Health Care Reform: The Mouse Trap

The Republican Party has, at long last, revealed the final iteration of their grand health care reform plan to “Repeal and Replace” the failing Affordable Care Act. Listening to the Republicans trying to sell this reform plan, you can tell they’re playing a game of political cat and mouse, scurrying between hungry cats on the left that want Washington to do something to address the cost and accessibility of health insurance coverage and angry cats on the right that wanted to get Washington out of the health care business.

So, what will the Republican American Health Care Act plan actually do?

  • It eliminates the taxes and fines of the Affordable Care Act. Good.
  • It eliminates the ACA individual and employer mandates. Good.
  • It retains the pre-existing condition requirements for insurers. Bad.
  • Allows adults to stay on parent’s coverage until age 26. Bad.
  • Creates a $100 billion political slush fund. Catastrophically bad.
  • Allots federal Medicaid funding on per capita basis. Better, but not good.
  • Changing tax law to broaden Health Savings Accounts. Better, still theft.
  • Create a tax credit that subsidizes insurance purchases. Bad.

So let’s break down the good, the bad, and the ugly of the GOP plan. The GOP plan will eliminate the tyrannical taxes and fines put in place by the Affordable Care Act. It will also supposedly eliminate the tax penalties for not buying health insurance for those that either do not want health insurance or simply cannot afford it. From a Liberty standpoint, this is a win for conservatives. Unfortunately, this is the last good news for conservatives in the plan.

The Republican plan will still prohibit insurers “discriminating” against individuals with preexisting health conditions and coverage for adult children up to age 26 on their parent’s plans. By eliminating the individual and employer mandates, as well as their punitive fines and taxes, there will be less revenue from healthy insureds needed by health insurance companies to counter balance the higher costs of insureds with preexisting conditions. Unless the federal government is going to pick up the tab for these higher costs, however, this necessarily means drastically higher monthly premiums.

One of the most questionable aspects of the GOP plan is the $100 billion fund that will be allotted to “design programs that meet the unique needs of their patient populations and help low-income Americans afford health care“. That sounds exactly like a federal slush fund or subsidy program that politicians will miraculously discover is inadequate to cover all of the costs and will become a political football in a few months, requiring constant cash dumps from Congress every year. There’s nothing for conservatives to be excited about here.

While “modernizing” Medicaid sounds great on its surface, and creating a per capita allotment will arguably be better for the federal budget overall, from a Liberty standpoint, the federal government will still be writing checks for a large and costly entitlement that Americans simply cannot afford. And while Health Savings Accounts (HSAs) are also a great way of dealing with health care costs for middle income families, low income families will have zero use for it, because they have no savings to begin with. Further, the implementation of HSAs requires the continuation of government theft through personal income taxation.

Finally, the tax credit formula that the GOP is depending on to help offset the cost of insurance are meaningless. Low income Americans don’t pay $2,000 of taxes a year anyway. Only the middle class will have any use for such tax credits, and the vast majority of them will already have insurance coverage through their employer. This will largely only benefit small business owners, which was the target of the GOP plan, but only tangentially. It also means, however, lower business tax revenue for the government, which means larger deficits.

The final verdict for the GOP plan? Despite moving to repeal the most onerous parts of ObamaCare, the individual mandate and the tax fines associated with that mandate, the GOP plan fails utterly on the promise to “repeal” the ACA. What we are getting instead is an Affordable Care Act Lite, clinging to the popular elements of the ACA which caused the steep premium increases that consumers hated in the first place. Conservatives will hate it, because it doesn’t get Washington out of health care. The Left will hate it, because it got rid of their taxes, which was all they really cared about in the first place.

The Liberty answer to the health care problem remains the same but also remains politically unpopular. True political and economic freedom requires government inaction. The federal government should be kept out of the business of health insurance. Period.

Clearly, on this issue, we’ve a long way to go.



Liberty is For The Win!

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