The Trump/Republican 2020 Health Care Plan

The Republicans don't yet have a health care plan less than a year before the 2020 elections.

But based upon their 2017 Obamacare repeal and replace efforts, as well as a major document recently issued by the House Republican Study Committee, what might a Republican plan look like?

Joe Biden's Health Insurance Plan Would Fix the Individual Health Insurance System

IF the Democrats capture the White House, keep the House and take over the Senate, no matter who they elect as President, this Biden health care outline, not Medicare for all, will likely be the plan Democrats embrace in 2021

The Biden health care proposal directly takes on the big things that haven't worked in Obamacare.

The House Republican Obamacare Replacement Plan: Mind Boggling

It won't work.

Obamacare works for the poorest that have affordable health insurance because all of the program's subsidies tilt in their favor.

Obamacare doesn't work well for the working and middle class who get much less support––particularly those who earn more than 400% of the federal poverty level, who constitute 40% of the population and don't get any help.

Because so many don't do well under the law, only about 40% of the subsidy eligible have signed up and, with so many insurers losing lots of money, the scheme is not financially sustainable because not enough healthy people are on the rolls to pay for the sick.

To fix it, House Republicans are proposing a very attractive program for the better off and, with the Medicaid rollback, gutting the program for the poor to be able to pay for it.

The New Health Law Needs to Be Repealed, Expanded, and Replaced—So Long As It Doesn’t Have a Mandate

Last week’s State of the Union speech was notable because the President hardly mentioned the new health care reform law.

Avoiding what is supposed to be the centerpiece domestic accomplishment of President Obama’s first term stuck out like a sore thumb.

He said almost nothing because the Obama team simply doesn’t know what to say.

The fact is the Affordable Care Act (ACA) is generally unpopular, and its best-known provision, the individual mandate, is wildly unpopular.

Two years after passage and, the implementation of the law’s first steps all designed to build support, the public’s opinion of the law is unchanged and not good. The just out January 2012 Kaiser Health Tracking Poll leaves no doubt:

• Only 37% of those surveyed have a favorable view of the law.
• 44% have an unfavorable view of the Affordable Care Act.
• But even some of those who don’t like it don’t like it because it didn’t go far enough—31% of all of those surveyed want to expand the current law while 19% want to keep it in its current form. That’s a total of 50% that want to keep or expand it.
• 22% want it repealed outright and another 18% want it replaced with a Republican alternative—a total of 40%, fewer than want to expand it or keep it as it is.
• On the individual mandate, 67% have an unfavorable view of requiring everyone to buy coverage, while 30% have a favorable view of the requirement.
• While a total of 50% of those surveyed think the law should be kept or expanded, 54% say the Supreme Court should throw the mandate out, while only 17% say they think the mandate should be upheld.

So, let’s summarize. Only 37% have a favorable view of the law and 67% don't like the mandate. But 50% think the law should be kept as it is or even expanded.

No wonder Obama and his political team can’t figure out how to play this.

Perhaps even more intriguing is the dilemma the eventual Republican presidential nominee is about to find himself in—everyone of the candidates is telling voters lots of times a day that the first thing they will do as President is to get rid of "Obamacare."

For the Republican presidential candidates, that is a safe thing to say among Republicans—73% of Republicans have an unfavorable view of the ACA, while 62% of Democrats view it favorably.

But come the fall, when the eventual winner will need lots of independent voters, the Republican nominee will have to face the reality that only 40% of the overall electorate wants the ACA repealed or replaced.

Then Obama’s dilemma will have to become the Republican’s dilemma.

I guess the voters are telling us that to get a majority of support, the ACA needs to be repealed, expanded, and replaced—so long as it doesn’t have a mandate.

The Ryan Health Care Proposals—Not Your Congressman’s Health Plan

Update: The New Wyden-Ryan Plan - Paul Ryan and Ron Wyden Blow the Medicare Reform Debate Wide Open!

In a speech at the Hoover Institution today, Representative Paul Ryan (R-WI) argued again that his proposal to reform Medicare, and now his tax credit proposal for replacing the Democratic health care law for those under-age 65, would guarantee to citizens “options like the ones members of Congress enjoy.”

His proposals would not give people the guarantees members of Congress, and all other federal employees for that matter, now enjoy.

This is not a small point.

Previously on this blog, I have argued that many of the defined contribution reform proposals, Ryan’s included, should be faulted for putting all of the future risk of health care costs on beneficiaries.

Ryan’s Medicare plan would create a premium support system for seniors. The premium support amount would increase each year by the rate of basic inflation, even though health care costs have historically increased much faster. Seniors would then take this premium support payment to the market and buy their own private health insurance policy. Another recent Medicare reform proposal by the health care industry would increase a similar health care premium support payment each year by the rate of increase in the gross domestic product (GDP) +1%.

In both cases, neither insurers nor health care providers would have any of the risk, and therefore responsibility, for keeping costs under control. The entire burden for the adequacy of these premium support payments would be with the beneficiary. If health care costs rose faster than these premium supports, tied to these indexes that have always trailed health care inflation, too bad for the beneficiary. Any excess cost is borne by the individual.

Ryan and his colleagues would argue that this is just what we need to create—a market so robust we can finally begin to control costs. Beneficiaries struggling to make their health care dollars stretch would seek out those health insurance plans that really did control costs. From his speech at the Hoover Institution today:

“The growth of these [health care] defined contributions should be capped, to reduce the inefficiencies that have led health-care costs to spiral out of control.”

As I have said before, after more than 20 years of defined contribution health insurance experience in the market there is no evidence this will occur. The Ryan school of health care thought argues that, “By putting the power into the hands of individuals, we can let competition work in health care just as it does everywhere else.”

I am continually amazed at those who argue the health care market can work, as Ryan put it today, “as it does everywhere else.” They are right that the health care system is too much driven by third-party pay and its beneficiaries have historically had too little incentive to be prudent buyers. But the health care market is also a one driven by complex science, major and legitimate philosophical differences about treatment choices, and enormous supply-side powers.

In short, grandma, or you or me for that matter, is no match for the American health care system.

That aside, Ryan is wrong when he says his plan is just like the plan members of Congress have. These schemes to cap health care premium support are fundamentally different from the Federal Employee Health Benefit Plan (FEHBP) that members of Congress enjoy.

From the federal employee handbook:

“The [federal employee health insurance] premiums for your enrollment are shared by you and your Federal agency or retirement system. The government pays the lesser of: 72% of the average total premium of all plans weighted by the number of enrollees in each, or 75% of the premium for the specific plan you choose.”

So, the federal government guarantees to Congressman Ryan, all of his Congressional colleagues, and all federal employees, that it will pay for at least 72% of the average cost of the health plans offered to and selected by federal workers—no matter how much the cost of the program rises over the years.

Ryan’s proposal would make no such guarantee.

I am not arguing that the federal government must guarantee that everyone should have 72% of his or her health care costs underwritten by the federal government year after year—or by anyone else for that matter. Nor am I arguing that defined contribution health care should not be part of any solution.

What I have consistently argued on this blog is that everyone—individuals, health care providers, and insurers—must all have some skin in the game in order for us to have the systemic change needed to finally reform our health care system.

The problem I have with the Ryan plan, and those plans similar to his, is that they give beneficiaries 100% of the risk and then just tell them to trust the market. If costs grow faster than the inflation indexes that underlie these premium supports, as they always have, tough luck.

For the Ryan plan to really be effective, and fair, he and the others proposing this kind of solution must put the same kind of responsibility on everyone else—particularly the most powerful in the health care system.

More, I will suggest that hospitals, doctors, drug companies, and insurers have the potential to affect the cost of health care far more than your grandmother will ever have.

The Republicans Had Better Get Organized on Health Care

If the past week is any indication, the Republicans will have real trouble come 2012 trying to convince voters they have a plan to fix the American health care system.

Last weekend, President Obama endorsed the Wyden-Brown bill that would give the states the opportunity, in 2014, to take their share of the almost $1 trillion the new health law collects and use it to craft an alternative health care plan to their liking.

With Republicans now controlling the “trifecta” in 16 states—the governorships as well as the state legislatures—it is a very interesting offer.

I found an editorial this week in the Wall Street Journal criticizing the offer puzzling.

In an editorial titled, “Obama’s Health Waiver Gambit—the White House offers the mirage of state flexibility," they wrote:

Mr. Obama's new faith in federalism is trailed by his customary rhetorical asterisk. Any state that the Administration decided deserved a waiver would still need to cover the same number of uninsured, and its coverage would still need to include the same comprehensive benefits and be as "affordable" as the Administration says it should be. That is, it must be as heavily subsidized.

So perhaps states could opt out of some consumer or employer mandates, which is a minor release valve. But they would still need to find other mechanisms to achieve the same liberal priorities, which in practice leaves little room to innovate—especially for a straight tax deduction or credit to purchase individual coverage or alternative insurance designs like high-deductible or value-based plans.

Say what? Getting rid of the individual mandate—the thing Conservatives are focusing their Constitutionality challenges on—is only an offer to jettison “a minor release valve?”

It looks to me like the WSJ is saying conservatives would not be able to cover as many people as well as the Democrats are on their way to doing under the Affordability Act.

First, let me remind you that the CBO has estimated that the new law would only cover about two-thirds of the uninsured. And, that the standard of coverage demanded by the new law sets the “Silver Plan” as the standard—essentially a typical comprehensive major medical plan with a $1,000 deductible. And, let’s not forget that the Affordability Act would require a family of four making $65,000 a year to pay $6,175 in out-of-pocket annual premiums net of any federal subsidy—hardly what the WSJ called, “heavily subsidized” premiums.

The WSJ laments that there isn’t enough “room to innovate” with tax credits and high deductible plans.

Why not? Why can’t a Republican tax credit plan be devised using the Democrats money pot? I see no reason an actuarially equal conservative high deductible plan that gave any excess Democratic cash to consumers in the form of deposits to Health Savings Accounts can’t be crafted that is financed with tax credits. And, all of those Republican governors’ complaints about Medicaid? Here is the block grant of all block grant offers!

Could a Democratic HHS Secretary play games and deny a state an actuarially sound conservative alternative? Sure but after the offer the President put on the table this week, suffer lots of political consequences doing it.

Could the Democrats rig the game by demanding things like too rich a definition of the standard benefits? Sure. But a Republican governor could also put a more reasonable plan on the table and dare a Democratic HHS Secretary to reject it.

Just how would a Democratic HHS Secretary deny a state any reasonable health care alternative experiment that had just passed both houses of the state legislature and had been signed by the governor?

It is notable that more liberal states like Vermont and Oregon look like they are ready to take up this challenge by crafting even more liberal health plans for their states. You have to give the liberals credit--at least they walk their talk.

By embracing Wyden-Brown, President Obama has offered the Republicans a put up or shut up political challenge: Show me how you can cover as many people as well as we did.

The Republicans are afraid of this challenge? The Republicans don’t think they know how to cover two-thirds of the uninsured for the same money the Democrats are spending? The don’t think they can craft a consumer-driven plan with a health savings account for the same money it will take to provide the “Silver Plan?” They think telling a family of four making $65,000 a year that still has to pay $6,175 for a plan with a $1,000 deductible that they are still too “heavily subsidized”?

If I had been advising the Republicans this week I would have told them that focusing on criticizing the benefit side of the new health care law, as they all did, was the wrong strategy.

Where they could have been critical of the President’s challenge, and still been consistent with their past arguments and objections to the new law, would have been to point out that the $1 trillion Democratic money pot they would have to use to fund their alternative comes from the new law’s tax increases and Medicare cuts they opposed last year. In essence, they could have pointed out that they still oppose having to fund their version of health care with the “fruit from an objectionable tree.”

I still think it’s tantamount to immoral to raise $500 billion over ten years in taxes to pay for this, and not go after the real problem of cost, when about everyone believes there will be many trillions of dollars of waste in our health care system over those same ten years.

But for one Republican after another to admit that they couldn’t take their state’s share of a trillion dollars and use it to craft a health care system that covered their portion of the 32 million more people, using the new law’s modest “Silver Plan” as the standard of coverage, and still leaving big gaps in premium support for the middle class, that was startling to watch.

They better have a health care plan they believe in come 2012.

They also had better be able to explain it.