Tuesday, May 9, 2017

Obamacare Repeal Observations

The House GOP has passed their version of the repeal and replacement of Obamacare.

It will now be up the U.S. Senate to develop their own version and then see if it can be reconciled with the House bill.

Will whatever comes out of this process be better than what we have right now?

I have no idea.

The only thing I know is that it could not be worse no matter what the critics are saying right now.

The mistake Trump made on Obamacare

That being said, I think President Trump made a political mistake in getting behind the Republican effort in the House. I understand why he did it. He kept hearing the statements in his head that he made during the campaign that he was going to do something about Obamacare. He said he would repeal Obamacare. He said he would make it better for everyone.

Of course, when you are dealing with something like Obamacare, there is no way you can make it better for everyone. Someone is going to be unhappy.

To show you how ridiculous it all has become, Jonathan Gruber (the so-called architect of Obamacare who I wrote about previously in a BeeLine post) is claiming that many of Obamacare's problems are due to Trump! I kid you not.

I think this goes to show that Trump would have been much smarter to go on the stump and make the case consistently that Obamacare is coming apart at the seams.  He could cite evidence of that almost every day. And he could have exhorted Congress to do something about it. Not the GOP Congress. The entire Congress.

For example, consider this Washington Examiner story on proposed Obamacare premium increases in Maryland and Virginia. Insurers in Maryland have requested average rate increases for 2018 of between 18% and 59%. In Virginia, insurers have requested rate increases averaging 30.6%.

Iowa is on the verge of having no individual health care options under Obamacare as the lone insurer left in the state has stated it is close to exiting the state market.

Humana has stated it will exit all of the Obamacare exchanges in 2018 no matter what happens in Congress. 

What Trump should have done

Trump then should have made it clear to both parties that he would not sign any repeal and replace bill unless it had substantial bipartisan support.

This would have three political advantages (what else is important in Washington?).

First, it would have allowed Trump to stay above the fray for the time being and allow him to do what he is best at. Elevate attention to the real problem---Obamacare--- while also allowing him to keep his political powder dry until he was needed at the end to help put a final deal together. Who is better than dealing?

Second, it puts the political pressure on the Democrats rather than on his own party, as it is right now. The message would be clear---the Democrats gave us this mess, they have a responsibility to help fix it. If they are not willing to act, they own every bad story that comes out on Obamacare leading to 2018.

Third, this strategy would have protected members of his own party. Yes, many were elected because of their promise to repeal Obamacare. However, what is the point of winning in 2010 on a promise to repeal Obamcare if you are going to be defeated in 2018 because you messed up the repeal of Obamacare? 

I understand the desire to do something but I don't think the GOP in Congress understands where this is all going to end.

For example, I believe it is already too late to make any real changes for the individual plan market for 2018. There simply is not enough time for insurers to re-do their products and pricing. That means Obamacare plans and prices will be in place for 2018 at a minimum. Any changes will not come until 2019---after the mid-term elections. You see that from the news stories above where insurers have already made most of the big decisions for 2018. 

When you also consider the fact that the Republican House bill envisions turning many of the decisions back to the individual states on key points in the law (what are essential benefits, risk pools, etc) having anything ready for the 2018 year looks even more far-fetched.

Pre-Existing Conditions Should Be A Non-Issue

One final point on all the craziness surrounding those that are trying to defend Obamacare.

The biggest issue that those who want to defend Obamacare seems to be about the possibility that coverage for pre-existing conditions could be lost in any repeal and replacement of the present law.

The first thing to consider is that there is no issue regarding pre-existing conditions at all with regard to anyone in a group health plan as long as the individual had coverage previously. In other words, if you are in one group plan and change jobs and join another plan, that plan cannot deny you coverage as long as you had continuous coverage for the last 12 months

Let's put that in context. There are approximately 156 million people who have group coverage in the United States. There are another 105 million people who are on Medicare or Medicaid. There are 6 million in various public plans. There is no real pre-existing condition issue with any of these people within these plans. This accounts for 270 million people.

The pre-existing condition issue (even if Obamacare is repealed) only relates to the 22 million people who are on individual plans (or would enter those plans from a group plan) and the 28 million people who are still uninsured despite the fact that Obamacare has already mandated they purchase coverage for over 3 years.

I have never understood why the HIPAA law that disallows pre-existing conditions in group plans was not simply extended to the individual marketplace as well. It would solve the problem once and for all. You could not be denied coverage for a pre-existing condition if you had previous coverage in the preceding 12 months. Problem solved!

It really should be an easy fix today as everyone, by law, is supposed to have had coverage for the last three years. There should be no one with a pre-existing condition in the United States anymore. Obamacare was supposed to fix that.

Of course, the problem is that 28 million people have had every opportunity to buy coverage (liberally subsidized for those with lower incomes) and yet have not done so. That is the sad truth about Obamacare. It really has done very little to reduce the ranks of the uninsured unless the taxpayers are paying the bill.

All of this disruption and costs for a meager 1%?

Investors Business Daily reports that 14.2 million gained coverage under Obamacare since it was enacted. However, 12 million of that number are on Medicaid. 2.2 million more are covered in the individual market. However, 84% of those are receiving subsidies. By my count, that means of the 14.2 million that have gained coverage, 97.5% of them are having their coverage paid for by someone else.

Think about that 2.2 million number for a moment.
ObamaCare has caused massive disruptions of the individual market, forced millions to drop health plans they like, caused huge price spikes and mounting insurance losses, created monopoly markets around the country, and resulted in the virtual takeover of the individual market by HMO plans.
That's to say nothing of the enormous costs of setting up and running the ObamaCare exchanges and the trillion dollars in subsidies to offset the cost of premiums for lower-income families.
All to increase the number of privately insured by a meager 1%.

Yes, Obamacare is a great deal for that 1% and those who are now on Medicaid. It is always great if someone else is paying the bill.

However, what about the millions and millions of other people who have lost coverage they liked, or seen their health care costs and taxes go up to fund Obamacare?

For those who don't qualify for subsidies, the costs of the coverage is causing more and more people to go without coverage. A perverse result indeed and one that will only get worse if Obamacare is not reformed.

It needs to be reformed but President Trump and the GOP are making a monumental political error in trying to do this while the Democrats who caused the mess sit idly by.

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