Tuesday, February 4, 2014

Republican Health Plan... Arg

So last week sometime, the Republicans put out their proposed healthcare plan... the thing they want to replace Obamacare with. The plan was drafted by Orrin Hatch, Richard Burr and Tom Coburn and it kind of stinks. Well, drop the “kind of.” Here are the details.

The plan stinks, but it’s not all bad. Here are the good parts:
● First, it starts be repealing Obamacare in its entirety. That’s a good start. There is too much insider and insidious crap buried within Obamacare to try to poke through it line by line. Kill this rotten beast and start fresh. Good move.

● Secondly, they keep the most popular parts of Obamacare – the parts the public will not give up easily: ending lifetime limits and letting adult children stay on their parents’ plans until 26.
Then things go downhill fast.
● First, it wipes out the state exchanges and the mandate, which is good right? Well, yeah, only it doesn’t really wipe those out. Yes, it technically wipes both out. BUT the law provides that insurers can’t charge for pre-existing conditions so long as you’ve been “continuously insured for 18 months.” This is a hidden mandate and I have no idea how you track this without an exchange to designate what is acceptable coverage. But that’s not even the real problem. The real problem is that this moves the uninsurables from the Exchanges, where they can be tracked and everyone see their cost, into the private insurance market where they will be hidden behind the cost of insurance generally.

In other words, the government is dumping the uninsurables into the lap of the insurers, just as Obama is doing, only the Republicans are doing it secretly.

● Secondly, whereas Obamacare limited insurers to charging old people three times as much as the young, the Republican bill doesn’t eliminate this limit, it just changes it to five times. Basically, young people continue subsidizing old people, only not as much.

● With the individual mandate vanishing, insurers will need some other subsidy to support the requirement that they take on the uninsurables. The Republicans raise this money by taxing portions of employer plans.

● Because the feds can never hand out too much money, they continue the idea of tax credits for anyone earning less than 300% of the federal poverty level, i.e. the Obamacare subsidies.
So here’s what we have. The Republicans are keeping the Obama bribes for the old and the poor and Big Insurance. They are hiding the cost of what they are doing by shifting it from the Exchanges deep into the balance sheets of private insurers, to whom they will provide a subsidy. To raise the money for all of this, the Republicans tax the insurance policies that middle class workers get from their employers. They do exactly nothing to make the system better, safer or cheaper.

Maybe they should kick a few puppies while they’re at it. Seriously, a retarded monkey working at a broken typewriter would probably come up with better policies than the GOP. How can an entire party be so bereft of intelligence?


Koshcat said...

I don't think your being completely upfront with their proposal. They also want to extend the tax credit for insurance to all decoupling it from employers and making it more portable. Insurance plans through employers are essentially untaxed income, which is fine. They proposed taxing above 65% of the highest cost plan. That is a company can't hide extra income in a Cadillac plan and expect the rest of us to pay for it through tax credits to the company.

There were a couple of interesting editorials in the WSJ this weekend, one was an interview with Coburn. He is a physician from Oklahoma. Did you know the senate all but forced him out of practice? He also is one of the few legislatures to publish a booklet on government waste. He got back into politics because he was against the Medicare drug perscription plan. He isn't the problem and at least it is a counter proposal to Obamacare. We should make sure we don't make the perfect the enemy of the good. Maybe this isn't the good yet but it is an incremental step.

AndrewPrice said...

Koshcat, You are correct that the tax only kicks in at 65%, but I didn't see a reason to discuss it. For one thing, it won't work. It will produce faaaaar too little money -- by orders of magnitude. For another, what this payment mechanism does is further pollute the tax code with complexity and more opportunities for gamesmanship as everyone competes to move around the percentages as campaign promises.

In terms of the perfect being the enemy of the good, I agree with that philosophy, but there's nothing good here. This is just more of the same game they've played for decades -- the Democrats propose something obnoxious and destructive and the Republicans start tinkering with it to find ways to let it limp along without the public knowing the harm it is doing. You could actually call this "The Hidden Obamacare Act."

Even worse, there is almost nothing in this proposal that would be an improvement over Obamacare. It does all the same bad things will adding complexity and letting people fall through the cracks. It also comes nowhere near paying for itself. Obamacare is a paradigm of fiscal sanity by comparison.

On Coburn, I am a big fan of Coburn, though he's not always right. And I get that they want to be seen as proposing a plan other than "let insurers compete," so they are no longer seen as the obstructionist party. I also appreciate that they aren't trying to undo the two popular provisions, which is the usual Republican way... if the public wants it then we want to get rid of it. But after that, this is not a good plan and this is not something we should advocate. This plan is ME-TOO to Obamacare with sneaky backdoor stuff to help insurers. That's a horrible plan politically and economically.

AndrewPrice said...

BTW, Let me add that despite my dislike for the plan, I AM thrilled that the Republicans are starting to come up with ideas. There's has been a real change in the past few weeks and that's a good thing.

Viewing this as a shot in the dark start, I'm ok with it... it just needs major surgery asap.

tryanmax said...

This is the first I've read of it, so I'm commenting from a place of relative ignorance. Doesn't sound too good, but I'd be happy even if just the individual mandate was removed and the rest dealt with piecemeal, that's how scary that provision is to me. It also sheds some insight (not justification) for why the GOP is often the "party of No"--once these things are in place, all you can do is inch back to the right direction. That, of course, is the very reason why Republicans need to present alternatives before Democrats pass things into law.

Tennessee Jed said...

I particularly like your comment "the real problem is that it moves the 'uninsurables' from the exchanges where everybody can see their costs. It is not an unworthy objective that no American should be prohibited from obtaining some level of treatment for medical issues if they so choose strictly because of finances. However, to do so without out regard to the costs is irresponsible.

One of my biggest complaints with "Obamacare" is that it was all about availability with very little, if any, regard for cost containment. Remember, technically speaking, insurance is not health care. Insurance companies are financial institutions, much like banks. They are a method of spreading the financial risk of non-business (e.g. speculative) loss so that an individual or organization is not ruined by a calamitous event. To be sure, big insurance is looking at stock price and will act with tunnel vision towards maximizing profit. That said, an attempt to force companies to insure uninsurables while regulating what they can charge is illogical and unfair, just as screwing taxpayers into subsidizing them is crony capitalism at it's worst. (con.t)

Tennessee Jed said...

No, it is much better to let the private sector compete for the desirable portion of the business, and compete based on service and price. Pull out the "uninsurable" element to study and find ways to improve the process of healthcare for this group and drive down the cost that the rest of society (taxpayers) must bear.

Additionally, one of the biggest problems with our cost of healthcare has been cronyism with "big medicine" in particular, hospitals. Congress has given all kinds of monopolistic tax breaks to big medicine. They have much more economic clout than physicians or insurance carriers. Hospitals charge a lot more for most procedures over and above what is needed, simply because they can.They claim they need to charge more because of the requiremnts they must treat anyone who comes into the E.R. Studies have shown prices charged for most medicines, surgeries, tests, and other procedures are way in excess of any off-set.

AndrewPrice said...

Mornin' folks.

tryanmax, I think the problem is the result of the GOP not having any real idea how to offer conservative solutions. This is not a new problem. What they've done here is sit down with the outline of Obamacare and decide to tweak it in ways that sound more palatable to conservatives.... "Hey, let's have the private sector do this part instead of the government." The result is a Democratic bill, using Democratic ideas, but assigned to Big Business to carry out.

They do this all the time. In fact, that's their entire history since Bush I (ADA, Clean Air Act, the Medicare expansion, ethanol, NCLB, McCain Feingold, etc.) has been to pass Democratic ideas to be carried out by Big Business and paid for by the middle class.

If they knew what they stood for, if they understood and trusted free markets, if they took the time to study an area rather than relying on the "I swear this will work" from their lobbyist friends, then they could easily come up with plans to do things like completely replace Obamacare. But they don't. So they either scream NO or they aid and abet the Democrats. Take your pick.

AndrewPrice said...

Jed, You make some very good points and I concur.

I think the underlying problem is this. The Democrats want the government to take over healthcare and then the regulators can "fix it." Unfortunately for them, that proved too expensive, so they decided to do the next best thing -- force everyone to belong to an insurer carrier and then treat the insurers like regulators who will fix the system.

Conservatives stupidly bought into this model of "insurers as regulators." It doesn't seem to have occurred to anyone on our side in Washington or talk radio land that the HEALTHcare industry is between patients and doctors. Instead, they bought into the idea that the healthcare industry is between patients and insurers, as if doctors are merely employees. Hence, all the proposals deal solely with how to get people into the insurance system and then assume that the insurers will sort it all out after that. No one is thinking about how to fix the system itself because they assume the insurers will fix it. But that will never work because the insurers are the problem -- they have wiped out the free market.

On hiding the costs, this is something that is frustrating to me. When Obama needs to pump $200 billion in subsidies into the exchanges, people can see that and freak out. When the cost of their insurance simply rises $100 a month with no explanation, they won't be able to see that. What Coburn et al. are proposing is the ultimate way to hide the folly of Obamacare.

Tennessee Jed said...

I stand by my earlier contention that big healthcare has had a lot more to do with costs, than the insurance industry, and that government has fallen down in their anti-trust responsibilities. Big insurance capitulated to the Obama administration, got inside the tent and cronied up. Laying off the problems solely on the industry and claiming they killed the free market seeems a bit of an over-simplification. The hospital industry is much more powerful, and has driven up costs far more than any insurr ever could.

AndrewPrice said...

Jed, I don't disagree at all. The problem with costs is this: because of the nature of health insurance, patients no longer have the normal incentives that free markets impose. Thus, their incentive is to get "as much" healthcare as possible under their insurance. The result is that they don't look to cut costs by looking for generics or looking for cheaper alternative treatments -- like preventative care.

It's not that the insurers are evil or don't want to keep costs down, but the nature of the insurance is the problem -- it causes people to stop caring what things costs.

As a result of this, doctors have no incentive to compete on the basis of cost or efficiency. To the contrary, their incentive is to find ways to game the system because they don't know that won't hurt their patients and it will instead help their patients. Whispering in their ear are what you are calling Big Medicine -- Big Pharma, un-needed equipment makers, etc. They see a golden opportunity here because no one cares what things cost.

The end result is massive surges in price. And insurers are poorly equipped to prevent these mis-incentives because they can't be in the room with the doctor and patient and decide on the best course of treatment.

Then you add in Medicare, which imposes the most mind-numbingly bizarre cost structure on medicine, and you have real problems.

Seriously, the same system imposed on burger buying would result in $100 hamburgers.

Tennessee Jed said...

I misunderstood your comment, and you are absolutely correct. People who are insulated from direct payments over-utilize; as you put it, their incentive is to get as much as they can. Under such a system, insurers are the ones who have to look at costs, and become easy targets for insurance commissioners (often politicians building their government careers.) Before the system was completely broken, people purchased "major medical" policies, mainly to cover big hospitalizations like surgeries. Wage controls were imposed by FDR in the early 40's, and DID NOT include health care benefits. This caused employers to compete for workers by offering health benefits. In 1965, Medicare gave retirees access to subsidized health care with little in the way of cost control. As health care industry analyst Avik Roy once put it, it's like serving drinks at an open bar. the folks getting enriched were the hospitals with a battery of procedures and tests of marginal benefit.

AndrewPrice said...

Jed, Yeah, sorry if I was unclear. I don't blame the insurers for the rising cost, I blame the misaligned incentives. And I think the only solution is the one that no one in Washington is even looking at -- returning free market mechanisms by making patients price conscious again. Washington, instead, just wants to add more people to insurance, which will only make the problem worse.

You are absolutely correct on your recitation of the history and the problems that caused. As an aside, I like Roy's work a lot. He's a smart man.

BevfromNYC said...

Here's the deal - Somewhere along the line in this whole Obamacare debacle, our legislators forgot how to legislate. Call me crazy but I always thought that you have to START somewhere - a first draft, then draft bills/proposed legislation are supposed to be negotiated, debated, hashed out, ripped apart/put back together, rewritten, thrown out again, pages kept/pages struck out etc. until we come to some kind of consensus that everyone understands AND agrees to. These are all supposed to be done in the full sunlight and in full view of the our trusted public information gatherers (f/k/a Journalists) who would explain it all to us. At the very least, we the citizens should expect that our duly elected representatives could have the common sense to read the damn thing before they voted for or against ANY legislation.

As we all know, NONE of this happened in the making of Obamacare. None of it. There was no plan other than to pass something that had words on a bunch of pages that no one was apparently supposed to read or was going to read anyway and they'd all just pretend that it would all work out...as planned. But again there was no actual plan, so I guess it has really all worked out...well...as planned.
Btw, when I say "them" I mean Democrats. This was going to be the Democrats' shining glory for a new Age of Progressive Enlightenment...damn the torpedos, full speed ahead.

Now after trying their hardest to repeal this monstrosity (knowing full well they would never be able to), The Republicans (btw, the only elected officials who bothered to read the legislation which is why none of them voted for it) now are devising their own plan. Let's hope that they are much wiser than their adversaries in that they will negotiate, debate, hash out, rip apart/put back together, rewrite, throw out again, keep pages/strike out pages struck out etc. until we come to some kind of consensus that everyone understands AND agrees to...this time.

At some point someone has to DRAFT something as a starting point. If this is a first draft I am okay with that. What has been sorely lacking is a starting point as in defining the REAL problems to be fixed. And frankly it is nice to see at least ONE doctor is involved since this entire process has been mostly "doctor-less". And, btw, the AMA does not have anything to do with doctors...

Btw, Tom Coburn is retiring from the Senate at the end of the year.

AndrewPrice said...

Bev, I concur. Legislation, in theory, is created in the manner you describe so everyone can offer their proposed changes and we can all reach some sort of consensus. Obamacare was never that. Obamacare was crafted in the backroom to give all the donors something they wanted. Then a veneer of "everyone can buy coverage now" and a couple popular provisions were added. What they created was Frankensteinian and it's no wonder it's causing havoc on the system and the country.

In terms of the Republican proposal, I agree that it's great that someone is finally offering a draft. Let us hope that others run with this and actually turn it into something useful (in truth, I suspect this was just a political document meant to let them claim they have a plan).

The problem, as I see it, however, is that they continue with the completely wrong focus -- "How do we get everyone covered by insurance so insurance can solve all the problems." That is fundamentally the wrong answer, and starting from that premise will doom any proposal. In fact, if you start with that premise, then you pretty much logically need to end up at Obamacare.

I know Coburn is retiring. Sad.

AndrewPrice said...

BTW, Bev, You are clearly an idealist. I can respect that! :)

Tennessee Jed said...

Bev - perhaps even more than "if you like your doctor", my lasting quote was Nancy Pelosi's "you have to pass the bill to find out what's in the bill" is the most obnoxious quote in the whole sordid history of the debate. The fact she could make such a statement and remain in office astounds me.

Kit said...

Coburn, don't always agree with the guy but he seemed like a good man and a good Senator. And just when he was starting to rock a nice beard too.

AndrewPrice said...

Jed, Even worse, her followers ignored this because they assumed she was lying... and they still voted for her. Wow.

AndrewPrice said...

Kit, I thought he was an excellent Senator for the most part. He will be missed.

BevfromNYC said...

Andrew - This is fundamental flaw of any kind of reform in the government. The very first objective is to define/identify the problem. If one doesn't do that how can we possibly formulate a solution(s)?

Uh, oh...oops, we may need to go into hiding now.

They don't WANT to actually solve problems. Of course as we all know this is not how the a bureaucracy perpetuated itself. As we have seen over and over, they formulate a solution and then try and find a problem for it to fit, so they can formulate more solutions to problems they create from their solutions (Huh??) If the "government" were to actually solved a problem and not create a dozen more, it would implode from the void created.

Yeah...don't let the NSA know that we've figured this out...

NSA said...

WANTED: BevFromNYC, The most dangerous woman in the world, for crimes against bureaucracy.

Definitely NOT BevfromNYC said...

Hey, NSA, I think BevfromNYC went that-er-way! <--------><-------------> No, over there! D'oh, you've gone to far, now back up and go the other way...oh, wait, that was VebformCYN. Someone completely and totally different and definitely NOT who we thought it was at all. Nevermind. We have not idea who that is.

Critch said...

May I go home now? My brain is full.
Honestly, trying to decipher taxes, Obamacare, etc is rough on my brain. My dad was able to afford health insurance on him and his family prior to 1965, he owned a gas station. Somewhere after 1965 the government got way involved in our lives and it's been downhill ever since.

AndrewPrice said...

Critch, It is mentally taxing and it would be nice if we could move on to another issue.

On your second point, it is obvious that the government caused the current problem. And it's frustration that people are suggesting more government to fix it.

Koshcat said...

For those who are interested, here is the interview from over the weekend with Senator Coburn.


Koshcat said...

I don't know if the link will work but here is an editorial by Holman Jenkins in WSJ. I think he is right that complete overturn of the law is not possible. It will have to be incremental.

For one of Bill Clinton's state of the union speeches, Republicans came festooned in lapel buttons proclaiming, "It's the spending, stupid!" Unfortunately only the word "stupid," in larger typeface, was visible to TV viewers.

Republicans do not improve their reputation with their recent brainstorm to focus their opposition on ObamaCare subsidies to insurance to cover the uninsured. Of the 50 million Americans who lack insurance partly because of government actions that have rendered insurance an unaffordable luxury, some by now have contracted pre-existing conditions that make them uninsurable. Even under an ideal GOP reform, handouts were always going to be needed to bring these people into the system.

Of course two things excite Republicans like Florida Sen. Marco Rubio : the chance to George Washington Bridge the insurance companies for getting in bed with ObamaCare, and the chance to make Democrats defend what is winsomely called an "insurer bailout."

But it's not socialism or crony capitalism for government to purchase services from the private sector. And were they to take off their stupid buttons, Republicans might see their heaven-sent opportunity lies elsewhere: in reforming ObamaCare's excessive coverage mandates that drive up the cost of individual policies.

Koshcat said...

Republicans wouldn't have to repeal anything; they could just seek to add an option to ObamaCare's bronze, silver, gold and platinum plans. Call it the rainbow plan, under which insurers would be free to design their offerings however they want, with any mix of coverage and coverage limits, any level of deductible and copay, and even restrict customers on age and health grounds.

Instantly insurers would roll out much cheaper plans aimed at the young and healthy. Because these plans would be cheaper, ObamaCare's income-based subsidies—which absurdly extend to the middle class—could be pared back.

Because these plans would be cheaper, ObamaCare's individual mandate would be far less burdensome.

But wouldn't rainbow plans siphon off the young and healthy who are supposed to provide ObamaCare's hidden subsidies to the old and sick? Yes, but it's not obvious the young and healthy are going to turn up anyway. Plus, it would be more honest and cheaper to subsidize the old and sick directly with tax dollars than with crypto taxes on the young.

It's too bad some GOPers can't lift their gaze from polling data showing the short-term returns to flogging the word "bailout."

Aetna's AET +1.50% Mark Bertolini said an interesting thing last week. The majority of retirees coming into Medicare nowadays chose Medicare's private option, known as Medicare Advantage. Traditional fee-for-service Medicare is becoming a redoubt of the "over 70" crowd.

The Obama exchanges already are favorable to the elderly, and the poor elderly would be further subsidized by income-related handouts.

Medicare already is means-tested and will become more so, and a private option can only become more appealing in the future as traditional Medicare is starved for funding.

OK, the way ahead is murky, but doesn't this political correlation suggest an inevitable conversion of Medicare for most users into a partly subsidized private option—subsidized rationally according to financial need rather than a general handout to everybody in Warren Buffett's age group?

Yet another large and idiotic subsidy in our health-care system is the $248 billion a year handout for employer-provided insurance. Already a few employers are discontinuing insurance for low-wage workers and sending them to the ObamaCare exchanges, which turns out to be a better deal for employees.

Hooray. If this trend continues, it will politically expose the existing handout as a favor mostly to those in the highest brackets. Eventually we might get rid of this grotesquely regressive subsidy in favor a system that focuses its handouts on the poor. Along the way, job-bound insurance could be tossed in favor of portable individual insurance. Yippee!

ObamaCare, as we've been saying for three years, is not the end of health-care reform. It can't be. It leaves in place too many perversities and adds too many new ones to assuage America's discontent with its health-care payment system.

Lapel buttons were not in evidence at this year's state of the union. Maybe Republicans are smart enough to see that ObamaCare supplies not just the vehicle but the political opportunity to move toward a more competitive, market-oriented health-care system. Such a system would actually reserve its market-distorting subsidies for the needy. Isn't this what GOPers should be championing?

Koshcat said...

Just for clarity, Mr. Jenkins' article started after the word "incremental".

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