Tuesday, March 7, 2017

Listen: Obamacare Lite is going nowhere.

This bill is going nowhere.  And there's a lot of reasons why.

It's unconstitutional.
That's not a word I throw around a lot, but fortunately we only recently received guidance about this fact.  See, a bunch of Republicans sued the Obama administration over Obamacare, arguing that the mandate (which requires everyone to have some form of coverage) was unconstitutional.  The argument was that the government cannot compel you to purchase any product.  And the Supreme Court agreed -- the GOP won that fight!  Of course, it doesn't matter because they went on to hold that the Obamacare mandate was still okay, since it was a tax.  The reasoning was that the government can use tax incentives or penalties to encourage all sorts of behavior, and that's well-established, so therefore they can use a tax penalty to encourage people to buy insurance.

But of course, Republicans hate the mandate in Obamacare.  The problem is that the mandate is what makes the current system work... you can't just force insurance companies to cover pre-existing conditions and put a cap on their rates, since then only sick people will bother to get insurance (and then insurance companies would go out of business, since they'd always be paying out more than they took in).  So you have to compel people to maintain coverage a different way.  In this bill, they would compel coverage by requiring an insurance company to charge 30% more for insurance for new enrollees.

Right off the bat, it's obvious why this won't work.  If I get seriously ill, then even with a 30% increase, the premiums for insurance are probably going to be cheaper than paying out of pocket.  There's no reason for the young and healthy to buy insurance!

But more to the point, the very suit that the Republicans brought established in black and white why this isn't allowed.  SCOTUS, while upholding the mandate as a tax, specifically said that it was only constitutional because it was a tax... that is, the IRS collects it and the government keeps it:
[T]he shared responsibility payment may for constitutional purposes be considered a tax. The payment is not so high that there is really no choice but to buy health insurance; the payment is not limited to willful violations, as penalties for unlawful acts often are; and the payment is collected solely by the IRS through the normal means of taxation. Cf. Bailey v. Drexel Furniture Co., 259 U. S. 20–37. None of this is to say that payment is not intended to induce the purchase of health insurance. But the mandate need not be read to declare that failing to do so is unlawful. Neither the Affordable Care Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. And Congress’s choice of language—stating that individuals “shall” obtain insurance or pay a “penalty”—does not require reading §5000A as punishing unlawful conduct. It may also be read as imposing a tax on those who go without insurance. See New York v. United States, 505 U. S. 144–174. Pp. 35–40.
It's really hard to see how the Republican alternative, which requires people to buy insurance or else pay the insurance company a fee, passes muster under this standard.  Everyone is required to purchase a service or else they have to pay more for that service?  At the very least, this will be a hugely contentious bit.

And that's leaving aside the fact that...

It won't work.
As I already mentioned, one of the central features of this bill is unworkable.  But that's only the tip of the iceberg.

A big healthcare bill is hard.  You need as many people as possible to get insurance, because all the healthy, young people subsidize the care of sick, old people.  A cancer victim's premiums are going to be much less than the cost of their treatment, and a healthy person's premiums are going to be somewhat more than the cost of their treatment -- ten healthy people pay for the cancer victim's care (plus a little profit for the company).

To make this happen, you need carrots and sticks.  You need carrots to bribe the insurance companies to give everyone affordable coverage, even the sick and old.  You need sticks to force all the young and healthy people to buy coverage, even if they don't need it at the moment.  If you don't succeed, then either (a) sick people overwhelm the system since no healthy people balance them out, or (b) sick people don't get coverage and die.

This bill doesn't have enough carrots and sticks.  The mandate was already pretty weak, and the 30% penalty is much weaker.  Young and healthy people, even more than right now, have no reason to buy coverage.  And so it falls apart right away, which is why...

It has no champions.
There's no natural group that's going to be happy about this bill.  Insurance companies aren't going to like it because they're not idiots: they know that it's impossible to cover pre-existing conditions unless there's a big stick to force healthy people to buy coverage, too.  Older people aren't going to like it, since the bill will raise the cost of their insurance since it allows insurance companies to charge them a maximum of quintuple the premium of a young person (as opposed to Obamacare, which allows only triple the premium).  The poor aren't going to like it, since it block-grants Medicaid and will gradually reduce its funding.  The retired aren't going to like it, since it guts the taxes that are currently paying for Medicare.  Conservatives aren't going to like it, since it still has a stick (a wimpy one) that they oppose out of principle.  And liberals... well, we loathe it.

Who's going to fight for this bill?

The reaction from the left has been predictable, but even on the right... it's not good.  They're calling it "Obamacare Lite."  I love that label, and I'm going to use it.

The rabid Reddit supporters at The_Donald hate the bill and are blaming it on the Speaker of the House, Paul Ryan (because you never criticize the king, only his foolish advisors)  Sample threads:
The conservative Cato Institute's article is more cordial and more brutal:  The House GOP Leadership’s Health Care Bill Is ObamaCare-Lite — Or Worse  Libertarian Reason agrees: The GOP’s Obamacare Repeal Bill Is Here. Is This Just Obamacare Lite?
And senators and representatives of all stripes are coming out against parts of the bill or the whole thing.  The appearance that it is a doomed mess encourages others to score points off of it, exacerbating the problem.

So overall...

This bill is going nowhere unless it changes dramatically, and it's hard to imagine any version that could pass.

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