Repeal and Replace: The Disaster Continues

Don’t worry everybody, Vice President Pence says that the replacement to Obamacare is on the way. In an event with Speaker Paul Ryan in Wisconsin, Pence promised, “We're going to replace Obamacare with the kinds of solutions that will lower the cost of health insurance for every American. We expect in a matter of days that you're going to begin to see a very brisk pace of legislative activity.” (via CNBC)

However, the Vice President’s ability to guarantee a speedy repeal and replacement is dodgy at best. For two months the Republicans’ have made replacing the Affordable Care Act one of their top priorities, but all they have produced so far is a leaked bill and lot of flowery, if confused, rhetoric. (Comparing the ACA to, among other things, a goat in a house, a puzzle, a ‘house of sand,' a bus ticket in a busless town, a collapsing bridge, a burning rug, and more cowbell.)

While Republicans are very good at coming up with creative ways to deride the ACA, they are divided on what might be done to replace it. In a newly leaked draft of the bill, the Republican house has retained the age-based tax incentives of the original draft and have added language that would preclude wealthy Americans from qualifying for tax rebates on healthcare. The new leak also contains provisions that would require a verification process for beneficiaries, state innovation grants and reinsurance funds (which funnel government money into private insurers when expenses for individual beneficiaries are too high, between $50,000 and $350,000 in the new bill), and the removal of the “grandmothering” language of the ACA which allows people to keep plans that do not meet the coverage standards of the ACA.

It is worth noting that none of this information has been released officially, and that all the above language is from documents obtained by Politico. There is still no official proposal or bill, even though Speaker Ryan has promised that the house will vote on new legislation within three weeks.

This continuing farce is not only bad politicking but bad legislating, as the as-yet-unseen bill continues to divide the party and ensure worse care and coverage for the average American.

Let’s break down the plan.

The tax incentive strategy, dubbed ‘Obamacare-lite’ by cynical Republicans, would allow Americans to apply for reimbursement of between $2000-$4000 annually based on broad age categories. The issue here is that many Americans without coverage would be unable to cover the initial medical fees and wait for a tax reimbursement. An estimated 36% fewer people would be able to attain coverage under that plan than the current set-up. This would be exacerbated by the verification requirements purportedly in the new legislation, which would require applicants to prove that they are ineligible for any other type of coverage before receiving tax rebates.

Under Secretary Tom Price’s plan – one which is believed will influence the bill heavily – recipients would receive a rebate that was 51% lower on average than the ones offered under the ACA. It also contains tax breaks for top-earners with no added incentives for Americans living beneath the poverty line. A study by the Urban Institute found that- using the information gleaned from the leaks – Americans using government health coverage would still be on the hook for three-quarters of their healthcare costs. Broken down another way, that means that many low-income Americans would be back to no health care at all.

The issue of ‘state innovation grants’ and ‘reinsurance funds’ is even more complex, as it would increase government payouts to non-government insurance providers who, with the provisions of the grandmothering policy, might not even provide a standard of coverage deemed acceptable under the legislation. Throwing taxpayer money, which would not be collected under the replacement bill if ACA were the first thing to go, at private enterprise does not seem like a wise course for the party critical of government spending on healthcare.

Things are so uncertain about the future of healthcare in America that, in a story reported by the New York Times, the preference in Utah is to retain the ACA. This is a state that voted overwhelmingly for Trump, with two Republican senators, but concern there is grave that the new legislation will retract coverage for the around 12% of Utahans who have been successfully covered by the ACA.

There’s a temptation in the wake of the leaked bills to romanticize the ACA, and I’m certainly not advocating for that here. Premiums are increasing at an alarming rate, and the program still does not do enough to ensure that every American has access to healthcare. However, if the bill tabled by the Republicans emerging from the secret legislation-bunker is consistent with the leaks, things are about to get a lot worse for those Americans who have accessed affordable healthcare for the first time in their lives.

The ‘kinds of solutions’ the Vice President spoke of are unilaterally going to raise healthcare costs, while managing to spend a similar amount of tax money. Whether this is a legacy war or a rebuke of the notion of socialized medicine, the Republicans are going to have to do a lot better, and they’re going to have to do it fast.

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