Ryan's health insurance plan meets reality
Reviews of the fiscal effects of the House GOP leadership's health insurance scheme to replace Obamacare are a mixed bag. But the biggest takeaway? It would be better to repeal Obamacare and do nothing, than to adopt the Ryan replacement plan:
In 2015, CBO evaluated a straight full repeal of Obamacare, without any replacement, and it found that coverage would actually be slightly better than what it would be under the House Republican plan being pushed by Speaker Paul Ryan. Whereas the Ryan plan would, according to the CBO, leave 51 million uninsured in 2025, two years ago, the CBO projected under a full repeal (without a replacement), 50 million would be uninsured. Now, it's quite possible that the CBO would score full repeal differently now, given a different set of underlying assumptions. But it's hard to see how the basic picture would change much.
How could that possibly be? How could a Republican plan that spends hundreds of billions of dollars offering tax credits to individuals and winds down Obamacare over several years cover no more people than a straight, immediate, full repeal would have? The reason is that the Republican replacement preserves many of Obamacare's regulations that drive up the cost of insurance. So, in essence, the GOP alternative would be asking people to purchase expensive Obamacare plans, with less financial assistance. In contrast, while full repeal would offer no assistance, because it would get rid of Obamacare's regulations, it would make insurance cheaper.
So, if the baseline assumption is that full repeal only covers about the same number of people as repeal and the House Republican replacement, it's fair to say that adding free market elements to full repeal — such as large health savings accounts or deductions toward the purchase of insurance — would help boost coverage numbers somewhat. Given the importance that the CBO places on the individual mandate and the fact that any repeal would significantly reduce Medicaid spending, it's clear that the CBO would still say that full repeal plus a market-based alternative would cover a lot fewer people than Obamacare. However, even if a free market replacement covers only a few million people under the CBO model, it would still be covering more than what House Republicans have come up with.
For some Republicans, the only thing that matters is whether whatever they decide to do raises or lowers health insurance premiums:
For Rep. Mark Meadows, R-N.C., the success of House Republican leaders’ Obamacare repeal and replacement plan, as well as the success of President Donald Trump, hinges on one thing: the cost of insurance premiums.
“We ultimately will be judged only by one factor: if insurance premiums come down,” Meadows [said]. “If the average person who is paying their bill looks at their bill, and it continues to stay down over the next three to four years, then this president will be applauded. If they continue to go up and health care costs continue to go up, then he won’t.”
But as it stands, the North Carolina Republican said, the House GOP’s replacement plan leaves in place the very provisions of Obamacare that many believe caused premiums to rise: insurance regulations and mandates.
We said when the Ryan plan was introduced that there would be a great deal of horse trading on the specifics of the proposal. Despite Speaker Ryan's public assertion that he isn't interested in major changes to his bill, he knows changes are inevitable -- particularly if Senate Republicans have anything to say about it.
One thing to keep an eye on as this bill moves through the legislative process -- how much political capital is spent pushing it.
If Republican House leaders insist on no changes, and strong-arm the bill through the House, they will have to expend a great deal of political capital that could otherwise be used to push tax and regulatory reform.
There is a risk they could empty the tank before these items come to the floor. And that could imperil key elements of the President's agenda.