President Trump and Congress have a once-in-a-generation opportunity to reform America’s health care system. The goals of any meaningful health insurance reform should include: (1) Maximize access to affordable, quality care; (2) reform the insurance marketplace by moving purchasing power and decision-making away from bureaucrats, insurance companies and employers and toward consumers and patients; and (3) rein in runaway costs on the federal budget —costs that taxpayers ultimately pay.
The Obamacare Medicaid expansion continues for years, as do many of Obamacare’s expensive benefit mandates and taxes. Worst of all, the refundable tax credits contained within AHCA are merely a new twist on Obamacare’s subsidies to insurance companies. None of this is good for patients. None of this is good for taxpayers.
Where Obamacare relied on special interest payoffs to insurance companies to obtain passage, AHCA forfeits an opportunity to truly reform the health care marketplace in order to keep insurers happy. Obamacare kept insurers happy by requiring everyone to obtain insurance, and by providing direct subsidies to insurers who participated in the Obamacare “exchanges.” Insurers expected a windfall, but it was a deal they would come to regret.
Now, AHCA relies on refundable tax credits for individuals who purchase insurance. These credits are paid directly to insurers. In principle, that isn’t different than Obamacare subsidies to insurers. The problem? These credits are highly expensive, they are a new form of entitlement, and they perpetuate third-party payment. Just as wage withholdings on paychecks make taxpayers less aware of the true cost of government because they don’t have to write an actual check to the IRS, direct payment of tax credits to insurers makes consumers less aware of the true cost of insurance.
True reform would instead make consumers more involved in their health care choices. It would take power out of the hands of government and insurers (third parties) and place decision-making in the hands of patients and consumers (first party). It would admit that patients are in a better position than the federal government to make their own health care decisions. AHCA falls wells short of this goal.
Likewise, AHCA does far too little to rein in runaway health care costs on the federal budget. Obamacare and Medicaid are two of the nation’s largest entitlements and contribute significantly to the nation’s chronic debt and deficits. Again, AHCA replaces Obamacare’s subsidies with a brand new expensive entitlement, in the form of refundable tax credits. AHCA also maintains the federal Medicaid expansion for years before finally phasing it down and block granting the program in 2020. In the meantime, it would reward states that expand Medicaid, while enticing those that have not yet done so to move forward with expansion. It’s not a conservative principle to give more power to the federal government. It makes individuals less free to make their own decisions regarding their own health care.
Finally, AHCA is far too timid in repealing Obamacare’s expensive benefit mandates, which require insurance policies to carry expensive coverage that policy holders may not need or want. These mandates effectively prohibit insurers from offering consumers affordable, no-frills, catastrophic insurance plans. AHCA does repeal these mandates, but not until 2020.
Conservatives may not have another opportunity to reform the healthcare marketplace for decades. Now is the time. They need to think big. Don’t just settle for a plan that improves things at the margins.
Instead of passing AHCA, where should conservatives start?
Allow the marketplace to work. Allow decision-making to be bottom-up instead of top-down by concentrating power with consumers and patients instead of bureaucrats and insurers. Repeal Obamacare’s expensive benefit mandates sooner rather than later. Repeal Obamacare’s expensive Medicaid expansion in 2018 and set the program on a sustainable course by block granting the program as soon as possible. And eliminate the refundable tax credits, which are merely a new twist on an existing Obamacare entitlement.
Until then, vote down AHCA. Congressmen Ken Buck, Mike Coffman, Doug Lamborn, and Scott Tipton all campaigned on repealing Obamacare. They should vote no on this replacement, and pressure Republican leaders to bring real, market-based reform to the House floor.
Laura Carno is a Colorado-based author and political strategist. She blogs at LauraCarno.com.