What Will Republicans do w ACA if they Clean Sweep?
January 26, 2014 5 Comments
Andrew Sprung asks wonks to weigh in on some questions regarding what Republicans will do with the ACA if they win the White House and both houses of Congress in 2016. He assumes that outright repeal then would be too disruptive, so wonders about many changes to sabotage the ACA. I have long been writing that both sides need a health reform deal, at least in part because some day Republicans will have all branches of government again, even if not in 2016. Brief answers to the questions Andrew poses:
Back to my reporting project: let me make it open source here. Wonks, politicos, and other interested parties: what do you think of the feasibility and likely effects of possible future Republican drives to, for example
1) repeal the individual mandate.
They could repeal the individual mandate and replace it with the auto-enroll procedures envisioned by Paul Ryan’s Patients’ Choice Act, which was originally released May 20, 2009, about one month before the first version of HR3200 was passed out of the Commerce Committee. In fact, in 2011 I was wondering whether auto-enroll procedures might be a better risk pooling mechanism than the existing mandate, making this an obvious place for a deal if we ever got back to the policy.
2) Deregulate the exchanges , e.g., perhaps by a) abolishing the 3-to-1 age rating cap;
Sure they could get rid of 3-to-1. But, which way would they go? In my Duke provided insurance there is straight community rating and I don’t hear people complaining about it; 28 year old Assistant Professor pays same premium as a 64 year old. They could let the age rating go up, say to 5-to-1. It is possible that the 3-to-1 is not optimal, but it is unclear to me the preferred change. But keep in mind that 165 Million have employer sponsored insurance that is typically straight community rated.
b) repealing the ban on lifetime and annual caps;
This is imaginable, but with all the rhetoric of preferring more catastrophic coverage (more exposure up front), then it doesn’t really follow to then truncate the back end. Of course, the traditional Medicare program has benefit limits and caps, and no cap of out of pocket expenditures. I would be interested in seeing the relative impact of no lifetime limits, no pre-existing conditions/guaranteed renewal, benefit mandates, etc on premiums. I suspect this change will be judged as not worth it by Republicans and the insurance industry when the time comes for Republicans to drive the train.
c) allowing exclusions for services such as mental health or childbirth;
I could imagine a move toward providing catastrophic insurance that focused on defining the financial size of the deductible before insurance kicked in, and essentially bypassing the question of benefits by covering everything that was not experimental, for example. My guess is that this would sound better to my Republican friends the more theoretical it was, and that prenatal care and childbirth would end up being preferenced before a deductible was met once they had to pass legislation (update: or issue rule changes). Back to my employer sponsored plan at Duke: the benefits are the same for everyone, so plenty of people “who can’t have a baby” are cross subsidizing those who plan to do so. And not to belabor the obvious that seems to be lost in lots of discussions of this issue, but it takes two to make a baby (we professors can figure out these complicated things). Maybe men could take out fertility liability insurance if Republicans decided that all maternity/labor costs should be assigned to the woman having the baby?
d) allowing sales across state lines (in concert with eliminating or drastically reducing federal coverage guidelines); or by other means.
I think if you live in Manhattan and call up Blue Cross Blue Shield of Arkansas, they will be fine selling you a policy, so long as you come to Arkansas to use health care. Premiums are determined by benefits, contracts to provide care and the health risk of the insured. This is a much better applause line at a political rally than a policy, which will become clear once someone tries to write the legislation necessary to bring this about.
3) Foster adverse selection within the exchanges by deregulating plans sold outside them, e.g., repealing the requirement that insurers put all customers within a given state in one risk pool.
I have written positively about the Patients’ Choice Act, and think that it is the most comprehensive Republican plan put forth. Its biggest flaw (they could change this) is allowing tax credits to flow in and outside of exchanges, but altering pre-existing conditions inside them only. This won’t work and will lead to death spiral. Again, committing to the details, passing it through the Commerce Committee, CBO weighing in, etc. will likely be quite a shock for Republicans. They just don’t have experience in doing this. It is hard.
4) Reduce subsidies (“we can’t afford them”…).
Maybe so. But, then premium shock. There definitely could be some changing of the subsidy level to try and smooth out the impact of the existing subsidy structure on marginal labor income tax rates. Of course doing this will increase the cost of the bill. The goldilocks principle “its juuuuuust right” is elusive. Again, it is hard to get this correct.
5) Reduce federal reimbursement for Medicaid expansion; block-grant Medicaid.
The biggest block to a block grant that is simply designed to limit federal costs and say “tag, you’re it” to states will be all 50 Governors, regardless of party. There are some more nuanced policies that focus on the different “parts” of the Medicaid program that I would actually support over the long run (more state responsibility for acute care insurance for states, federalizing the cost of the dual eligibles). I suggest this as a long term strategy in North Carolina. The focus of health reform is now in the States, and I suspect that will continue.
update: I fixed some typos and clarified a few things.