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17 USC 102

Who Knew Healthcare could be so Complicated?

March 19, 2017

 

It was 3:00 AM the Saturday before spring break, and I, like many other college students in America, had just thought of a really terrible thing to do over my vacation. Regrettably, this idea lacks the flare of bellybutton rings or the cult heroism of drinking ten jello shots and then trying to jump through a flaming hula hoop. Yet it was a bad idea nonetheless.

 

Before I tell you what my bad decision was, let me fill in a little back story. Anyone who has had the misfortune of stumbling across cable news in the last couple of weeks probably has heard something of the healthcare debate currently boiling over in Washington. Of all the promises President Trump made on the campaign trail, healthcare seems to be the one Paul Ryan and the Republican leadership are most willing to take up.

 

After eight years of bombast over the Democrats’ attempt at healthcare reform, the Affordable Care Act, the Republicans will finally have a shot at their own “fix” to America’s healthcare woes. And what a fix it will be. While still on the campaign trail then candidate Donald Trump and the Republicans made some pretty wild promises — that you will be able to keep your insurance if you like it (a phrase that has just become some sort of trigger to know when a politician is lying to you), significant rollbacks to entitlement spending, and plummeting healthcare costs, just to name a few. But now with majorities in both the House and the Senate and a Republican in the White House, it is time for them to release the plan of our dreams, the solution to the healthcare in America.

 

With such big promises and 6 years of free time (because blocking Supreme Court nominees doesn’t count as work), I had high expectations for the Republican healthcare plan. When it dropped, however, criticisms were sharp. As expected, many Democrats derided the bill. Less anticipated, however, was the backlash from the right. Jim Jordan, a Republican Representative from Ohio and member of the ultra-conservative House Freedom Caucus, called it “Obamacare in a different format.” These competing narratives made me curious — what was this bill all about? Either it was going to single-handedly fix healthcare forever, or was just another of many failed attempts.

 

This leads back to my terrible spring break idea. I decided that with such competing narratives, the only way to get a straight answer on the matter was to read the bill for myself. This is the first bill I’ve ever read, and I’d like to share the experience with you. I’ll admit, the story neither thought provoking or well written. Don’t think of this as a review of legislation. It’s more of an epic. A political coming of age. My first journey through the mystical world of what is America’s bureaucracy. It’s like “The Wall,” but without psychedelics, Roger Waters, or excitement. It’s the Republican healthcare bill, or as I like to affectionately call it, The American Health Care Act, my first love.

Honestly, before breaking into this bill, I had no idea what to expect. I didn’t know what kind of language I’d find or if I’d be able to understand it. I had always thought of legislation as these huge enigmatic documents that magically run our government. When I opened it, and much to my surprise, I found words — simple words and policies. After all that I had heard, I was hoping something a little bit more exciting. Even just a grand edict like “Obamacare is Hereby Repealed Forever!” But it just wasn’t there. Instead I saw a bunch of ideas and possible solutions to real healthcare issues in our nation. Well, sort of.

 

If I were pressed to characterize this bill, I’d say it sort of resembles the recipe for a cake. Add a little of this, take away a little of that, add a dash of Ayn Rand, mix for five minutes, and then let sit. Today I’d like to go over with you the actual ingredients in the Republican’s recipe for healthcare. America, let’s find out what we’re going to be eating.

 

So if the Republicans’ healthcare plan were a cake, it would have a lot of raisins in it. Raisins: they’re aesthetically pleasing, but most of us really could have done without them and are probably just going to pick them out anyways. Raisins: policies that don’t really add to the actual cake-ness of our cake, but they help our very conservative uncle justify taking another slice because he needs the added serving of fruit. These kinds of policies are everywhere in this bill. The first “raisin” policy takes away all government funding from any institutions which provide abortions. Another raisin policy is the ban on any government healthcare money going to non-legal residents in the country. Then there’s the repeal of the tanning tax (I’m assuming Trump had something to do with that) and the nearly 5% of the bill — six of its 123 pages — dedicated to making sure that if a poor person ever wins the lottery, they’ll be taken off of the government healthcare rolls as quickly as possible, because everyone knows that what’s really bankrupting healthcare in America is all those illegal immigrant lottery winners stealing all of our Medicaid money.

 

After you’ve added all those raisins to the bowl you’re going to need something to fill in the empty space where the healthcare policy should have gone. The flour of our bill is tax cuts and deduction expansions. There are all sorts of tax cuts in this bill. Presumably Republican policy wonks were hoping that these changes would help to bring down costs, but the majority of them will only affect a very narrow segment of people. Now, don’t get me wrong, I love tax cuts, but I doubt that the changes this bill proposes will help to accomplish its raison d’etre, creating a sustainable and affordable healthcare market. Tax cuts like the repeal of the tax on luxury health benefit packages, reduced taxes on health savings accounts, deductions for employers offering prescription drug coverage, and the repeal of tax hikes on medical devices, make up the bulk of the “repeal” in the Republicans “repeal and replace” plan. Tax cuts are undoubtedly necessary, and it should come as no surprise that a Republican bill has these changes. But that’s not the issue. The issue is that these changes don’t fix healthcare problems for millions of Americans. If these were an addendum to the bulk of the bill, that would be one thing, but the fact that much of the bill’s weight comes from the obscure tax changes is alarming.

 

Additionally, the bill cuts taxes on health insurance companies. It allows them to take deductions on large benefit packages (over $500,000) they offer their employees and removes an Obamacare tax on health insurer profits. The issue here, again, is not the tax cuts. It is widely accepted that health insurance markets in America have profitability issues. These tax cuts, however, fail to correct the underlying issues for insurers; overpriced healthcare in America and draconian regulations which allow only the largest health insurance companies to succeed. If you were hoping for helpful changes for health insurers which would bring down costs in this bill you will be sorely disappointed.

Tax cuts are undoubtedly necessary, and it should come as no surprise that a Republican bill has these changes. But that’s not the issue. The issue is that these changes don’t fix healthcare problems for millions of Americans.

There are a few policy changes included in this bill which do actually represent significant pivots in healthcare policy: the sugar, milk, and eggs of our bill. (This is a Republican bill; of course it’s not vegan. What were you expecting?) These are alterations to health savings account and changes to the dreaded individual mandate. If you were trying to point to any actual solutions in this bill, this is where you would find them.

 

Let’s start by looking at health savings accounts, HSA’s for short. These specialized accounts allow consumers to save money for medical related expenses. Republicans see these HSAs as a major tool to bring down healthcare costs. There are many kinds of HSA’s, each with slight variations. But the overall idea is the same: you deposit a little bit every month, and when medical needs arise the you’ll be able to cover them from existing funds. Money deposited in these accounts and spent on health-related issues is not taxed so as to incentivize responsible planning for healthcare emergencies. The problem is, you can’t really plan for healthcare emergencies. Moreover, the maximum amount you can add to these accounts year over year is $5,000 dollars, which doesn’t really cut it when government estimates put our yearly healthcare costs per person at somewhere around $10,000. The people who do mainly benefit from these kinds of accounts are (you guessed it) the upper income earners in our country. The Republican healthcare bill does a lot to try and incentivize this kind of spending by reducing barriers to creating these kinds of accounts and lowering penalties for taking money out of them. The idea, however, that all Americans would be able to pay for healthcare out of pocket, without any action to curb the skyrocketing costs is laughable at best. Here again, HSA’s may be part of an answer, but they are not the whole solution.

 

The final central concept I found while reading the Republican healthcare bill, the last ingredient in our cake, are adjustments to the infamous individual mandate established by the Affordable Care Act. Republicans hated this probably more than anything else in Obama’s signature healthcare legislation (and let’s just forget the fact that this was actually a Republican idea from the 90’s in the first place). This individual mandate that everyone have health insurance or pay a penalty, combined with requirements that employers provide healthcare, was the primary tool of cost reduction in the ACA. The idea was that if everyone had to have health insurance, then requirements like coverage for preexisting conditions or price ceilings for seniors would be offset by younger healthier people paying into the system.

 

Republicans saw this portion of the law in particular as a gross overreach of government power. The individual mandate, along with incentives and Medicaid expansion in the ACA were the primary drivers behind the nearly 20 million people who signed up for health insurance under the law. The Republicans’ healthcare bill repeals these requirements. Instead it allows a 30% surcharge to be placed on individuals who have gone more than 63 days without health insurance. In addition, it allows seniors to be charged five times the rate of a young healthy person (up from three times under the ACA). Lastly, the Republican bill provides tax incentives based on age to help make healthcare more affordable. This will potentially lead to further consolidation within the healthcare market as even more firms are muscled out, and rising prices as more consumers put off getting coverage until disaster strikes. Since young people will get the smallest tax credits under this plan, a larger burden will fall on them, causing many to forego getting health insurance entirely. Mandates on insurers to provide coverage, even to those with preexisting conditions, will make healthcare more expensive for everyone. It’s no surprise then that the congressional budget office predicted 24 million people will have lost their healthcare under this law by 2026. Though the CBO has had trouble predicting healthcare coverage numbers in the past, their estimate represents the most systematic analysis of this bill to date, and though it may be somewhat inaccurate, it certainly gives a better picture than any qualitative analysis on the issue.

 

Yes, if you feel like our Republican healthcare plan is a little half-baked, you’re not alone. Remember: this bill can’t even make changes to policies in the ACA because it is a budget act (a necessary maneuver to prevent a Democratic roadblock in the Senate). Rather, it intends to maim the ACA enough to force Democrats to work towards other reforms later on. The problem, however, is that Obamacare wasn’t really the answer to all of our problems either.

 

I’ve tried to make this topic funny and engaging because otherwise, honestly, would you really have read this much about healthcare reform? But let’s be serious for a moment, because maybe that’s the problem. Healthcare is not fun or sexy, but if you have been or ever will be sick, have a body, or care about someone who is mortal then this issue is incredibly important. Why, therefore, are we completely unable to discuss it like adults? Obamacare will be repealed in one form or another, but this bill will most likely not be signed into law. Moreover, the American healthcare system has issues that fundamentally compromise it. The causes and solutions to the healthcare problem may be up for debate, but the importance of them are not. I know it may sound like a radical proposition that we actually sit down and talk to each other. I know both sides have plenty of “reasons” why they could never actually come together on healthcare reform, but here’s the deal: that kid with cancer doesn’t care, the recently widowed mother who lost her husband and life savings to an unexpected medical crisis doesn’t care, and the senior who can’t afford the lifesaving medication he or she needs, all of them don’t care about those petty squabbles. We, the American people, need to demand results, not just rhetoric. In the meantime, I guess we should all just try really hard not to get sick.

 

Photo credit Caleb Smith, public domain

 

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