OBAMACARE AND THE GOP Flashcards
Lesson from Obamacare: Everything in health care is a painful trade-off
Any government health coverage expansion involves a series of trade-offs, decisions that will inevitably anger one constituency or another. Change the system so one group pays less, and another group, inevitably, has to pay more.
Democrats had to make very clear trade-offs to advantage this older, sicker population.
–For example, the law limits the premiums that insurers could charge their oldest consumers to just three times whatever they billed the youngest enrollees.
–The Affordable Care Act mandated that insurers must cover 10 “essential health benefit” categories.
Bringing unhealthy people into the market is difficult, “because it requires the healthy people who had a sweet deal in the past to pay higher rates.” Still, Obamacare has struggled to attract young people: Back in 2012, administration officials told us they wanted one-third of the marketplace enrollees to be between 18 and 34. The number has never gotten there, hovering around one-quarter for the past four years.
The hospitals’ support for the bill was contingent on getting a high percentage of the uninsured covered.
Republicans pushing for the AHCA refused to own up to trade-offs, thus lying to constituents: “Nobody will be worse off financially,” promised Health and Human Services Secretary Tom Price. That’s a promise no plan could keep, but that Republicans have now made, in public, and that will be played back on ad after ad after ad.
The American Health Care Act (AHCA)
The American Health Care Act, however, lays these issues bare. It makes different trade-offs than the ones that Democrats made. The bill would change the rules of the individual market to advantage people who are younger, healthier, and higher-income — but disadvantage people who are older, sicker, and poorer.
–Would allow insurers to charge the oldest enrollees five times as much as the youngest enrollees.
–Would allow insurers to sell less robust health insurance plans that cover a smaller percentage of enrollees’ costs.
According to the CBO’s analysis of the plan, a 64-year-old making $26,500 would see his premiums rise by 750 percent under the AHCA.
It keeps Obamacare’s Medicaid expansion until 2020 — even allowing new states to sign up — and then freezes the expansion and cuts overall program spending thereafter.
Beyond the coverage numbers, the leaner subsidies and new age-rating regulations will mean many who have insurance they like and can afford now will have to switch over to insurance that costs them more, covers less, and leaves them furious with the Republican Party.
The AHCA cuts both the size of the subsidies and the generosity of what counts as insurance. The result will be people paying more to receive less. Some plans, for some people, may sport lower premiums, but those lower premiums will come with eye-popping deductibles and copays, and the diminished tax credits will make the price tag hurt more for most. The plan makes the most unpopular parts of Obamacare worse, and the GOP will own the results.
The CBO says the law cuts the deficit by more than $300 billion, but it does so by kicking 24 million people off health insurance.
Lesson from Obamacare: Bipartisanship
Obamacare passed without a single Republican vote. In 2017, the GOP tried to pass the AHCA through the filibuster-proof budget reconciliation process — a strategy that means they won’t need a single Democratic vote in the Senate, but that also means they are limited to policy changes that are directly budgetary in nature.
“Reconciliation was designed for minor budgetary adjustments, not major policy proposals,” says Alan Frumin, the former Senate parliamentarian.
The Obama administration tried to find a plan that would garner some GOP support by adopting the Massachusetts health care model. And yet magically, the minute Dems said, ‘This is a great idea, and it’s working,’ the Republicans said, ‘This is terrible, and we don’t want to do this.’”
The individual mandate emerged in 1989 at the conservative Heritage Foundation, and Senate Republicans made it a centerpiece of their alternative to the Clinton reforms. The consensus didn’t last. In December 2009, every Senate Republican — including a number who still had their names on the Wyden-Bennett bill — voted to call the individual mandate “unconstitutional.”
The Affordable Care Act, like Obama’s presidency, was built to prove the premise that with the right ideas, and the right spirit of compromise, bipartisanship was still possible in American politics. Instead, like Obama’s presidency, it proved the opposite.
“The first thing we did was have the health care summit at the White House with Republicans and industry,” he says. “The president met repeatedly with congressional Republicans to find common ground. Congressional Democrats did the same. But it didn’t matter what the cost would be, how we designed the law, or how it would work. The answer was going to be no. And at every stage the answer was no.” The GOP’s Senate leadership wanted to make sure there would be no agreement.
How the ACA is similar to GOP proposals
The Obama administration tried to find a plan that would garner some GOP support by adopting the Massachusetts health care model. And yet magically, the minute Dems said, ‘This is a great idea, and it’s working,’ the Republicans said, ‘This is terrible, and we don’t want to do this.’
The individual mandate emerged in 1989 at the conservative Heritage Foundation, and Senate Republicans made it a centerpiece of their alternative to the Clinton reforms.
Mitch McConnell’s strategy for obstruction and against bipartisanship
Mitch McConnell, the canny leader of the Senate Republicans, explained his strategy to the Atlantic. “We worked very hard to keep our fingerprints off of these proposals,” he said. “Because we thought — correctly, I think — that the only way the American people would know that a great debate was going on was if the measures were not bipartisan. When you hang the ‘bipartisan’ tag on something, the perception is that differences have been worked out, and there’s a broad agreement that that’s the way forward.”
He’s right that keeping Republicans united against Obama’s major proposals was an effective strategy against a president who had promised a kinder, gentler political era. Imagine if 20 Senate Republicans had voted for the Affordable Care Act and praised Obama’s commitment to bipartisan ideas and governance. Imagine how powerful the campaign ads would have been, how high Obama’s approval ratings would have been — and imagine how much worse Republicans would have done in the 2010 election.
The catch to McConnellism is that the Senate, at least under its current rules, typically requires compromise for anything to get done. But if the minority accurately diagnoses compromises as counter to their political interests, then nothing can get done. In 2017, the GOP reaped what they sowed.
Lesson from Obamacare: If you change the health care system, you own it
Top Democrats were astonished to see how unified Republicans remained in their opposition to the health care law, even as millions gained coverage. Whenever some part of Obamacare went wrong — when premiums, for example, spiked 22 percent in 2016 — Republicans trumpeted those failures. The White House learned, over the course of the past seven years, that they couldn’t expect a law passed on party lines to garner any praise from its legislative opponents.
“The public never heard, from those who had originally been opposed, any concession that this was doing something good,” Obama says. “That affects public opinion. Generally speaking, when Obamacare has worked well, it wasn’t attributed to Obamacare. And when there were problems, they got front-page headlines.”
White House officials felt hamstrung by the fact that they passed Obamacare with no Republican votes, which made it easier for the party to pile on — they didn’t have to worry about putting a colleague who supported the law in an awkward spot.
One constant tension in the White House messaging strategy was over how to describe the change the new law would make to Americans’ lives. On the one hand, officials wanted to talk about the milestone accomplishment that would hugely change the lives of millions. On the other, they wanted to reassure millions of other anxious Americans that nothing would change at all.
–Most famously, Obama told Americans that if they liked their doctors, they could keep them. But insurers change networks constantly.
–Another problem: The Affordable Care Act did expand coverage to millions of Americans. But those millions of Americans made up a tiny sliver of the population.
–Obamacare’s wider-spread benefits — the end of annual limits in all employer-sponsored insurance, for example, or the end of cost sharing for preventive care — are harder to notice and don’t come with a sticker labeling them as part of the Affordable Care Act.
Americans didn’t seem to recognize what parts of Obamacare worked, but they could see exactly which parts of the health care system didn’t seem to function well, which is one of the drawbacks of watered-down reform bills. And anything bad that happened in the health care system got blamed on Obamacare.
–If premiums spiked? That was Obamacare, regardless of the fact that premiums historically go up every year.
–If a doctor stopped accepting certain patients, or an employer cut a hospital out of network? Also Obamacare.
The last party to reform the health care system owns the good and the bad.
Lesson from Obamacare: Benefits might not get popular, but they are very hard to take away
Somewhat ironically, the only thing that seems to have boosted Obamacare’s poll numbers is the threat of repeal.
For reformers of all ideologies and all approaches, this is the hardest fact of health reform: We aren’t starting from scratch. Any system you build needs to be a compromise with the system we have — a system that provides insurance to more than nine in 10 Americans, a system that employers know how to navigate, a system the medical care industry has designed itself around
The core mistake seemed clear: The Clinton administration had tried to change too much, too fast. Americans are protective of their health insurance and mistrustful of the government. Where the Clinton administration had built its bill in secret, the Obama administration would hand the process to Congress. And where the Clinton administration had tried to change as much as possible, the Obama administration would try to change as little as possible while still creating a universal, or nearly universal, health care system. Thus the design of the ACA was incremental, even if its ambitions weren’t.
The incrementalism of the ACA
The core mistake seemed clear: The Clinton administration had tried to change too much, too fast. Americans are protective of their health insurance and mistrustful of the government. Where the Clinton administration had built its bill in secret, the Obama administration would hand the process to Congress. And where the Clinton administration had tried to change as much as possible, the Obama administration would try to change as little as possible while still creating a universal, or nearly universal, health care system. Thus the design of the ACA was incremental, even if its ambitions weren’t.
–Save for some spending cuts, it left Medicare coverage mostly alone.
–It left the massive employer-based insurance market mostly alone.
–It expanded Medicaid coverage to more people.
–The big changes it made were to the messy individual insurance market, where the administration:
(1) added protections for preexisting conditions,
(2) regulated marketplaces where insurers would compete for consumers,
(3) subsidies for lower-income Americans, and
(4) the individual mandate to buy health coverage.
But even here, the Obama administration tried to be careful — it allowed existing plans to “grandfather” into the new system. This was the backdrop of, “If you like your health care plan, you can keep it.”
“If you like your plan, you can keep it”
The Obama administration tried to be careful when implementing protections for preexisting conditions and essential benefits, allowing existing plans to “grandfather” into the new system rather than starting from scratch.
This was the backdrop of, “If you like your health care plan, you can keep it.”
However, this turned out to be false in 2013 when about 4 million Americans saw their plans canceled because they were noncompliant with Obamacare’s regulations, and because they hadn’t followed the strict, complex regulations that governed the grandfathering process. The outcry was swift and severe.
Change proved scarier than stasis, and Obamacare’s popularity never recovered from the public’s fear of what they might lose, or did lose. Now, though, Obamacare is the status quo.
Lesson from Obamacare: Partnering with the private sector, and private insurers, can be risky — in a way expanding government-run programs isn’t
Predictions for the employer-sponsored insurance system’s collapse ran rampant. The question around companies shifting workers to the new public marketplaces was often framed not as if but when.
The Congressional Budget Office estimated in 2014 that the marketplaces would have 23 million enrollees by now. Instead, they’re hovering around 10 million.
Large employers turned out to be much more hesitant to drop coverage than economists had expected. They had become accustomed to providing this as part of a benefit package and, after Healthcare.gov’s disastrous rollout, were not enthusiastic to send their workers into a brand new marketplace.
There are risks to working with private partners. If they decide not to participate in an insurance expansion, there isn’t much the government can do except beg and plead — which the Obama administration has had to do in a few cases, when some counties had no insurers at all.
There is significant evidence that Aetna pulled out of the marketplaces, for example, in retaliation for the Obama administration denying its merger with Cigna.
Obamacare’s Medicaid expansion, meanwhile, has been a quiet success. Because Medicaid pays doctors less than other programs, it was a cheaper way to cover millions of Americans. Democrats couldn’t afford a bill that expanded more expensive private insurance to everyone, so they included Medicaid as a significant source of coverage.
The program often gets maligned in Washington for not offering as much doctor choice as private insurance. But here’s the surprising thing about Medicaid: Even so, most enrollees are really happy with their coverage. They pay no premiums and face pretty small copays when they go to the doctor or fill prescriptions.
Lesson from Obamacare: Affordability doesn’t mean what Washington thinks it means
To appeal to Republicans, Obama tried to frame the ACA as a way to cut the deficit and cut costs.
The subsidies were designed to push people into cheaper plans on the insurance exchanges. Medicare was given a board empowered to make sweeping, unpopular reforms to keep costs down. The law included a tax on expensive, employer-provided insurance plans. Democrats made sure the whole thing was paid for by raising taxes on the rich and cutting more than $500 billion in Medicare spending.
The changes appear to have worked: Systemwide costs have been growing at their slowest rate in recorded history. Exchange insurers have pushed hard into plans with narrow networks and high deductibles.
The only problem is people hate it. The narrow networks and high deductibles are among Obamacare’s most-loathed features. The Medicare cuts and tax increases have been powerful issues for Republicans on the campaign trail. The tax on expensive, employer-provided insurance plans is so unpopular that both Bernie Sanders and Hillary Clinton promised to kill it.
It is rare for a policy to work so well in practice and fail so totally in popular opinion. But Obamacare ran into the paradox of cost control: The policies that control costs are the policies people hate most. Under private insurance model, you can’t cut costs and offer robust insurance. Can’t have cake and eat it too.
Then again, it’s worth asking if perhaps the government should have paid more. Democrats built Obamacare with a number of artificial strictures. One was that the law could only cost $1 trillion over 10 years — a number chosen arbitrarily to reduce sticker shock, though it clearly didn’t work. Another was that the law had to be paid for in its first 10 years. Not everyone involved in its drafting thinks those constraints were worth the trade-off of lower subsidies, higher premiums and deductibles, and assorted unpopular spending cuts and tax hikes.
This is a lesson Republicans aren’t learning. The AHCA cuts both the size of the subsidies and the generosity of what counts as insurance. The result will be people paying more to receive less. Some plans, for some people, may sport lower premiums, but those lower premiums will come with eye-popping deductibles and copays, and the diminished tax credits will make the price tag hurt more for most.
Lesson from Obamacare: Prices are the fundamental challenge in American health care — and reform will remain an exasperating exercise until that changes
We spend $2.8 trillion on health care annually, more than any other country.
The reason we spend so much money isn’t because we go to the doctor a lot. On average, Americans actually see the doctor slightly less than people in other developed countries. It’s simply because it costs more to go to the doctor than someone in Canada or England.
Other developed countries use price controls in medicine. The government negotiates with drug companies and device makers and doctors to set lower prices. The government is buying in bulk, and has the power to win those negotiations. These countries regulate medical prices akin to how they regulate the price of electricity or water: a service that everyone needs at reasonable price, but would face significant difficulty bargaining for on their own.
The United States does set medical prices for the 50 million elderly Americans who rely on Medicare. The government-run insurer has a fee schedule that says exactly what doctors can bill for every visit or checkup.
Rather than cutting costs by regulating health care prices, the ACA instead aimed at reducing the volume of health care. It tried to get rid of the financial incentives of a “fee for service” system that pays doctors for every test or procedure, regardless of whether it’s actually necessary. Obamacare had dozens of experiments that aimed to move the health care system to a “pay-for-value” system, where doctors would be rewarded for making patients healthier — not just providing medical services. Unnecessary readmissions to hospitals, which the health care law began penalizing in 2013, have plummeted. But this didn’t do much to reduce prices, it only led to slower health care cost growth.
The United States pays health care workers much more too. Nine of the 10 top-paying jobs in the United States are different medical specialties.
The Obama administration made a conscientious decision, at the start of its health care effort, to get all major industry groups to stand behind the law — or at least not work against it. Regulating health care prices would have meant that hospitals, doctors, and pharmaceutical companies would all earn less. The idea was a nonstarter. But America’s high health care prices are at the core of what Obamacare enrollees dislike about the program.
Costly ER bills: the Band-Aid example
A college sophomore made a trip to the emergency room after cutting his finger with a knife doing dishes. The physician assistant examined the finger and treated him with liquid stitches and a bandage.
He received $2,237 in two separate bills — one for $1,032 from the hospital, another for $1,438 from the doctor — for the Band-Aid and its application.
The doctor group charged the Andersons for two days in the emergency room, because the late-night visit began around 11 pm and ended around 1 am.
These types of bills just don’t happen in other countries, where the government negotiates with providers to set a reasonable fee for what a Band-Aid delivered in an emergency room can cost.
The Lesson Republicans need to learn when pushing health care reform
Don’t overpromise, and don’t mislead.
GOP proposals tend to envision a health care system based around catastrophic plans and health savings accounts, where people are protected from financial calamity, but otherwise are pushed to shop cautiously for care, and must make do when they simply can’t afford it at all. Republicans want a market where consumers push the cost of health care down, and one reason they push the costs down is because they often can’t afford the pricier options.
To the extent that Republicans have a different vision of health care than the Democrats or even the voters, they need to be making that case, and building consensus around a health care system that offers less so it can cost less and tax less. Building that system while promising the opposite will result in disaster, both for them and for the voters who rely on them.
Obamacare one-state kickbacks for senate votes
At least 7 Democratic senators demanded deals worth hundreds of millions of dollars to mostly benefit their home states.
–Landrieu was swayed by $300 million Medicaid deal
–Ben Nelson of NE was swayed by deal to have federal taxpayers pay for Medicaid expansion in NE forever.
–Bill Nelson got FL senior exempt from Medicare cuts
–Mystery $100 million grant to unknown health care facility in unknown state, written by CT senator Chris Dodd
Majority leader Reid didn’t express much shame, arguing that these deals are how you get to 60 votes. Trading favors is how you pass bills. Democrats didn’t even feel defensive or embarrassed when pressed about deals because they could argue all the special favors end up helping needy people, albeit arbitrarily.
Republicans wanted the kickbacks to be a national process scandal about Democratic corruption, but these senators run for reelection in one state, and now they get to claim they delivered for their constituents.
