Obamacare Forever?

By ROGER STARK  | 
BLOG
|
Mar 24, 2017

Rep. Paul Ryan (R-WI), Speaker of the House, pulled the Republican health care reform bill from a House vote today, for the second day in a row. According to CNN, Ryan told reporters “we are going to be living with Obamacare for the foreseeable future.” (here) President Trump has stated that the Administration is now going to move on to tax reform.

This is a terrible blow for patient-centered health care reform and for the U.S. health care system in general. The Republican bill was not perfect. Because of only a simple majority in the U.S. Senate, the House bill was limited to financial and budgetary issues in Obamacare. Consequently, it left in place several critical items, such as the benefit mandates that the Affordable Care Act requires in every health insurance policy. Last minute negotiations added repeal of the mandates, but it is highly unlikely this would have passed through the Senate.

Imperfect or not, the bill would have:

  • Started a reform of the Medicaid entitlement – the first significant entitlement reform in U.S. history.
  • Provided tax credits to individuals to help them purchase health insurance. This would have initiated a leveling-of-the-playing-field with the $3.5 trillion (over 10 years) tax break employers receive for providing employee health benefits.
  • Repealed all of the Obamacare taxes and delayed the “Cadillac tax.”
  • Provided federal funds to help states establish high-risk pools and shore up their Medicaid spending.
  • Repealed the individual and employer mandates requiring everyone to purchase health insurance or pay a penalty.
  • Decreased government spending by $1.2 trillion over the next ten years, thereby stimulating the economy.
  • Given states more control over their health care systems.

Conservative Republicans in the House, mostly in safe seats, evidently believed it is better to retain Obamacare than to “compromise” on a bill that doesn’t include everything they wanted. Moderate Republicans, many in swing districts, felt the cuts to Medicaid were too severe and the tax credits were not large enough, especially for older individuals.

Essentially what this means is conservatives are not willing to take an incremental approach to health care reform and moderates are not willing to engage in entitlement reform.

It’s foolish to believe Obamacare will spiral down and die of its own regulatory and financial burden. The health insurance exchanges may collapse, but the Medicaid entitlement will stay and grow. The Obamacare taxes, really an income redistribution scheme that lasts forever, will remain. The financial cuts to Medicare that were designated to fund Obamacare will probably not take place, which will add to the national debt.

For anyone who believes in patient-centered health care, the most disheartening long-range outcome is to see Democrats and potentially moderate Republicans banding together to pass legislation that drops the age of eligibility for Medicare and raises the income eligibility level for Medicaid. By simply expanding these existing entitlements, elected officials could drive the country into a single-payer, government-controlled health care system without adding any new programs.

Perhaps the next Congress can tackle health care reform. I’m not confident.