(image owned by Vox.com, used via Fair Use)
Republicans have a very tricky problem right now. A big part of their election platform revolved around the idea of repealing the PPACA (also known as ‘Obamacare’), a legislative act that has granted insurance to millions of Americans since it was enacted. The Affordable Care Act (ACA from here on) was and is a flawed piece of legislation. Its goal was to slow the tide of rising healthcare costs on America while largely maintaining the existing system of private insurers. In other words, it was trying to combine the best of parts of private and public healthcare, and as a result ended up creating a kind of Frankenstein’s Monster of ad hoc policies put together by various contingents in an attempt to get both Democrats and Republicans to pass the bill while also trying to accomplish its main objections. Put more simply—it’s a bit of a mess.
On the plus side, the ACA has ameliorated one of the biggest problems with private insurance—the fact that pre-existing conditions are often outright denied because there is no profit in covering them. Insurance companies are businesses, which means they need to make profits in order to continue to exist. If you know someone has an existing chronic health problem, then you know that this customer will only drain your company and not add anything of value. So, you can either raise your prices for that customer until this drain is balanced, or you can deny that customer coverage altogether. The ACA disallows companies to deny the customer altogether. The price increase approach is too complex to deal with in this blog, but suffice it to say that the ACA did not altogether eliminate this practice.
Now, if you are going to force companies to cover people that are known drains on the system, then you need to balance that in some way. This is where the Individual Mandate comes into play. The Mandate was an idea that was first proposed by a Conservative think tank (yes, Conservative) known as the Heritage Foundation, as far back as 1989. By forcing all people to buy insurance, you spread the risk across a more varied group of people, many of whom are perfectly healthy. These healthy customers help offset the loss that insurance companies face when forced to cover risky customers. It’s a very practical solution to the problem, and if we consider the issue purely economically, it makes a lot of sense.
But this is where things get really tricky. Many people believe the Individual Mandate is a violation of basic rights. The government, they argue, should not be able to force people to buy a product. In other words, these people do not object to the economics argument, but to the government interference that it represents. While some people have countered this concern by noting that car insurance is required in many states, objectors can counter that you don’t have to own a car, if you want to avoid paying for car insurance. But there is no way around the healthcare mandate (other than to pay the fine, which is its own issue).
This is not the only problem people see with the ACA. I saw someone post on Facebook once that he resented the part of the ACA that requires companies to cover certain women’s issues, since that means he is paying for things he’ll never use (yeah, well women have to cover your prostate cancer, jerk!). Others believe the ACA is actually raising prices (despite evidence that in most years since the ACA was enacted, price increases in healthcare have slowed compared to previous years). Interestingly, many people actually agree with most of the provisions of the ACA, when asked about them individually, and yet still object to “Obamacare”, if it is phrased that way.
Ok, that’s enough background. Whatever you think about the ACA, the fact is that the GOP promised to repeal it if they were put in power, and now they are tasked with carrying out that promise, despite the fact that many Americans are now entrenched in the new system.
Right now, the plan being floated about among Republican circles is known as ‘repeal and delay’. It rests on a very simple premise: we promised to repeal the ACA, but we don’t yet have a plan to replace it; so we need to delay its actual removal. What this would mean in practice is that Congress could repeal the ACA (or most of it, since there is talk of keeping certain provisions, which I’ll get to in a moment), but delay its removal for two years, while they come up with a new and better plan.
Vox has an excellent article up right now on why this is a problematic strategy. That’s where I got the image above this blog post, and it contains a longer, more detailed argument than I will give here. It’s well worth reading.
But here is the short version. The ACA relies largely on insurance companies offering plan through the ACA marketplace, so that Americans are able to take advantage of the subsidies that the ACA provides and receive “affordable” healthcare. Without those marketplaces and the subsidies that drive them, the ACA effectively disappears, at least for the millions of Americans who have gained insurance from it.
Now, suppose you are an insurance company who offers plans through the marketplace. You know you will get some risky customers among the people who sign up this way, because many are people who could not get insurance before. However, others are people who simply could not afford it, or who elected to go without coverage and take their chances. The ACA’s subsidies now allow these people to sign up for your insurance, and you are pretty sure about getting the money, because the government is providing some or most of it. There could be good reasons, then, to keep a plan or two on the marketplace.
But now, Congress repeals the ACA. It won’t really be gone for two years, but you know it is going away. You don’t know what will replace it, because that plan doesn’t yet exist. You’ve heard about some of the proposals, but they are all different, and none are certain to pass. All you know is that the current system is going away, and there will be no more subsidies, perhaps no more marketplace of this sort at all. Why would you keep putting plans on the marketplace? You wouldn’t. It doesn’t make good business sense at all. You would just pull out of the system altogether and wait to see what happens, while focusing on your more traditional business (employment-based insurance).
This is almost certainly what will happen in the case of repeal and delay, and many people already see it. Senator Rand Paul (more of an independent libertarian than a true Republican) warned about the disaster that repeal and delay would represent. He is convinced that the only responsible approach is to replace the current plan with a new plan that promises something better. He’s right! The problem is that such a plan does not yet exist.
And Republicans have a promise to keep…..