It Couldn’t Be Fixed: Policy and Politics in the Republican Health Care Bill

Marc Stier |

Now that the Senate Republican effort to repeal and replace the Affordable Care Act has failed, let’s take a step back and understand why no bill based on the Republican approach to health care could have been fixed enough to reduce the pain to levels acceptable to a majority of Republicans in Congress, let alone to the American people.

The basic design of the bill was deeply flawed from the perspective of anyone who thinks that America has a responsibility to guarantee quality, affordable health care to all. The design only made sense if one, instead, seeks a politically palatable way to reject that responsibility and reduce federal health care spending in order to cut taxes on large corporations and the rich.

What started as a bill to repeal the Affordable Care Act (ACA) became a bill to partly repeal the health insurance regulations and subsidies for insurance purchased in the individual marketplaces, fully repeal the Medicaid Expansion, and radically restructure – and drastically reduce – funding for traditional Medicaid.

Why did every Republican health care bill take this form? First, because Republicans could only cut taxes deeply if they reduced federal health care funding below pre-ACA levels. That meant making deep reductions to not just expanded, but also traditional Medicaid. And second because cuts to the parts of the ACA that help relatively middle-class people who benefit from the subsidies on the ACA marketplaces (and who vote at high rates) are politically difficult. Leaving these components of the ACA untouched also made deep cuts to Medicaid necessary in order to make the numbers add up.

To placate the market fundamentalists in their caucuses who opposed keeping  some subsidies in the marketplaces, Republicans leaders had to roll back insurance regulations. They allowed states (and multi-state corporations anywhere) to opt-out of the regulations that prohibit insurance companies from excluding certain conditions from an insurance policy or from creating annual or life-time limits on coverage. And they embraced the even more radical Cruz Amendment, which would have allowed insurers that offer one plan that meets the ACA’s requirements to offer other plans that adjust premiums for the health status of the insured.

When you put together the fundamental features of every Republican bill – a cut in federal health care spending of at least $1.2 trillion over ten years and changes to health insurance regulations that drastically raise premiums for people who are older and have pre-existing conditions – there was no way to avoid the result the CBO keeps finding. These bills reduce the number of insured Americans by well over 20 million people (and the number of insured Pennsylvanians by well over 1 million).

The Republican health care proposals were caught between two basic facts. The first is that we can’t provide health care without paying for it. The second is that if we were to cut federal spending by 1.2 trillion dollars over ten years, millions of people would receive less health care than they would without the reduction.

That is why all the Republican patches on their bills couldn’t stop millions of people from losing health care. Every one of their “fixes,” from the $45 billion for substance abuse disorders to the $200 billion insurance stabilization fund, suffered from the same problems. They didn’t provide enough money to make up for the health care lost under the current system. They didn’t provide enough health care to those who really need it because the patches were solely designed to win the votes of Senators and Representatives. And every one of those patches was temporary. They were meant to delay the pain of the Republican health care bill for one or two or three election cycles or so the next CBO score is a little better. Eventually, however, all the losses in insured population predicted by the first CBO score – 24 million – would have happened.

There is no way around it. There is only $430 billion available for patches from the combination of the deficit reduction in the original Senate bill and the removal of repeal of the Medicare taxes. That left the Republican health care bill about $800 million short in the first ten years. And when the patches were removed in the second ten years, the full $1.2 billion reduction in federal spending would have gone effect.

Every change in the bill that left the basic structure of the Republican approach to health care in place, including the ones we had not yet seen, were only Band-aids on the deep, stinking wound that would have been created in our health care system by these bills. By the end of ten-years – if not sooner –  those Band-aids would have all fallen off and the stinking wound would have been be obvious to anyone who does not benefit from the huge tax cuts in the bill.

We should all be grateful that this effort failed.

(Further details on the arguments in this blog post can be found in this paper.)