President Donald Trump and House Speaker Paul Ryan finally twisted enough arms and convinced just enough Republicans to get on the Obamacare repeal train. The amended American Health Care Act (AHCA) passed the House by a razor thin majority of 217 to 213 Thursday and now makes its way to the Senate.
We don’t plan to go exhaustively through what is wrong with this bill. Please refer back to our previous blogs on this topic at our site: almost all of what we wrote remains true with the version that passed. In summary, the bill is largely a political statement and would be lousy for America if it is passed in its current form. The bill would still lead to as many as 24 million people becoming uninsured and it does not ensure the affordable access for all Americans that we believe is needed to shift the paradigm from a healthcare system dominated by transaction payments to one centered on quality.
The changes made to attract conservatives to the bill are unlikely to be enacted in great measure at the state level, as we don’t think many Governors or state lawmakers will be foolish enough to vote to remove certain pre-existing protections (community rating) and take away too many essential benefits. They, too, understand the struggle of maintaining the solvency of high-risk pools. The paltry funding placed in the bill for protecting adverse individuals does little to change this reality.
While Trump and Ryan get a small political victory (at least in their minds) and got the chance to celebrate at the Rose Garden, it is a pyrrhic win at best. In Washington, and if you have seen Prime Minister’s Questions on C-Span, good political sport suggests that lawmakers tend to try to hang the albatross around the other party’s lawmakers’ necks. In this case, the House Republicans seem to have gladly done it to themselves. We have made the case that the Exchanges as we know them are unstable and will fail over time in most states. Democrats would likely have been blamed for this. Now, if the bill were to pass, tens of millions who lose coverage, and perhaps tens of millions of the friends of the impacted and disgruntled, will now blame Republicans for their personal plights. Even if the bill does not pass, Democrats now can credibly blame Republicans for causing chaos and instability in what promises to be a long and arduous repeal fight. We can already hear Senator Chuck Schumer and Representative Nancy Pelosi shouting: “If only those nasty Republicans had not passed that terrible Obamacare repeal bill, we wouldn’t be losing all these plans in the Exchanges!”
We hope that responsibility and maturity prevail in the Senate over the brazen politics of the House. Even if they do, there remains the real question of whether the much more ideological (perhaps best labeled “knee-jerk”) House will cave and enact responsible reforms. They have pretty much backed themselves into a corner.
At any rate, we hope sensible-thinking moderate GOP members in the Senate recognize what is at stake here. As the Senate takes up the bill to craft a reasonable compromise, we wanted to make one major recommendation. We think an Exchange Marketplace will always remain a financially volatile place given adverse populations. But, admittedly, some programs will be needed here. Crafting ones that ensure reasonable premiums and at the same time protect those with pre-existing conditions and older Americans is no easy task. It is a careful balancing act. Aim for a population here that is as small and manageable as possible and shift the focus to safeguarding, even expanding, Medicaid. Many of the moderate GOP rightly are focused here.
We have been the first to note that Medicaid needs reform given the unfunded liability it creates for America over time. Without it, the program on which more than 130 million Americans rely could be in jeopardy. While the Medicaid costs per capita of the expansion population have been high (even higher than estimates), we still think Medicaid represents the most cost-effective and financially stable way to cover those with no or inconsistent access to healthcare (with perhaps some other safety net programs noted above to fill the voids). Senators should spend much of their time:
- Crafting a fair per capita cap program or reform to the current system as a successor to the rigid entitlement. It must be fair to states and ensure adequate spending levels and growth based on aging demographics, recessionary trends, population growth, and inflation. This necessarily includes redefining the benefit, ensuring that enrollees pay a reasonable amount toward coverage based on income, and that personal responsibility is prioritized.
- Preserving the Medicaid expansion into the future and even encouraging non-expansion states to increase income levels to cover the uninsured.
- Enacting a reasonable federal policy infrastructure that emphasizes quality transformation. A blanket devolution of authority to states will likely mean that many states lose sight of the need to enhance quality, prevention and management in the healthcare system.
- Recognizing that consistent and affordable access will help transform our healthcare system and reap long-term savings.
- Leveraging the private delivery system. We do not see the traditional Medicaid fee-for-service system as the right delivery mechanism by any means. It is as dysfunctional and anachronistic as its Medicare sister. The federal government and states should work together to promote an efficient and accountable private plan delivery system as is being built in Medicare Advantage.
We think a remade Medicaid program provides the biggest opportunity to solve the problem of the uninsured. A financial case can be made that a reasonable and fair overhaul combined with a true quality transformation strategy will reap long-term savings and free up resources to afford the expanded access in Medicaid. Focusing holistically on transformation across all lines of business (Medicare, Medicaid and commercial) will begin to reset the system and slowly migrate America away from excessive healthcare spending when measured against gross domestic product (GDP). Instead of spending 20 percent of GDP, perhaps someday we could migrate to the developed world norm of 10 to 12 percent.