Everyone wins if the GOP health plan fails, even Republicans

OK, maybe it’s a slight exaggeration, but almost everyone—99 percent of Americans and all members of Congress—will win if the GOP health plan fails.

Let’s start with Congress. Democrats win if they vote against a bad, unpopular plan. Republicans, meanwhile, minimize their losses if they vote it down—even for the wrong reasons. Basically, incumbents in both parties are better off if it goes away, though Republicans have to go through the motions since they’ve bluffed that they had a better plan than “Obamacare” since day one.

Win or lose, it’s obvious that Republicans don’t want to drag out the process of deliberating the American Health Care Act (which Case Western Reserve University Professor Joseph White has aptly dubbed the “Unaffordable Care Act”). That’s why they rushed committee votes ahead of a Congressional Budget Office review while web traffic to analyses of the plan has been so heavy that it crashed the Center on Budget and Policy Priorities’ website.

Until recently, railing against Obamacare played well politically, and Democrats lacked the party discipline to defend the Affordable Care Act (ACA) against attacks, especially after a botched rollout. The ACA slowed—but did not stop or reverse—excess health cost growth in the United States, and also did a good job of spreading these costs among sick and healthy and poor and rich to make health care affordable for most Americans, if not quite the fundamental right enshrined in the World Health Organization’s constitution. (House GOP leader Paul Ryan seems unaware that risk pooling is the whole purpose of insurance.) The CBO report, released this afternoon, confirms that the GOP plan will cause millions to lose coverage—an estimated 14 million next year and a whopping 24 million by 2026.

Consumers and providers were both helped by ACA regulations that serve to pool risk and enforce standards. The ACA did this by requiring coverage of preexisting conditions, instituting limits on out-of-pocket expenses, and standardizing and expanding covered benefits, among other provisions. Neither consumers nor providers benefit when adverse selection makes insurance unaffordable or consumers have trouble navigating a complex marketplace. In health care, the challenge isn’t limited to what economists call asymmetric information, but also transaction costs and other problems associated with markets for professional advice and insurance. These and other market failures explain why providers aren’t keen on ACA repeal, though it begs the question of why it took them so long to coalesce around reform in the first place.

Political realities meant that some cost-control measures undertaken by peer countries couldn’t play an important role in the ACA. For example, leveraging government purchasing power to bargain lower prices for drugs and restrain doctor salaries was never seriously on the table. However, the ACA did provide financing for a number of pilot studies to control health costs and gave a bit more authority to the Independent Payments Advisory Board to exercise bargaining clout with health care providers if costs exceeded certain benchmarks.

Since the ACA had limited ability to address the cost drivers that make the United States an outlier among industrialized countries in the share of GDP devoted to health care, coverage expansions in the ACA were largely paid for by taxing high-income people and high-cost employer plans. The latter were misleadingly labeled “Cadillac” plans, though costs are driven not just by plan generosity but also regional cost differences and higher-cost (older, female) risk pools. Thus, while the distributive impact of the ACA was highly progressive, an unfortunate side effect of the funding structure was implicitly validating the Republican conceit that overconsumption by wasteful consumers is why health care costs in the United States are so high. The argument that health care costs will go down when consumers have more “skin in the game” is the high card in the Republicans’ hand, but it’s not a winner unless you include cost savings from people forgoing needed care and ignore how cost sharing increases medical bankruptcies.

Republicans in Congress are in a trap of their own making. By adhering to a simplistic version of free markets and exalting the wealthy as job creators, they left themselves little room to come up with a plan that wouldn’t leave the vast majority of Americans much worse off than under Obamacare. While upper-income households pay higher taxes under ACA, for most this is a small price to pay for better protection against costly and debilitating medical conditions. Only the top 1 percent are arguably better off without Obamacare, since the $33,000 extra in taxes they pay can buy a lot of insurance, even in a poorly functioning system (and, of course, most of these households get insurance through employer-sponsored plans). Among the worst hit by “repeal and replace” will be older workers, rust-belt swing states that adopted Medicaid expansion, rural areas, and high-cost states—in short, many struggling Americans who voted for Donald Trump in 2016 but may not have bargained that doing so would mean losing affordable health care.

In this and other attacks against social insurance, Republicans appear to be counting on a human and very American tendency to blame other people (especially the supposedly undeserving poor) for their own misfortunes. This explains the deep cuts to Medicaid which are arguably the worst part of the GOP health plan, as well as their repeated attacks on disability programs. But surveys have shown that voters have more generous and expansive views of social insurance than the Republicans seem to think—for example, opposing proposed cuts to Social Security that wouldn’t affect them.

Certainly, if Republicans were counting on ACA repeal being easy and popular, they appear to have miscalculated, especially when it comes to the support of older Americans. Though this demographic has lately tilted Republican, with age, people tend to appreciate how life can knock you for a loop and the importance of affordable health insurance. Thus, while Republicans might have been hoping that seniors would embrace ACA repeal because some viewed it as negatively affecting Medicare, seniors are bound to balk when they learn that repeal actually shortens the life of the Medicare trust fund. Meanwhile, it’s hard to imagine that older Americans who aren’t yet Medicare-eligible will ignore premium increases of $2,000 to $3,000 a year.