet the responsibilities of upkeep, never mind actual improvements. They are like some of the elderly I know that begrudge every nickel and so gradually let their houses decline to the point that it is unsellable. Eventually they have a leaky roof and end up putting a big blue tarp over it because that’s cheaper than actual repair.

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  13. Kari Q says:

    @Tyrell:

    This is one problem with the mandate (penalty tax): the very reason that a lot of them did not sigup for the Obama Care (AHA) was that they did not qualify for a subsidy, yet they could not afford private coverage or the AHA plans, which run hundreds of dollars a month for one person: and that for a plan with a very high deductible and co-pays. So these people are already struggling financially and are hit upside the head with a penalty from the IRS ! Maybe I am not seeing this right or missing something about this.

    This is an excellent argument for more generous subsidies expanding Medicaid in the states that have not already done so. Of course, that’s not what the GOP wants to do. They have the peculiar idea that people who aren’t buying insurance would prefer to go without it, rather than have greater help getting it.

    Another problem I encountered in looking into the AHA was that our local doctors were not on their list.

    This type of complaint (narrow networks generally) makes me wonder if conservatives are really that unfamiliar with how insurance works. The ACA isn’t what decides how many doctors are in your network, that’s the insurance company. The ACA doesn’t cause your doctor to accept insurance or not, that’s your doctor. This kind of problem was going on long before the ACA was passed. Repealing it won’t change that.

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  14. @Kari Q: I think a lot of people don’t understand insurance (or health care policy in general–even the basics). Right now anything that is bad about health care is blamed by critics on Obamacare, even if the object of complaint is, well, a preexisting condition of the system.

    It is like how people blame everything they hate about public education on common core.

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  15. DrDaveT says:

    @Steven L. Taylor:

    It is like how people blame everything they hate about public education on common core.

    Excellent analogy, Dr. Taylor. I’m going to steal that one.

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  16. Terrye Cravens says:

    The big drop in coverage is going to come from medicaid and that is going to hurt the individual states. Many of those states voted for Trump. Such as my state, Indiana. Morons.

    As for the mandate, it is waived if there is financial hardship. I do know one family that was upset about it because if they did not have insurance they would not get over $6,000 back from the government. They would get about $3,500. Often times that is how that worked, you did not write them a check.

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  17. Daryl's other brother Darryl says:

    It’s only a train wreck if you naively expect it to be about peoples health.
    As a tax cut for the wealthy it is very effective and quite well designed.

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  18. the Q says:

    So Marilynn Tavener of the AHIP is complaining about the changes?

    She’s the same Marilynn Tavener that went directly from being Obama’s Administrator of the Centers for Medicare and Medicaid Services (and in charge of the disastrous roll out of the website healthcare.gov) which implemented the ACA to being the primary shill for the HMOs.

    So why couldn’t Obama enact his very first day, the same prohibition that the lunatic Trump imposed on his appointees regarding a ban for 5 years on lobbying?

    Because, as few of you will admit, the Dems are almost as much in the bag for big bizness as the worthless GOP.

    The wingnuts can use Travenner as populist fodder for the corruption of gov’t, while the libs somehow will try and justify that there is nothing wrong here.

    The point is, Obamacare was not perfect and the Dems didn’t do enough to correct the faults. Any criticism of the ACA means you are an enemy of the libs, hence the loons are now in charge.

    The Dems took care of their “poor” base and alienated the middle since most middle class are not eligible for the subsidies. The wingnuts are taking care of their “rich” base and will alienate the same middle class once their plan is fully rolled out.

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  19. Tyrell says:

    @Kari Q: I hear about doctors complaining about the huge amount of information and data that they have to collect. I have noticed at doctor visits that they spend a lot of time on a laptop. Is this a requirement of the government? And where does all that information go ?

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  20. David M says:

    And the CBO says 24 million will lose coverage. That sounds bad. Is that bad?

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  21. Kari Q says:

    @Tyrell:

    That’s far too vague a question to have even the slightest idea what you’re talking about. In any case, I find it hard to believe that doctors having more information is a bad thing.

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  22. Matt says:

    @Kari Q: The question has been answered in detail multiple times in the past by various people here including me. Tyrell has had many things explained to him only for him to turn around and complain/ask about it again a day later. I have no willpower to explain to the troll again.

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  23. ...ig'nint... says:

    @Tyrell: @Kari Q: Well I can’t speak for the reasons here, but when I was in Korea, my doctor spent a lot of time on the computer because that’s where my charts and his notes were. :-(

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