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

By Marc Stier

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Later this week or next we should get a CBO score of the latest Senate health care bill and we will revise, once again, our projections for its impact on Pennsylvania. But, we are not expecting major changes in anything but in how long it takes for well over a million fewer Pennsylvanians to have insurance as a result of the bill. To see why, one must step away from some of the details of the bill and look at the big picture, focusing not just on the policy but the politics of the bill. 

From that perspective, it is pretty obvious why the Republican approach to repealing and replacing the ACA – and drastically reducing the size of the Medicaid program – can’t be fixed. 

The fundamental problem is that the basic design of the bill is deeply flawed from the perspective of anyone who thinks that America has a responsibility to guarantee quality, affordable health care to all. If, on the other hand, one rejects this aim and, instead, wants to cut federal funding for health care as much as possible, in order to cut taxes on large corporations and the very rich, the bill makes some sense.

But it makes no sense as a health care bill, that is, one designed to help Americans secure health care.  And the fixes that the Republicans have proposed to the earlier versions of the bill not only fail to address those flaws, but aren’t really meant to do so. Rather, they aim to give political cover to Republican senators whose constituents largely oppose the bill. And not only does that show us why the current bill is unacceptable, it warns us to be extremely wary of the Republican strategy for Senate debate of the bill, assuming that Majority Leader McConnell can find 50 votes to allow that debate to begin. 

The Basic Structure and Problem in all the Republican Plans

The right wing, which dominates the Republican caucus in both the House and Senate, fundamentally wants to not only repeal the ACA but roll back Medicaid expansion. They simply do not believe that health care is a right. They do not believe that anyone, including large corporations or the very rich, should be asked to pay taxes so that anyone else – whether low- or middle- or upper-middle-income – gets federal assistance to secure health insurance. 

They can’t roll back all the programs that provide such help at once. Indeed, they won’t touch the program that actually helps upper-middle class and rich people secure health insurance, the federal tax credit for employer-sponsored insurance, which is the mostly expensive federal tax break, costing roughly four times the ACA. And the reason they won’t touch that program is that people will scream and holler if the federal government takes a huge benefit away from them – and they will scream and holler even louder if that benefit is health insurance, in large part because without some kind of federal subsidy that helps create broad insurance pools – like those found in large companies – health insurance becomes extremely expensive for people who are older and who have pre-existing conditions. And if we were to end the tax subsidy for employer-based insurance and companies, these companies would gradually phase out employer-based insurance. Even if they raised wages in lieu of health insurance, everyone – even people in the upper middle class – would discover that without the market protections of the ACA that prohibit insurance companies from charging older people and those who are sick at much higher rates, their health insurance would become unaffordably expensive. 

Republicans know they can’t repeal the federal tax break for health insurance because the people who will be harmed are well-off, vote at high rates (and often for Republicans), and are politically connected. But they are determined to roll back the new benefits provided to working people and the middle class by the ACA. 

They can’t totally eliminate the health insurance marketplaces and the subsidies that help moderate- and middle-income pay for their premiums without a great deal of opposition, either. But they can reduce them. And to placate the market fundamentalists in the House and Senate who oppose them entirely, they have made an increasingly bold attack on the ACA’s regulations on insurance, such as the ban on insurance companies charging people more if they have pre-existing conditions or the requirement that all policies cover essential benefits – which prevents insurance companies from excluding certain pre-existing conditions or setting annual and lifetime limits on policies. 

And, to radically reduce federal spending on health care – and provide room for the tax cuts they so want – the Republicans have decided that the time is ripe to do what they have wanted to do for years. They want to scale back the Medicaid program that helps lower-income people secure health care and everyone who outlives their savings pay for nursing home care. 

So every Republican proposal has called for a huge reduction in federal spending on health care while also repealing many of the ACA’s regulations on insurance sold in the individual market. By reducing subsidies for insurance in the marketplaces, ending the Medicaid expansion, and radically restructuring the traditional Medicaid program to put a per-capita cap on funding, each bill reduces federal spending on health care by roughly $1.2 trillion in the first ten years and somewhat more in the following ten years as the per-capita caps dig deeper into traditional Medicaid. 

And, while the original aim of the Republicans was to repeal the ACA, far more of this huge cut in federal spending (almost $900 million over ten years) is made from traditional Medicaid and the Medicaid expansion than from the subsidies for individual insurance purchased in the ACA’s market places or exchanges. Also, the exchanges, to the consternation of the very far right, have been retained in the bill even though the regulations on insurance have been substantially rolled back. Why is traditional Medicaid cut so much while parts of the ACA survive? In part, for the same reason that the tax subsidy for employer-based insurance is not cut. The lower you go on the income scale, the less politically active and connected people are and the less likely they are to vote (and less likely to vote for Republicans). The whole Republican approach to government help for securing health care, in other words, is to take it away not from those who need it less, but from those who are less politically powerful and less likely to support Republicans. That Medicaid is (falsely) perceived to be a program that particularly benefits urban, black people also makes it an attractive target for a party that wins elections by subtly – and quite often not so subtly – appealing to racism. 

The Republican determination to deeply cut federal support for health care is the fundamental reason that each Republican bill, in both the House and Senate, looks a great deal like the last one. It’s why there is no need to see the CBO score to know it will hurt Americans. As long as every Republican plan changes the structure of Medicaid, ends the Medicaid Expansion, reduces subsidies for insurance in the marketplaces and repeals the insurance regulations, millions of people will lose insurance and the insurance marketplaces will become unstable and unwelcome to those who are older or have pre-exiting conditions. 

Republicans have denied they want to take health care away from people. They have always said they wanted to improve the ACA. But the basic fact is that there are only two ways in America to provide quality, affordable health care for all. One is some version of the ACA approach, which, coincidentally was invented by the right-wing Heritage Foundation. The other is single payer. There is no third alternative. Thus, what Republicans have said all along about their bill is a lie. Their goal is reducing federal support for providing health care to people – and reducing the taxes that pay for it. There is no way to radically reduce federal spending on health care and cut taxes without millions of people losing health insurance. 

To emphasize this basic point: you can’t get health care without paying for it. And so you can’t reduce what you pay for health care by 1.2 trillion dollars over ten years, which is roughly what every Republican health care bill does and get the same amount of health care. A $200 billion patch over here or a $70 billion patch over there doesn’t help much, especially when those patches are complicated add-ons to the system you have torn apart, which means the government then wastes billions of dollars in administrative expenses. Nor do those patches solve a long-term problem when they expire after four or five years. 

It’s just basic math. The Republicans’ bill takes $1.2 trillion out of health care spending. Of the approximately $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, the new bill already allocates $175 billion to the opioid fund, additional stabilization money and expanded health savings accounts, which, as explained below, will not meaningfully reduce coverage losses. That leaves only about $250 billion available to offset that $1.2 trillion in cuts. No matter how further changes to the Senate bill divvies this amount up, it still leaves about $800 million reductions in health care spending. 

Is there any wonder why so many fewer people will have health insurance under the Republican plan? 

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