- - Tuesday, March 21, 2017

ANALYSIS/OPINION

The problem is, the American Health Care Act – the GOP’s Obamacare “repeal” bill – does not repeal the heart and soul of Obamacare. If this bill is enacted into law without significant changes, it will likely blow up in the GOP’s hands, and leave all of them – including President Trump, who campaigned on a promise to repeal Obamacare – scrambling for cover.

Consider:

Ask what people who want to see Obamacare repealed associate with “Obamacare,” and the most popular response will be, “higher insurance costs.” That’s not surprising – since the imposition of the Affordable Care Act, premiums, co-pays, and deductibles have all risen substantially.

The converse is true, too; ask them what they mean when they say they want to see Obamacare repealed, and they’ll say, “I want health insurance to be affordable again.” 

That’s a pretty simple marching order for the GOP majorities in the House and Senate: Find a way to make health insurance affordable again.

To do that, you’d just have to figure out which parts of Obamacare are responsible for driving up the cost of health insurance, and then repeal those elements. 

The good news is, we know what’s driving the increases in insurance costs – the mandates on the insurance companies themselves. 

I speak of Guaranteed Issue, Community Rating and Essential Health Benefits.

“Guaranteed Issue” is wonk-talk for the Affordable Care Act requirement that insurance companies sell a policy to anyone who wants to buy, pre-existing conditions be damned. “Community Rating” is wonk-talk for the requirement that prohibits individual risk assessment when pricing a policy, and requires insurance companies to sell policies in the same geographic region to similarly aged people at the same price. And “Essential Health Benefits” are ten types of coverage that every policy must contain, whether the policyholder wants all that coverage or not, which has the effect of preventing the sale of low-cost catastrophic coverage.

The first two are enormously popular with the public, primarily because large elements of the public apparently hate the insurance companies. So anything that can be marketed as “sticking it” to the insurance companies is popular. 

The problem is, insurance companies are like any other company when it comes to basic economics. They are organized, and their management actually has a fiduciary responsibility, to maximize profit for their shareholders.

Raise their costs (by requiring them to sell a policy to anyone who wants, even if they know the new policyholder is very likely going to cost them lots of money, and by preventing them from charging that new policyholder enough money to cover the cost of his medical care) and they’ll simply pass those higher costs on to consumers, in the form of higher premiums. It would be economic foolishness to think otherwise.

So why doesn’t the GOP bill repeal these insurance mandates, the very heart and soul of Obamacare?

It may simply be a question of political calculation. Perhaps they simply do not WANT to repeal these popular elements of Obamacare – they’re popular, for gosh sakes! – despite the fact that these are the very elements that are driving up the cost of insurance.

If the AHCA is enacted with these insurance mandates left intact, the result will be predictable – with generous subsidies replaced by less generous tax credits, and without the individual mandate, there will be far less incentive to purchase insurance in the private marketplace.

Many people, knowing the insurance mandates are still in place (read: knowing they can still buy insurance if they suddenly need to), will choose to save that premium money and use it for other purposes. The healthier among them will drop out of the market, thereby reducing the pool of healthy insured, and leaving the private insurance pool smaller and relatively sicker. Insurance companies will respond by raising prices further and continuing to withdraw from marketplaces. The so-called “death spiral” will be accelerated.

And Republicans will own it. What’s necessary instead is a sustained public relations campaign to educate our citizenry as to the realities of the costs associated with the “popular” elements of this unpopular law. Most people in this country still know intuitively that there is no such thing as a free lunch. We need leaders willing to explain that to a citizenry that needs to hear it.

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