Thursday, March 16, 2017

We have a bill! The GOP's plan to cut taxes on the rich and health care for the rest of us

Every day it gets more difficult to write about the new “American Health Care Act” (AHCA) that has been introduced in the House of Representatives by Speaker Paul Ryan because every day there is so much more news about it, and so much more criticism of it that appears in the press. Even before its introduction, the bill was attacked for being likely to significantly increase the number of uninsured Americans while providing windfall tax cuts for the wealthiest.

It did not disappoint. Consistent with predictions, the nonpartisan Congressional Budget Office (CBO) estimates that initially 14 million people will lose coverage, with the number rising to 24 million in 10 years. These estimates are discussed in detail, and clarified, in “Deciphering CBO estimates” at the Kaiser Health News site. The largest number of people who will lose coverage will do so because of the changes – but let’s call them what they are, “cuts” – to federal funding of Medicaid (discussed by the Health Affairs blog), which would shift costs to the states, most of which will be unable or unwilling to absorb these costs. The 31 states that have expanded Medicaid to all those under 138% of the federal poverty level  under the Affordable Care Act (ACA) will be faced with having to fund a lot more from their own coffers; poor people in the states that have not expanded Medicaid eligibility will continue uncovered. The other group that will lose coverage will be those who have bought subsidized insurance on the ACA-created marketplaces and who will no longer be able to afford the premiums. Yes, the new GOP plan calls for tax credits to help pay premiums, but they will be far less than under the ACA and far from enough to cover the actual cost.

This change will have the biggest impact on the older, sicker poor who are not yet eligible for Medicare (and, while I we will not address it here, the GOP leadership certainly has plans for cutting Medicare!), whose premiums will go up because of two important changes the AHCA will make. It will end the “individual mandate” of ACA, so that those who feel that they do not need health insurance can pass on buying it, which means the pool of insured will lose those healthier people and have a pool more skewed to those who are sicker and will actually use health care. This will tend to drive premiums up for them, and the AHCA also allows insurers to charge 5 times as much to older people as younger. As reported by Thomas Kaplan and Robert Pear in the NY Times on March 13, 2017
Under current law, in 2026, a single 21-year-old earning $26,500 with an insurance policy that costs $5,100 a year would get a tax credit of $3,400 and would have to pay $1,700 of the premium. Under the Republican bill, that person’s share of the cost would drop to $1,450.
By contrast, a 64-year-old earning the same amount would fare much worse. That person’s $15,300 health plan would be offset by a $13,600 tax credit under current law, leaving the consumer responsible for $1,700. Under the Republican plan, health insurers would be free to charge older people more, raising that person’s premium to $19,500. But the tax credit would be only $4,900, and that person’s share of the premium would then be $14,600.
That’s a bite! And, ironically, as pointed out by Noam Levey in the Los Angeles Times (March 12, 2017), it will hurt Trump/GOP voters more than Democratic voters, because those Trump voters – and the counties and states which went for Trump in which they live -- are more likely to be in this older, sicker, group. This group of Republican voters did not like Obamacare because the premiums, co-pays, and deductibles were going too high and the coverage was not always great, especially for the plans they could afford. Trump, and the GOP, promised them high-quality, affordable coverage. These folks believed them. They voted for them. And they are not going to get it, certainly not from the AHCA. Levey notes that “…In nearly 1,500 counties nationwide, such a person stands to lose more than $6,000 a year in federal insurance subsidies. Ninety percent of those counties backed Trump…[a]nd 68 of the 70 counties where these consumers would suffer the largest losses supported Trump in November.” What can you do. Politicians lie. This one was a whopper.

What is the reason for this? Many of Congress’ and Washington’s leading “conservatives” say that they believe that the role of government should be as close to zero as possible, and certainly think that the government has no business being involved in the insurance marketplace to ensure that people without resources have health coverage; to them, the AHCA is too much like the ACA in that it actually makes some effort to help some people, if weakly. There are a few of these “conservatives”, in and out of Congress, who really believe this and act on such beliefs. Uniformly, they are not poor, are not close to poor, and are not likely to be negatively affected. There is a much larger contingent that only believe government should not help most people. They support legislation that benefits rich people, like the AHCA, which uses the money it will save (and the CBO says that it will reduce the deficit over 10 years by $337 billion) to give tax cuts, not evenly distributed, but very much skewed to the highest incomes. This is where the [mean] rich people come in; they fund the Congresspersons, and this is what they want. Rep. Michael Burgess (R, TX), Chairman of the Energy and Commerce subcommittee on health, is quoted in the Times on March 11 (“The GOP’s high-risk strategy for health law repeal”) as saying “If you ask someone to give up something, there will be resentment,” and he is correct. That it is regular people who are being asked to give up something by Mr. Burgess and his colleagues, so that his rich patrons can save even more on their taxes, is something he doesn’t focus on.

One of the most iconic differences between ACA and AHCA focuses on equity: the subsidies (and tax credits for those who paid taxes) under ACA were tiered to income. The tax credits that replace subsidies under AHCA are tiered to age. Of course, as I have noted, older people are more likely to be sick, but they are not all of the same need; some older people have lots of money, and some have none. The same is true for younger people, including those with medical need. In any case, the tax credits in AHCA will not, as demonstrated above, be sufficient for those without significant other resources to buy health coverage, even if they are in the more-highly-subsidized older group. The Times’ Alan Rappeport reports on March 16, “One certainty in health bill: tax cuts for the wealthy”, with 40% of the cuts going to the top 1%, and the bill providing the necessary basis for further tax cuts for the rich. Rappeport quotes Mike Mulvaney, the White House budget director: “We promised at the outset that we were going to repeal all of the taxes. Who cares if someone else benefits?” Well, maybe the people who will suffer for their benefit? The same issue of the Times contains a brief and informative piece by Mr. Pear, “Putting Republicans’ plan on the Obamacare scale”, examining the criticisms of ACA and how the AHCA solves them (or not).

President Trump apparently feels conflicted; he promised the repeal of ACA, and the Congress wants to do that. He also knows that any plan that comes out that does this will be called “Trumpcare”, just as the ACA was called “Obamacare”. Enough Republican senators are concerned that the House’s AHCA will make it too hard for too many people to afford insurance that they might vote against it, so “Mr. Trump was left to strike a balance between siding with House Republicans while also distancing himself from the details, with top aides conceding that the legislation needed modifications before it could pass the full Congress,” (”G.O.P. Senators Suggest Changes for Health Care Bill Offered by HouseNY Times, March 14).

For the rest of us, it is an impending disaster.


Saturday, March 4, 2017

Will the GOP "solve" access to health care? No, unless you can redefine "access"!

An editorial in the New York Times on February 20, 2017 (“Ryancare: You can pay more for less!”) does a very good job of concisely demonstrating what the new Republican plan is likely to do to access to health care, the cost of health insurance, and what it covers. The key to House Speaker Paul Ryan’s plan for replacement of Obamacare involves “…flat tax credits unrelated to income, that could be applied to the purchase of insurance” (Paul Krugman, “Death and tax cuts”, NY Times February 24, 2016). As Krugman makes clear, the credits would be insufficient for low and middle income families to buy insurance, but would be a small benefit to high income households. The obvious result would be the loss of health insurance for millions of Americans who gained it through either the ACA exchanges and accompanying subsidies or through Medicaid expansion.

Giving tax credits or deductions is a long-standing Republican strategy that pretends to be equitable but in reality always benefits the financially better off. Ivanka Trump (the President’s daughter who is not, it should be observed, elected or even appointed to anything) has her pet project, tax deductions for childcare. Again, this sounds good, especially to the more well-off, two-income couples who would benefit (but don’t get your hopes up; the $500 billion tab makes it unlikely to pass even with the First Daughter’s support), but would be of less benefit to the poor. The one thing that is certain about Republican and Trump policy is that it will benefit the better-off; the problem with such deductions, from their point of view, is that it is costly and doesn’t benefit a narrow enough slice of the highest income individuals and corporations (sorry, Ivanka).

As summarized in MedPage’s Washington Watch Policy Papers on ACA Repeal: Many Question, Few Answers, no one, outside the Republicans pushing it, has any belief that the Ryan plan will provide coverage for most of the people who gained coverage from the components of the ACA, not to mention those who remained uninsured even with ACA in place, mostly poor people in states that did not expand Medicaid and undocumented people, as well as those who risked the penalties for violating the individual mandate rather than buy health insurance that they felt they could not afford. The first two groups are completely left out of any “replacement” plan (and of course undocumented people were never part of Obamacare). None of these plans will in any way benefit the middle and lower income people who voted for Trump in part because they wanted to get rid of Obamacare, which was costing them too much, and get the terrific, affordable health care coverage that the President promised them in the campaign. It is not going to happen, and people are beginning to understand that; CNBC reports that Obamacare is getting more popular in the first month of Trump’s presidency.

All that has been revealed so far about the content of a Republican “plan” indicates that it will cover fewer people than the ACA currently does. Some of this has to do with the mechanism of funding, with “tax credits” replacing direct subsidies for lower-income people. There is even a debate among Republican lawmakers about whether those tax credits should be “refundable” or not; if they are, then people will get the amount designated for the tax credit even if that amount is greater than the amount they would have owed in Federal income tax. Thus, it would be a subsidy, and thus many “conservative” (their word) Republicans oppose it. For a very large percentage of those who would be buying insurance and need help, the amount would likely be greater than the amount of Federal tax they owe. Of course, this depends upon how much the tax credit is determined to be; one thing, however, is that there is essentially no chance that it will be enough to actually purchase insurance.

Which brings up another big part of the way Republicans talk about health coverage. They use the term “access” rather than coverage, and have defined it in such a way that it is different from coverage; people, they say, will have the option of buying health coverage, not be forced to, the way that the ACA’s individual mandate did. This requires a conscious effort to ignore the crucial “ability to pay for it” as part of access, and makes the idea of “option” insincere. Something is not an option if you cannot afford it. Sen. Bernie Sanders said, in a good takedown of this use of “access”, that he had access to purchase a $10 million house; he just didn’t have the money to do it!

Insurance companies are a big part of the problem for ACA. The absence of a “public option”, not to mention a single-payer plan, meant that the law had to build in a way for insurance companies to be able to make money. To be able to profit, they have to either be able to charge a lot for coverage (or deny it altogether) for sick people, which was the pre-ACA status quo, or have a large pool of healthy low-cost people buying insurance. Thus, especially given ACA’s elimination of their ability to refuse insurance to people with pre-existing conditions, the individual mandate, requiring everyone to buy insurance, was needed. Despite the mandate, though, not enough healthy people bought insurance, and there was no rate cap, so it quickly has become unaffordable for many. Of course, we could have done what other developed countries do – have either a single-payer system where we have everyone automatically in the risk pool and everyone is actually covered, or have a highly regulated system, where benefit packages and rates are set by the government and insurance companies are non-profit, so compete on customer service. We actually have examples of both in the US. Medicare is a single payer plan (and while Medicare Part A, hospital, is paid for by the Medicare trust fund, Part B, doctor and outpatient bills, require individuals to pay, with high-income  people paying a supplement), as is the military health care system and the VA. Medicare supplement (Medigap) plans are regulated with regard to benefits; there are a number of plans lettered Type A to Type N (except there is no E, H, or I) with different benefit packages. The degree of comprehensiveness does not follow the alphabet (F is the best, K probably the worst) but at least they are standardized so all Type A, C, F, or K plans offer the same benefits regardless of which company you buy from, and so you can shop based on price.

I do not think that we are going to have such a simple situation as a highly-regulated marketplace, and certainly not single payer. We are likely going to back as far away from comprehensive coverage and affordable health care as the Republican Congress and President can get away with, which means as far as the American people will allow. Of course, the American people (other than the small number of, but incredibly powerful, wealthy ideological conservatives) do not want to lose their health coverage; they just want to pay less. Or not pay until they are sick. For them, and maybe for their families. For others, maybe not so much; some studies have found that as many as 2/3 of Americans support Medicare for All, while for Dr. Paul Gordon on his “Bike Listening Tour” across the US in 2016, one of his most upsetting findings (at least among the mostly white, rural, northern people he interviewed) was people’s lack of concern for others. Or at least “the other”, folks not like them.

It’s a real shame. We could have comprehensive quality care for everyone, at a more reasonable cost. Too bad the ideologues and the greedy are in control.

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