Fixing Obamacare

A week ago, Paul Ryan, Speaker of the House, withdrew the American Health Care Act from consideration in the House of Representatives, without a vote.  The Speaker, among others, had counted heads, and he knew that the AHCA would be defeated.  For now, at least, Obamacare lives on.

Earlier this week, Mr. Ryan was interviewed by Norah O’Donnell of CBS News.  During that interview, he continued to bang the drum for repeal and replacement of Obamacare.  He expressed his desire to “get to yes” on some version of the American Health Care Act, implying that he would be interested in substantive, interest-based negotiations.  (“Getting to YES” is the title of a book on interest-based negotiation by the late Roger Fisher, director of the Harvard Negotiation Project.)

When asked whether he would consider working with Democrats to amend the elements of Obamacare that he and his fellow Republicans view as problematic, he dismissed the idea of an amended Obamacare as not “conservative enough” for many Republicans.  So much for being open to interest-based negotiation.

Mr. Ryan then reached for a standard Republican catchphrase (in discussions of health care, but not abortion), stating that Americans need a new health care law that allows for more freedom of choice.

The Problem

When Obamacare was implemented, many low-income Americans were able to get health insurance for the first time in ten or twenty years.  Some of them had received no preventive care for decades and were in very poor health.  Their care was, and continues to be, expensive.

Congress anticipated the high costs associated with providing care to this group.  To address these costs, various provisions in Obamacare (e.g., Section 1402) provided that the Secretary of Health and Human Services would reimburse a health insurer when payouts for treatment made coverage a losing business proposition for the insurer, due to the relatively low premiums paid for that coverage.

For several years, Republicans on Capitol Hill have attempted, repeatedly, to blow up Obamacare by interfering with this reimbursement scheme. For example:

  • In September of 2013, Senator Ted Cruz filibustered to shut down the federal government over a funding re-authorization, asserting that President Obama would not cooperate with Republican efforts to de-fund Obamacare.
  • In the 2013 – 2014 budget, the House would not authorize an appropriation for these reimbursements; in 2014, House Republicans sued the Obama Administration and obtained a court order that prohibited the Secretary of Health and Human Services from reimbursing insurers, since the reimbursement funds had not been specifically appropriated by Congress. The case is still pending.
  • In 2015, health insurers seeking reimbursement for extraordinary losses incurred in specific geographic areas during the first several years of the exchanges were thwarted by a provision that Senator Marco Rubio proposed for inclusion in an appropriations bill.

These maneuvers are obviously not about freedom of choice; they are about money.  In purely political terms, they are also about breaking Obamacare, so that lawmakers can label the current system as irretrievably broken and swirling in a “death spiral” – such a “disaster” that the only reasonable solution is repeal and replacement.  The vague assertions about freedom allow the players to pretend that they are defending what we value most, rather than quibbling about money.

Freedom is not the Solution

In the health care system, there is one group of Americans who would obviously benefit, at least in the short term, from more freedom of choice.  That group is the young and healthy people who do not like paying their premiums and deductibles for routine wellness exams.

If we allow this group the freedom to go without health insurance coverage, we all lose, for two reasons.  First, premiums rise for those with health insurance, as explained in a previous post.  Second, in twenty years, this group of voluntary free-riders will be the next group that, due to a lack of preventive care over the long term, will need expensive care for diabetes, heart disease, various cancers and so on.

Obamacare was enacted with three objectives in mind: (1) insure more Americans; (2) improve the efficiency of health care; and (3) reduce health care costs.  The law has been reasonably successful in meeting the first two objectives.  Sooner or later, Congress will need to tackle costs.

It is time for some substantive, interest-based negotiations concerning health care on Capitol Hill, with or without Mr. Ryan.

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