Repeal vs. reform
Today, the House of Representatives will begin debate on legislation repealing the Patient Protection and Affordable Care Act. That makes for a bracingly clarifying choice. America will either have a package of reforms that we've studied quite thoroughly or a status quo we know all too well. So what would a world without the health-care bill look like?
1. In 2019, there will be 32 million Americans who don't have health insurance, but would have had it under reform: There are a lot of questions about how the Affordable Care Act will work in practice, but this is the part we know for certain: Tens of millions more Americans will have health insurance. About half of the newly insured will get coverage through Medicaid, and about half will get it by purchasing subsidized private insurance on the exchanges. But they'll get it. Under the status quo, they won't. Here's the comparison, using CBO data from this report (pdf):
There are a lot of reasons to prefer being insured to being uninsured. For one thing, a sudden illness can just be that: a sudden illness. Without insurance, it's also a financial catastrophe. For another, health insurance just might save your life. So it's worth having. As you can see on the graph, even under the ACA, about 20 million people are left uninsured. Here's who they are. But Congress isn't choosing between the ACA and legislation that covers more people. They're choosing between the ACA and legislation that covers no one.
2. Over the next decade, the deficit will be $230 billion larger, and in the decades to come, it will grow much beyond that: As written, the health-care law saves money. Full stop. It cuts spending and raises taxes by a larger amount than it raises spending. Repeal, in addition to reversing the increase in coverage, would also reverse the decrease in deficits:
Republicans have tried to undermine the CBO's conclusions, but their arguments don't hold water. They say, for instance, that the cost of reversing the changes the 1997 Balanced Budget Act made to Medicare's formula for paying doctors should be included in health-care reform. That's absurd on its face, but it becomes more absurd when you realize that their repeal bill does nothing about those doctor payments. In fact, the repeal bill doesn't do anything about the cost problems in the health-care system, or about the deficit. It just lets everything keep going the way it's going now.
3. The experiments in controlling costs will disappear, and we'll be back at square one. It's important to understand that there's a difference between the bill's financing provisions -- which were mentioned in the previous section -- and the bill's cost controls. The financing provisions cut spending and raise taxes to make the numbers add up. The cost controls implement reforms and change the health-care system to try to slow spending down in the future. They're more speculative than the financing provisions, but they're also more important.
For example: There's a large experiment with payment bundling, under which hospitals get a lump sum for the treatment of a particular condition, and if they're able to resolve the condition for less, they get to keep the difference. That means they can make money by saving money, which is a far cry from the current system, where they make money by persuading patients (and their insurers) to spend money.
There's the Independent Payment Advisory Board, which is an expert body empowered to make cost-saving reforms to Medicare even if Congress and the president don't sign off on them. That makes the program a lot less untouchable than it is now. There's the excise tax, which begins to tax expensive employer-based health-care plans, and in doing, gives employers and workers a big incentive to choose cheaper plans. There's a center tasked with spreading cost-saving pilot programs throughout Medicare, and there are provisions to penalize hospitals with high rates of infection. And that's just a small sampling: There are pages and pages and pages of different ideas on how to cut costs throughout the system.
Do we know, with certainty, which of these ideas will work? No. Is there an argument that they don't go far enough? Yes. But that makes it all the more important to start trying the different ideas and then building on the ones that work. As Mark McClellan, who served as George W. Bush's director of Medicare and Medicaid, has said, "this is the right direction to go."
4. The insurance market will be unchanged: Perhaps the most aggressive reforms in the ACA are to the insurance market. Insurers are no longer allowed to discriminate based on preexisting conditions. They can't take back their coverage without showing outright fraud on the customer's part, or raise premiums without explaining why. Individuals and small businesses will begin buying insurance from "exchanges" -- regulated marketplaces where insurers will have to compete transparently on cost and quality, where consumers will be able to rate insurance products (and other customers will be able to see those ratings), where small business and individuals will be able to pool their bargaining power to extract better prices, and where insurers can be kicked out for bad behavior.
Repeal the bill, and all of that disappears. There are no exchanges. The small business and individual markets remain exactly as fractured and dystopic as they are right now. Insurers can continue to turn you away or jack up your premiums for past illnesses and rescissions will continue at their current pace. The young and the healthy will avoid buying insurance till they get sick, and so their costs will continue to fall on the rest of us and premiums will continue to be unnecessarily high because the young and the healthy aren't present in the system to bring them down.
The choice Congress is debating today is not between the vision of progress in the Affordable Care Act and some other vision for how we move forward. It's the progress in the ACA or the status quo. And when you compare those two, there's no contest: Under the ACA, coverage is more universal, deficits are lower, cost control experiments are more numerous, and the insurance market is more competitive and humane than under the status quo.
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