It’s too bad Republicans are trying to rush their health care plan through Congress. They have some ideas that could actually work, but they’re wrapped in a deeply flawed package.
Take, for instance, the way the proposed American Health Care Act would replace the individual mandate. The mandate is considered a linchpin of Obamacare because it makes young, healthy people buy insurance.
Republicans hate mandates, so instead they’re proposing a premium penalty for failing to maintain continuous coverage. If you go without insurance for more than two months and then want to buy coverage, your premium would jump 30 percent.
The approach is similar to Medicare Part D’s late enrollment penalty. If you don’t sign up for drug coverage when you enroll in Medicare, and you want it later, your premium goes up by 1 percent for each month you delay.
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It’s an effective design: Even relatively healthy people sign up for Part D because they fear being forced to pay a lot later.
The Republican plan differs from Medicare Part D in an important way, however: Its penalty lasts only 12 months. If we want to dissuade people from rolling the dice and going without insurance, the penalty needs to last a lot longer or be a lot steeper.
Similarly, the bill’s plan to turn Medicaid into a sort of block grant could, in theory, lead states to find efficiencies and cost savings. States, though, need to be assured that the grants will grow with rising health care costs. Otherwise, the Republican plan is a blueprint for deteriorating care and rising pressure on state budgets.
Obamacare, as the Affordable Care Act came to be known, admittedly, is not perfect. As insurers drop out of the exchanges, many parts of the country are left with only one company offering coverage. There’s a concern that the exchanges may collapse if more insurers leave.
The so-called Trumpcare proposal could make this better or worse. By letting insurers charge older folks five times as much as young people, up from a maximum of three times now, the plan may put prices more in line with costs.
On the other hand, the Republican plan will leave a lot of people unable to afford coverage. It replaces Obamacare’s income-based subsidies with tax credits based only on age and family size. If that drives young people — who, on average, are healthy but don’t have a lot of money — out of the market, it could hasten the exchanges’ collapse.
The biggest question about the Republican bill, meanwhile, is whether it has enough Republican support to become law. Even as supporters rammed it through two House committees Thursday, some conservatives predicted that it wouldn’t pass the Senate.
The road to passage may get rockier after the Congressional Budget Office weighs in on the cost of the legislation. If Republicans can’t pass a bill on their own, they may be forced to compromise with Democrats and keep more of the features of Obamacare.
“There’s probably a list of 20 things even the Affordable Care Act proponents agree are problems and need to be fixed,” said Tim McBride, a health care economist at Washington University. “I think Democrats would come to the table if they thought there would be give-and-take.”
President Barack Obama, we should remember, didn’t sign the ACA until March 2010, more than a year after he took office. If Republicans try to push their replacement plan much faster than that, their slapdash effort is likely to do more harm than good.