Republicans

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The Scorekeeper Speaks

The Congressional Budget Office is the latest victim of the intensity of Washington politics. The CBO is the organization we rely on to “score” legislation so that Congress and the White House know roughly what impact their policies will have on the country. As you can imagine being the CBO during times such as these when alternative facts have become the primary way of explaining things is perilous. Worse: being the CBO when one party wants to cram through some legislation  that is already known to be a doozy is more than perilous.

So it is with Trumpcare.

Up until today we were just guessing at how awful the Republican healthcare reform plan is. Now we know. The CBO issued its report today. There isn’t much to say other than this:

  • A sixty-four year old man with an income of $26,000 [which is 175% of the poverty limit] would be hammered — that’s an understatement. Under Obamacare such a person pays $15,300 for a policy but gets a subsidy of $13,600 for a net cost of $1,700. Under Trumpcare that same person pays $19,500 for a policy and gets a subsidy of $4,900 for a net cost of $14,600. So healthcare becomes over 50% of that person’s annual income. This is an astonishing and thoroughly immoral attack on the poor.
  • If that same person was much better off and was earning $68,200 [which is 450% of the poverty limit] the same numbers apply. The massive rise in cost is slightly more bearable, but is still an outrageous act of pillage.
  • Twenty-four million people will lose their coverage entirely.
  • By 2026 a total of 52 million people will be uninsured, compared with an estimated 28 million under Obamacare.
  • Spending on Medicaid, America’s primary healthcare plan for the very poor, will be reduced by $880 billion over the next ten years. An example of the damage this will do is that Medicaid provides about 60% of all spending on old age homes. So the effect of reducing it so drastically will be to throw older and sicker people back into the care of their families, reducing those families ability to pay for other things and thus setting up a negative cascade through the economy that could dramatically affect growth.
  • By altering the funding set aside for Medicare, the plan brings forward the date of the insolvency of the Medicare Fund by three years.
  • The plan contains specific wording to attack Planned Parenthood which is the country’s primary delivery mechanism for family planning to low income women.

I need say no more.

The Republican plan is mean spirited, stupid, immoral, and menacing. It represents a massive tax cut for the wealthy and an equally massive attack on income redistribution. It may satisfy the raving libertarian right, but it utterly fails even the slightest humanitarian test.

It is important we pin the moniker “Trumpcare” on it. Make Trump responsible for the damage he is trying to do because of this great irony: the slice of the population hit the hardest is exactly that slice who voted for Trump with the largest percentage margin. He is undermining his own supporters. He manifestly lied during the election. Either that or he is spineless because he could oppose the plan but isn’t.

This plan must be stopped.

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Guaranteed Failure?

I promise I will keep this one short:

So awful is the new Republican plan to repeal and replace Obamacare, so manifestly will it fail, and so maladroit its construction, that some of our more cynical observers have taken to thinking along somewhat different lines.

That is to say they believe the Republican leadership is crashing through a flawed piece of legislation knowing full well that it will fail to pass through Congress. They have built in so many obvious points of failure and incurred the opposition of absolutely every major industry organization — the doctors, hospitals, and nurses of America have all come out as opposed to the plan — that no Republican member of Congress can be comfortable supporting the legislation. This doesn’t even take into consideration that the plan seems deliberately to annoy both conservative and moderate policy wonks within the party. The entire effort thus appears to be a massive subterfuge. It is a ploy to get the Republicans off the hook for their seven year long tirade about Obamacare without ever having thought much about what they would replace it with.

So here they are face-to-face with the reality that Obamacare needs tweaking and not replacing. How do they get to tweak and not “repeal and replace”? By failing in the latter effort! They can then go forlorn to their supporters and say that they tried but were prevented from following through by forces beyond their control. So, as a poor alternative, they had to go back and tweak.

Sorry, they will cry, we gave it a shot, but you know how Washington is.

Then, fresh from this ‘defeat’ they can get on with the real business they want to ram through: notably tax reform and huge tax cuts for the wealthy.

This different perspective makes sense. Indeed, it is the only interpretation of the current plan that does make sense. It gets the Republican leadership off the hook from having to do something that they now realize they cannot do, it relieves them from blame for any further bad outcomes of Obamacare, such as more premium price increases, and it clears the legislative schedule for the work they really want to get on with.

The only flaw in their strategy appears to be Trump, whose incompetence might just interrupt them. After all he promised health care for all, lower prices, and better care, plus the abolition of Obamacare. He is already pumping up their new plan as being ‘great’ and ‘beautiful’. Someone needs to whisper in his ear and get him to turn his attention elsewhere. That doesn’t appear to be a difficult task. His attention span is close to zero. All they need to do is to get one of his favorite TV news shows to run a segment on how the new plan is so successful and that it has already been passed through Congress, and he will be convinced of this as reality. Then they can quietly fail and move on.

Sounds like a plan, or non-plan, to me.

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Health Care Addendum

As a short addendum to what I have been saying recently about health care and the Republican efforts to ‘reform’ it I want to add the following:

  1. One of the major obstacles the Republicans face is that Trump has virtually no interest in policy making. This is remarkable. He seems not to like, let alone relish, all the detailed work that has to go into creating public policy. His attitude is that if it covers more than a page or so he just blocks it out. This abstinence on the part of the White House deprives the Republicans of a crucial weapon in their crusade. It puts the entire burden for policy making on Congress where the fault lines within the Republican caucus are constantly exposed. It is shocking to note how little of substance has occurred so far: Trump has plastered the walls with executive orders, but has yet to introduce legislation of substance. It’s as if he totally disdains governing and that winning election was all that mattered. In this context we will soon all be used to dismissing his every utterance, since we know it will never be backed up with action.
  2. The hodgepodge nature of the Republican health care plan reflects their deep, and probably unbridgeable, divisions. They seem never to have discussed making health care policy at all. The plan released yesterday is easily seen through as a political fudge rather than as an act of policy making. It tries to offer each faction within the Republican party something to get behind, and in so doing offers everyone nothing. In particular, the plan appears to have no strategic goal. Is it supposed to offer maximum coverage? Does it offer less coverage but more choice? Is it an attempt to rein in cost? Or is it the basis for the exit of government from health care altogether? It matches none of these, and some of its features appear to doom it to failure within a few years. Do the Republicans really want to be associated with a health care crisis of their own doing?
  3. Already opposition outside Congress is fully mobilized: various professional organizations and associations have come out against the plan, key retiree groups are adamantly opposed, and many Republican governors in states that expanded Medicaid coverage under Obamacare are especially upset. This combination of opposition will almost certainly prevent the legislation from passing in its current form, and probably prevent a compromise from emerging because many of those interests are irreconcilable.
  4. The Republican leadership is, nonetheless forging ahead into the valley of death. Why? Because after seven years of whipping up their base of voters with scare stories and promises of repeal they have no choice but to plunge forward. I imagine they had hoped that failure to repeal Obamacare could be pinned on the Democrats in Congress and so be used in the next round of elections, but that now appears a non-existent option. Failure will be due entirely to the divisions in their own ranks. Perhaps they want this: if the plan goes down in flames they can blame their own extremists and, possibly, defang their right wingers for future policy making. I wish them luck in that endeavor.

At the very least the next few weeks will be interesting as the entire Republican establishment squirms in full view. The White House has already thrown its weight behind the plan — the White House has not produced its own plan — even though it fails to meet Trump’s publicly stated goals. Currently there are three alternatives on offer each from a different Republican faction. The politics look intractable. The games are now beginning as the leadership looks for a plan that can garner sufficient votes to pass. Right now that appears impossible. But who knows?

Meanwhile public approval of Obamacare is rising. The likelihood is that we will end up with a revamped or modified version of Obamacare because that has always been the best solution: fix the old law rather than tossing it out and introducing a new law that will, no doubt, need fixing. In which case all the huffing and puffing since Obamacare’s introduction would have been for naught.

Winston Churchill once said that we can rely on the Americans to do the right thing only after they have tried all the wrong things. So it appears with health care. We will end up with single payer eventually. But only after decades of pointless partisan bickering, and only after the self-evident failures of our current system have brought it to its knees.

America is not a good place to be poor and sick. There is no compassion or sense of community to rely on to reduce sickness in the poor. Health care is just another commodity to be bought and sold. And if you can’t afford it, well that’s just tough. This is America after all.

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RyanCare! Or is it TrumpCare?

Well, the wait is over. We now know what the Republican health care plan looks like. It’s early days and the inevitable compromises will have to be made, but the Republican seven year crusade is reaching its climax.

Or not.

The problem is this: as we have discussed many times, any credible health care plan needs a number of key features. Three stand out:

  1. You need to ensure the biggest insurance pool you can. In an ideal world this pool would be the entire population of the country. In the US it will be smaller because local ideologies militate against “social” solutions and thus we are prevented from seeking maximum efficiency. Obamacare sought to do this through the so-called “mandate” which penalized people who failed to get insurance coverage.
  2. You need to regulate the private insurers to prevent them from discriminating against high risk customers. Obamacare did this by forcing insurance companies to cover people with “pre-existing” conditions, and by limiting the premiums charged to such people.
  3. Then you need some form of subsidy so that low wage people can afford to buy insurance. Obamacare did this by providing subsidies and by imposing taxes to cover the cost. The subsidies were linked to income and to the cost of insurance to make them strongly effective.

The success of Obamacare was that it achieved its biggest goal: it vastly expanded coverage, with around 20 million people newly insured at a rough cost of 0.6% of GDP. That cost, in the context of the goal, is low.

So now we have RyanCare.

How does it differ?

Well, it keeps those three main features, so it is not a repeal of Obamacare, it is a new version. The problem is that it waters down all three features and so is almost certainly doomed to failure.

  • RyanCare keeps the mandate. This was castigated as the most “unAmerican” part of Obamacare, but it stays in the GOP plan. The issue is that the way the Republicans keep it is that it imposes a penalty on people who have gaps in coverage. In other words if you don’t get coverage there is no penalty. It is only when you get coverage later, after a gap of having no coverage, that a penalty kicks in. This opens the door to a huge increase in adverse selection — this is the fancy name given by insurers to the problem of people only buying insurance because they know they need it. In other words the insurance pool will get a whole lot weaker — basically full of sick folk — and thus premiums will skyrocket.
  • RyanCare keeps a form of subsidy, but significantly weakens it. It switches to the provision of flat tax credits that phase out at higher incomes, but which are much lower than Obamacare’s subsidies at the low end. So low wage people will get a lot less help. This will, undoubtedly, end up with many poorer people being forced out of the market.
  • RyanCare keeps provisions preventing discrimination against people with pre-existing conditions.

So the basic structure of Obamacare continues. There is no real “repeal and replace”. There is just a lot of heavy handed meddling.

At the end of the day the big issue that confronts the Republicans is that they ave no over-arching strategy for health care. It is not a typical issue they worry about, so there isn’t a deep pool of prior existing thought. This may shock you given the seven years of discontent since the advent of Obamacare, but it seems as if no one in the upper echelons of the GOP ever gave serious thought to what a true Republican plan would look like. So they have been reduced to this botched and cobbled together effort, that pretends to eliminate Obamacare, but which is, in truth, a pale and poor imitation.

An imitation, moreover, doomed to fail.

It makes no mention, yet, of Republican favorites such as allowing the sale of insurance across state lines. It does include typical Republican goodies for the wealthy: they will benefit especially from the elimination of the Obamacare taxes, and form the widening of scope for the so-called Health Savings Accounts [HSA’s] that allow people to accumulate cash tax free in order to cover health care costs. The Republicans present HSA’s as a way for poor people to save to offset the inevitably higher premiums their plan will create. This is absurd because most poor people will not have sufficient cash to save, and most don’t have high enough incomes to take advantage of the tax break: they don’t pay tax to begin with! So HSA’s are yet another giveaway to the wealthy.

Nor is there any word on the impact of the elimination of the Obamacare taxes on the budget. One of the successes of Obamacare was that it brought in a large net inflow of tax revenue. Getting rid of that tax knocks a big whole in the Federal budget. It is surprising that the GOP, long a source of stern opposition to deficit spending during the Obama years [but not, lest we forget, during the Reagan years, or during the Bush’s tax cuts], is suddenly so blasé about the budget.

And then there’s the conservatives. Already, within hours of the plan’s release, the Republican right wing is lining up in opposition to it because it maintains too  much of a government presence in health care. It is highly unlikely that the plan, as it now exists, will get sufficient votes to pass. Then, if it does and it arrives in the Senate, there is growing opposition from GOP moderates to its Medicaid features. The plan eliminates the Obamacare expansion of Medicaid by 2020. This will place a huge burden on the states that accepted the Obamacare expansion [not all did], and since many of those states have Republican governors who would then be faced with slashing health care for their own voters, it is understandably an unpopular move.

So: not all is well with RyanCare. And, apparently the Republican leadership realizes this because they are crunching through a voice on the plan without any further consultation and without the usual “scoring” of it by the Congressional Budget Office. It is pretty clear why the leadership wants to avoid seeing the scoring: it will show that the plan throws a lot of people off health care, and that premiums will rise rapidly because of that adverse selection problem.

Ugly all round.

Let’s see what happens from here.

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Healthcare continued …

Nothing could possibly give us more insight into the ineptitude and unpreparedness of Trump for high office than his comment yesterday:

“It’s an unbelievably complex subject. Nobody knew health care could be so complicated.”

Really?

Everyone knew. Everyone.

Except for Trump who has blithely been assuming that his bully-boy attitude could translate easily from his real estate business into the White House. He, like a lot of others in recent years, reacted to the gridlock in Washington by arguing we needed a bold business like period of “action” to solve our national issues. We did not need anymore “talk”. All talk and no action is a criticism Trump levels glibly at anyone who appears to want to reflect before doing or saying anything.

So it is with health care.

During the presidential campaign Trump promised the earth. According to his many statements on the topic no one was going to lose coverage, prices would fall, people could keep their own doctors, and all this would delivered by a private rather than public mechanism. He said he was going to eliminate the dreaded mandate aspect of the Affordable Care Act [aka Obamacare]. This was the crucial part of the three legged stool approach in the ACA that lowered average insurance premium costs. Unfortunately it raised them for healthy people and lowered them for the sick, and it was the subsequent uprising amongst the healthy that so motivated the Republicans. This was, of course, over and above their ideological objection to anything smacking of governmental intrusion into the purity of the free market.

The Republicans have been calling for the destruction of the ACA ever since it was voted into being. They have been passing legislation calling for its repeal with regularity — all the time knowing that Obama would veto any such attempt.

But here we are: since they control all branches of government the Republicans can now carry through with their threat. Their leadership promised urgent and early repeal to their rabid base of supporters. It was, we were led to believe, their number one priority ranking even higher than their promise to reduce taxes for the rich.

That sound you hear is the silence surround their efforts.

It now transpires that Trump had no idea what he was talking about, and is only just getting an inkling of the difficulties surrounding a health insurance program based on private market delivery. Any such program is riven through with contradictions unless, and this is the pivotal point, legislators are prepared to cut millions of people adrift from health care coverage. If the Republicans were willing to roll back the triumph of the ACA and its extension of coverage to the well over 20 million people who previously had not been covered, they could easily forge ahead. It would be an act of enormous callousness but not wood be consistent with their anti-social pro-individual ideological stance. Under that stance anyone without health care coverage is to blame for their own inadequacy and it is not the proper role of the state to compensate for that inadequacy.

The Republican mantra is, in this sense, straight out of the Hayek and Friedman playbook: “everyone gets what they deserve”; and if you have failed to get health care coverage you must, by definition, deserve not to be covered.

The social democratic mantra is, in contrast: “everyone gets what they deserve” implying a socially cohesive policy stance allowing for the public provision of health care because all citizens deserve it. They are, after all, equally citizens.

The problem currently undermining the Republicans is that their ideology prevents them from caring about their fellow citizens and so providing coverage to everyone. The idea of full coverage is contradicted by the need to prevent state coercion. Since the latter is needed to ensure the former the whole idea of full coverage through a private market collapses. It cannot be done.

Apparently neither Trump nor his key advisors had thought this through. Hence his ridiculous claim that nobody realized how complex health care policy making is.

Everyone knew.

Except Trump: What an amateur.

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