Between our typical astronomical monthly insurance premium and the requirement to pre-pay for the new 2017 plan, our December credit card bill had over $2,200 in charges to Blue Cross Blue Shield. All for a $13,100 deductible! Seeing the exuberant bill, my wife asked me if we’d see relief this year. Sadly, I turned to her and said, “honey, unless Republicans begin understanding free market health care, the factor that is forcing us to pay these premiums is not going away.”
Both Trump and GOP congressional leaders continue to pursue the original sin of Obamacare (and past interventions in health care): the utopian pursuit of universal coverage through regulations and subsidies at the expense of lowering costs, thereby achieving neither goal.
On the surface, it appears to most voters that repeal of Obamacare is proceeding swiftly through Congress. Last week, both the House and Senate cleared the first hurdle — passing a budget resolution — in enacting such repeal through the budget reconciliation process, which will enable the bill to avoid the Senate filibuster en route to Donald Trump’s desk. The problem is that, since we initially reported on the bait-and-switch, there are no signs that Republicans plan to include repeal of the insurance regulations in the package. In other words, premiums will not go down nor will we achieve solvency in the insurance market.
Once we allow Republicans to renege on their promise to repeal them legislatively, Obamacare will be enshrined forever.
The new plan to fool members into keeping Obamacare
Enough pressure has mounted for Republicans to address the insurance regulations. However, they are still peddling the lie that repeal of the regulations cannot be included in budget reconciliation. From what I’m hearing, a number of House members now recognize that if the insurance regulations are not repealed now, they will never be repealed because the same 60-vote hurdle — if we take leadership’s position face value — will always stand in the way.
As such, congressional leaders are now telling the rank-and-file members not to worry about the insurance regulations because they can be repealed administratively by the Trump administration with the guidance of incoming-Secretary of HHS Tom Price, R-Ga. (D, 62%).
It’s important to declare up front that this assertion that administrative repeal of Obamacare can be a substitute for a legislative repeal is a complete myth. Most of the insurance regs, if not all of them, will never be repealed administratively. Once we allow Republicans to renege on their promise to repeal them legislatively, Obamacare will be enshrined forever.
Sen. Lamar Alexander, R-Tenn. (F, 15%) is the leading voice in developing a so-called rescue plan that involves administrative relief from the Obamacare regulations. But if you look at his speech from last week, he only mentions relief from the “essential benefits” requirement. While it is true that the requirement for insurance companies to cover a panoply of unnecessary benefits in all plans drives up the cost of premiums, the real 800-pound gorillas in the room are guaranteed issue (requirement to cover all pre-existing conditions) and community rating (requirement to charge even the sickest applicants the price of the community), which are not addressed in his plan.
Alexander claims that section 1332 of Obamacare allows HHS to issue a waiver against the essential benefits requirement. But he never mentions guaranteed issue and community rating because they are written in plain language into the statute and Republicans have no intention of getting rid of them. It’s no coincidence that when forced to finally address the insurance regs, Republicans latch onto the least impactful of them. While there are no comprehensive studies of the cost of individual insurance regs from Obamacare, a 2008 study of state regulations published in the Forum for Health Economics and Policy found that the combination of guarantee issue regulations with community rating regulations in New Jersey were associated with an increase in premiums of as much as 227 percent. The same study found that mandated benefits accounted for only a tiny increase in premiums.
It is very possible that the essential benefits of Obamacare are more onerous than those observed in previous studies, but the consequences of repealing them without repealing guaranteed issue and community rating are very limited.
Moreover, even the section 1332 waiver for essential benefits is not a complete license for HHS to abolish that mandate. It merely allows states to come up with alternative plans to cover the same number of people. In other words, the Alexander solution of leaving the regs intact legislatively but “repealing” them administratively, is a partial solution to the least costly of the major regulations.
Furthermore, the tenuous nature of a partial administrative waiver is unlikely to serve as a strong enough signal to the insurance market that “insurance” has now been returned to the business of offering insurance. Premiums will not come down.
What’s worse, Alexander outlined in the same plan his intent to leave intact the cost-sharing subsidies that Obama’s HHS created out of whole cloth. Thus, the signal to insurance companies will continue to be: “we will regulate you to death but at the same time offer subsidies to cover the cost” — the exact opposite approach that is needed to force them to return to the free market and lower premiums.
Individual members of Congress must realize they are being lied to. Republicans have no intention of replacing the very elements of Obamacare that are most responsible for insolvency. And no, they cannot repeal them administratively. However, it can and must done legislatively through budget reconciliation.
This week will be completely consumed with attention on the razzle dazzle of the inaugural festivities. But the most important revelation of the next week — one that will set the entire tone of this presidency — will be the news concerning Trump’s final plan on health care and whether it actually repeals the worst element of Obamacare.