One Step Closer: The House GOP Manages to Pass a Repeal-and-Replace Bill

May 05, 2017

Happy Cinco de Mayo!

Give Republicans credit — they got a health-insurance reform bill through the House!

The good stuff:

· The individual mandate is gone. You are no longer subject to a special tax if you don't purchase health insurance.

· However, there is a consequence if you don't buy insurance and end up needing it later. If you let your insurance lapse for more than 63 days, and then go back to buy it again, you can be charged 30 percent more.

· Adult children can stay on their government plans. Even if you think this is treating young twentysomethings like children, this part of Obamacare was wildly popular and the fight was not worth it to Republicans.

· A nice compromise on the expansion of Medicaid under Obamacare: If you're already in the system under the expansion, you're grandfathered in and you don't lose your Medicaid coverage. But if states want to continue the expanded eligibility for new applicants, they'll have to pay more of the costs. Most states just don't have the financial resources to do this.

· Block grants for Medicaid, allowing states much more flexibility in how they administer their programs. Republican governors love this, contending they can give their poorest citizens better care in a more efficient manner if Washington will just stop micromanaging from afar.

(When you hear from a Democratic friend about how terrible it is to cut the expanded eligibility for Medicaid, ask him why the Democrat-controlled Oregon state legislature is contemplating the same thing, a proposal that would cut off 335,000 people from Medicaid. This program, as noble as it is, is really expensive, and politicians' promises keep writing checks that the state revenue can't cash.)

· Expansion of health-savings accounts (HSAs). Right now, "individuals can save up to $3,400 and families can save up to $6,750 tax free in an HSA. Under the bill, those limits would nearly double, to $6,550 for individuals and $13,100 for families in 2018."

· Just about all of Obamacare's taxes are gone: the new tax on incomes over $200,000 (or $250,000 for a married couple); a tax on health insurers and a limit on how much insurance companies can deduct for executive pay; and a tax on medical-device manufacturers.

The stuff you might like, or might not like:

· Obamacare's subsidies are gone; instead, there's a system of tax credits (remember, this is different from a tax deduction. Even if you don't owe as much in taxes as the credit, the government gives you a check). "The credits start at $2,000 for people in their 20s, and go up to $4,000 for people in their 60s. Individuals earning over $215,000 and families making more than $290,000 would not be eligible to receive the credits, which would start in 2020."

· Under this bill, state governments can apply for waivers to exempt insurance companies in their state from certain rules enacted under Obamacare. This is the big controversial part, and right now, a really big question is how many states will want to seek these waivers. The most consequential waiver is the one for pre-existing conditions; state insurance companies will want to charge more if an applicant's health situation means they're going to have to spend more to provide care in the coming months or years. The bill provides $8 billion over five years for states that apply for the waiver, to help cover the costs of care for people with pre-existing conditions. Quite a few folks think that won't be sufficient.

But Avik Roy, who knows this stuff backwards and forwards, points out that Obamacare created something called the Pre-Existing Condition Insurance Plan, a heavily subsidized coverage for anyone who could prove that they had been denied coverage by an insurance company and had a pre-existing condition. The maximum number of people under this plan was… 115,000 people.

So if the same number of people need this kind of assistance as the peak in early 2013, this plan provides almost $70,000 per patient, a pretty sizable chunk of change. Maybe the funding in this bill will be enough after all.

Roy points out that "Maine, Massachusetts, New Jersey, New York, Vermont, and Washington all required insurers to guarantee issuance of coverage to those with pre-existing conditions prior to Obamacare becoming law."

The Tougher Long-Term Outlook for GOP Health-Care Reform

Charles Krauthammer, last night:

In the short run, I think the Senate is not going to accept the House plan. It will come up with the plan of its own, they'll go to conference — who knows where it's going to end up, but it's going to be a rickety arrangement. It's likely that Republicans are going to suffer at the polls. If that happens, you're going to get a sea change in opinion. And then there are only two ways to go: to a radically individualist system where the market rules, or to single-payer, and the country is not going to go back to radical individualist.

One other scenario is that the Senate tries to pass its own version of AHCA, but Democrats filibuster it… and repeal-and-replace dies because eight Democrats won't join Republicans in ending a filibuster. The status quo continues, things get worse, and Republicans go to the public in 2018 with the message, "we tried to fix this, but Senate Democrats wouldn't let us." The message resonates, the map of states up for reelection helps, and Republicans return to Congress in January 29 with either 60 votes or 50-some with a bunch of nervous Democrats, and a larger majority is open to making structural changes to Obamacare.

Keep in mind, the GOP is being led by a president who has only the vaguest idea of what is in the bill, and no coherent way to explain what it does. Trump, last weekend:

PRESIDENT DONALD TRUMP: --the premiums are too high. The deductibles are through the roof, so you never get to use it. But more importantly, it's dead.

JOHN DICKERSON: So but in the bill, as it was analyzed, there were two problems. One, and you talked about this with Congressman Robert Aderholt, who brought you the example of the 64-year-old who under Obamacare the premiums--

PRESIDENT DONALD TRUMP: But that was a long time ago, John.

JOHN DICKERSON: But has that been fixed?

PRESIDENT DONALD TRUMP: Totally fixed.

JOHN DICKERSON: How?

PRESIDENT DONALD TRUMP: How? We've made many changes to the bill. You know, this bill is--

JOHN DICKERSON: What kind though?

PRESIDENT DONALD TRUMP: --very much different than it was three weeks ago.

JOHN DICKERSON: Help us explain because there are people--

PRESIDENT DONALD TRUMP: The bill--

JOHN DICKERSON: --out there wondering what kind of changes.

PRESIDENT DONALD TRUMP: Let me explain. Let me explain it to you.

JOHN DICKERSON: Okay.

PRESIDENT DONALD TRUMP: This bill is much different than it was a little while ago, okay? This bill has evolved. And we didn't have a failure on the bill. You know, it was reported like a failure. Now, the one thing I wouldn't have done again is put a timeline. That's why on the second iteration, I didn't put a timeline. But we have now pre-existing conditions in the bill. We have -- we've set up a pool for the pre-existing conditions so that the premiums can be allowed to fall. We're taking across all of the borders or the lines so that insurance companies can compete--

JOHN DICKERSON: But that's not in--

PRESIDENT DONALD TRUMP: --nationwide.

JOHN DICKERSON: --this bill. The borders are not in--

PRESIDENT DONALD TRUMP: Of course, it's in.

JOHN DICKERSON: --this bill. It's in that third bill, right, because--

PRESIDENT DONALD TRUMP: It's in the second phase.

JOHN DICKERSON: Okay.

PRESIDENT DONALD TRUMP: It's called phase one, phase two. And that's, in effect, second phase, which will get approved, which will quickly get approved.

JOHN DICKERSON: Let me--

PRESIDENT DONALD TRUMP: But let me just explain something. There will be such competition. Right now, there's no competition. There will be such competition by insurance companies so that they can get health care and the people taking care of health care.

Notice Trump is touting "phase two" (I thought phase two was Tom Price making changes at HHS, and that legislation to allow the sale of health insurance across state lines was phase three, but whatever)… which has no particular deadline, other than, "after phase one."

Kevin Williamson says so much in so few words: "I'd rather have a health-care system that looks like the Apple Store than one that looks like a Venezuelan grocery store." Meaning, he would rather have a system where it costs money out of pocket but there is high quality and a variety of services against one where the government runs everything and functionally, very little is available.

ADDENDA: This week on the pop culture podcast: Aren't you glad you didn't buy tickets to the Fyre Festival? Mickey and I discuss David French's NR cover piece on The Rock; why every child in America will want a Baby Groot from Guardians of the Galaxy Vol. 2; how every British movie star ended up in Murder on the Orient Express; my complaint about The Handmaid's Tale hype; Gwenyth Paltrow brings GOOP to print; television-streaming fees spike; Facebook starts hiring for a disturbing problem; and on Kentucky Derby weekend, everybody turns into a horseracing expert.