On Thursday, House Republicans prepared to take final ownership over Obamacare, slapping a giant “T” atop the edifice of legislative manure and declaring victory. This follows Republicans embracing Barack Obama’s budget priorities in their newest budget bill, which did not fund Trump’s wall but did fund refugee resettlement, Planned Parenthood, and Obamacare. Republicans have apparently become the David Copperfield of garbage: they can take Obama’s garbage and turn it into Trump’s garbage right before your eyes!
To be fair, not everything in the Republican bill is bad. Here’s what’s good:
1. Medicaid Reform. This was always Speaker of the House Paul Ryan’s big priority. Instead of need-based grants to the states for Medicaid, Trumpcare would give block grants to the states, saving a trillion dollars over the next ten years by estimates. These savings could be used for the tax reform bill Congress will approach next. They also prevent the states from throwing more and more people onto Medicaid, knowing the feds will pick up the tab.
2. It Eliminates Most – But Not All – Of Obamacare’s Taxes. Trumpcare would kill the medical device tax, the health insurer tax, the 3.8 percent tax on investment income. It wouldn’t kill the so-called Cadillac tax, which taxes people with employer-provided, top-end plans.
3. It Gives States Options They Didn't Have Under Obamacare. States have the option to opt out of Obamacare's pre-existing conditions regulations under the House bill. That likely won't be the case in the Senate bill, and virtually no states will take advantage of this, given the political blowback. But it's an improvement in the letter of the law.
Now, here’s the bad stuff:
1. It Doesn’t Repeal Pre-Existing Conditions Coverage. As Avik Roy has pointed out, the vast majority of health coverage in America already prevents insurance companies from ignoring those with pre-existing conditions:
[P]rior to Obamacare, the vast majority of Americans with health insurance were already in plans that were required to offer them coverage regardless of pre-existing conditions. Employer-based plans were required to offer coverage to everyone regardless of pre-existing conditions. So were Medicare, Medicaid, and other government programs like the VA. Employer- and government-based plans, prior to Obamacare, represented 90 percent of Americans with health insurance. The other 10 percent were people buying coverage on their own, on the individual market. In most—but not all—states prior to Obamacare, people buying coverage on their own could, in theory, be denied coverage for a pre-existing condition.
But the mandate to cover pre-existing conditions for everyone dramatically shifts the burden in the individual market, creates incentives not to get health coverage at all until you are sick, and destroys the profit margins for insurance companies, which is why they have been dropping out of Obamacare altogether. This bill doesn’t really change that. It offers the fig leaf of granting state governments the ability to opt-out of the pre-existing conditions provisions, but it’s hard to imagine governors actually doing it, since they would now have the affirmative political burden of rejecting Obamacare’s most popular provisions.
2. The Mandate Remains. The mandate is formally repealed, but the bill still requires insurance companies to levy a 30 percent surcharge on those who skip a year of coverage. So instead of you paying a fine to the government, you pay a fine to the insurance companies, mandated by the government. Great.
3. It Funds People Not To Buy Health Insurance While Healthy. In order to woo moderate Republicans who were upset with the pre-existing conditions state opt-out possibility, Rep. Fred Upton (R-MI) came up with an amendment that would give states $8 billion over the next five years to fund high-risk pools, adding to the $130 billion in temporary funding already headed to the states. His amendment would essentially pay people’s fine if they skip a year of coverage.
4. It Retains The New Ryan-Trump Entitlement Program. The bill still provides refundable tax credits to buy health insurance, which amounts to a new entitlement program.
Here’s the bottom line: by stepping into the muddy waters of healthcare policy with a giant overhaul instead of a simple Obamacare repeal, followed by piecemeal passage of popular provisions relieving particular burdens, the Republicans own the system Obama built. They’ll be blamed for whatever comes next. And because they’re not repealing Obamacare, that means they’ve now transformed Obama’s legacy into their own.