qotd: Fundamental flaw of Republican health reform proposals

New York
August 18, 2015
Scott Walker, Marco Rubio Propose 'Plans' to Replace Obamacare
By Jonathan Chait

Today, Scott Walker and Marco Rubio have published plans — really, not
so much plans as skeletal descriptions of planlike concepts — to replace
Obamacare. Appealing to the general election requires them to promise
something to compensate the victims of repeal. How will they fund that
something? This is the basic problem that for decades has prevented
Republicans from offering a health-care plan. Rubio and Walker show that
they still have no answer.

The main reason people lacked insurance before Obamacare is that they
did not have enough money to afford it. Some of those uninsured people
had unusually high health costs. Some of them had unusually low incomes.
Boiled down, Obamacare transferred resources from people who are rich
and healthy to people who are poor and sick, so the poor and sick people
can afford insurance.

Walker and Rubio are fairly clear about their plans for regulating the
insurance market. They want to go back to the pre-Obamacare, deregulated
system. They'd eliminate the requirements that insurance plans cover
essential benefits, and let them charge higher prices to sicker
customers. That's good for people who have very limited medical needs
(as long as they never obtain a serious medical condition, or have a
family with somebody with a serious medical condition). It's bad for
people who have, or ever will have, higher medical needs.

Both Walker and Rubio promise to take care of people with preexisting
conditions by creating separate "high-risk pools." That is a special
kind of insurance market for people with expensive medical conditions.
As you may have guessed, insurance for people with expensive medical
needs is, well, expensive. Making that insurance affordable therefore
requires lots of subsidies from the government. Where would Walker and
Rubio get the money for that? They don't say.

Both Walker and Rubio propose to cut funding for Medicaid, but this
doesn't create much room to subsidize coverage, since Medicaid is
already much cheaper than Medicare or private insurance. Republicans are
willing to cut Medicaid because they're generally willing to cut
programs that focus on the very poor, but there's not much blood to be
drawn from this stone.

It is tempting to treat the lack of specifics in the Republican
health-care plans as a problem of details to be filled it. But it is not
a side problem. It is the entire problem. They will not finance real
insurance for the people who have gotten it under Obamacare, nor will
they face up to the actual costs they're willing to impose on people.
The party is doctrinally opposed to every available method to make
insurance available to people who can't afford it. They have spent six
years promising to come up with an alternative plan, and they haven't
done it, because they can't.

http://nymag.com/daily/intelligencer/2015/08/walker-rubio-obamacare-replacement-plans.html#jumpLink

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Comment by Don McCanne

Much has been written this week about the proposals of presidential
candidates Gov. Scott Walker and Sen. Marco Rubio for replacing the
Affordable Care Act (ACA or Obamacare) once it is repealed. Most
articles discuss the few specifics of their proposals that they have
provided, but Jonathan Chait's stands out because he describes the
underlying fundamental flaw common to all conservative proposals for
reform: for everyone to have affordable access to health care, there
must be a large transfer from the healthy to the sick and from the
wealthy to those with lower incomes, and the conservative proposals fall
far short on the size and direction of the transfers that are needed.

Chait exits the topic leaving ACA in place, but there is more to be
said. Although ACA actually did expand the necessary transfers, it still
falls short of what is needed, plus too many inequities are perpetuated.
Patches to ACA would still leave in place the fundamentally flawed
infrastructure, and the Republican replacements are even more
fundamentally flawed because they would worsen the financial barriers to
care, especially by failing to include adequate transfers in their models.

A much more efficient and equitable method of achieving the necessary
transfers would be to enact a single payer national health program. If
the Republicans really do want a better replacement for Obamacare, maybe
they should seriously consider single payer.