Delegate Kirill Reznik: What Are Republicans Going To Do About Healthcare?

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For the better part of six years, Republicans have been screaming their heads off about repealing and replacing the Affordable Care Act (which they initially dubbed Obamacare).  They’ve done more about the repealing part than the replacing part, mainly because the latter is much, much harder do to.  And there is a reason for that that I will go into in a bit.

Now, they can do it.  With majorities in, and leadership of both chambers of Congress, and with the impending reality of a President Trump (this is the first time I’ve written or said those words out loud), their dreams may finally come true.  Throughout the campaign, Trump called the ACA “a disaster,” “a failure,” “horrible,” and likely to “collapse under its own weight”.  All of this while never articulating what the problems of the law are, what needs to be fixed, or that he even understands what the law is.  A few weeks before the election, when premiums under the ACA were announced to go up by an average 22%, Trump said that “all of my employees are having a tremendous problem with Obamacare.”  Except, it was later confirmed, that 95% of his employees are on employer-sponsored health coverage and not in the Obamacare network.

So, Republicans are now able to “repeal and replace,” but as Goethe once said “be careful what you wish for.” 

The problem for Republicans requires a little history and context.

Election of Barack Obama

It should come as no surprise to anyone paying attention that President Obama would try to tackle the issue of universal health care.  And why not?  At the time, 32 of the world’s 33 most developed countries (all capitalist and most democracies) had some form of universal health care.  Guess which country was the one that didn’t?

During the 2008 Presidential campaign, healthcare reform that aimed at covering all Americans was a stated campaign promise.  The assumption from Obama’s base, and the rank-and-file of the Democratic Party, was that he would pursue the more liberal policy of single-payer healthcare.[1]

Once in office, President Obama had to make a calculated decision.  With majorities in both chambers, but understanding the history of mid-term elections, he could pursue single-payer healthcare, put a lot of his Congressional members at risk, and alienate voters before mid-term elections (and before the reforms can fully take effect), or, he could go a different, somewhat safer route.[2]  He looked at what Governor Mitt Romney did in Massachusetts in 2006.  Taking a page from Republican fights against Clinton’s attempts at reform in the 1990s, Romney implemented a plan drafted at The Heritage Foundation as his answer. 

Though Stuart Butler (the plan’s author) denies any responsibility for what became Obamacare, he does admit that “[he] held the view that as a technical matter, some form of requirement to purchase insurance was needed in a near-universal insurance market to avoid massive instability through "adverse selection" (insurers avoiding bad risks and healthy people declining coverage)."  This was followed by legislation in the Senate sponsored by Republican Senator John Chafee of Rhode Island and co-sponsored 18 Republican Senators.[3] There are differences, of course.  For example, neither Chafee’s bill, nor what became known as “Romneycare,” had massive Medicaid expansion (ironically, the most successful part of Obamacare).  The Chafee bill had tort reform and no requirement for employers to pay for healthcare, just offer it.  The Chafee bill also didn’t outline how to pay for it.  Romneycare mandated any business with 11 or more employees offer health insurance and provided no tax assistance, while Obamacare was actually less generous and required companies of 50 or more employees to offer health insurance but provided a tax subsidy for small companies to offer it.

The program in question, boringly titled “An Act Providing Access to Affordable, Quality, Accountable Health Care”, but colloquially titled “Romneycare” (get it, see a pattern?) was passed with dramatic bi-partisan support from the overwhelmingly Democratic state legislature, and became the basis for Obama’s plan.  After all, it’s the Republicans’ basic idea.  If we can see eye-to-eye on the general concept, we can argue about some of the details (the way that the legislature and Romney did[4]), but then a compromise would be reached, health care would be reformed, we would achieve universal coverage, and the Republicans would even have a victory that they can run on (“See, even the Kenyan Socialist prefers conservative ideas over those of his own party.”)

What Obama underestimated was the Republicans’ hatred for him personally.  Mitch McConnell vowed that his “number one priority is making sure President Obama’s a one-term president.”  Whether it truly was personal or partisanship or anger at being thrown out of power (hey, I know, we get it), Republicans would not play ball.  It didn’t matter that it was their idea and it didn’t matter that they could take credit.

 

The Response

The Republican response was both predictable and out-of-the-box bananas crazy. 

The predictable part was that the Republicans were going to muster all their corporate forces, including the Chamber of Commerce and the insurance industry (those guys that stand to gain the most from a universal healthcare mandate), exaggerate a few facts, and go on an offensive campaign to convince the very people that need this reform that it was a bad idea.  The very people that invented the idea, including Mr. Butler and his friends at the Heritage Foundation, started to backtrack.  The Heritage Foundation wiped the individual mandate from their individual and collective memory banks, and Mr. Butler claimed “that his views had evolved over the years. He said that he now believed that near-universal coverage could be achieved without a mandate”. 

The bananas crazy part came from a place that, I believe, even Republicans didn’t expect.  Advocacy efforts coupled with the “little” exaggerations made people believe that a minor provision dealing with required coverage of end-of-life discussions were actually government death panels, that enforcement of the failure of coverage penalty through tax returns was Obama using jack-booted IRS agents to take everyone’s property, and that the individual mandate was SOCIALISM!!!!  Forget that the law already requires every car owner to carry car insurance, and every homeowner to carry homeowners’ insurance, but every person who wants medical care carrying health insurance is a step too far.

Suddenly grown men with nothing better to do started dressing in tricorn hats, forming tea parties, and protesting in front of Congress; spitting on members and holding up posters of the President as an aboriginal medicine man.  They shouted FREEDOM! with the same patriotic zeal as Mel Gibson pretending to be William Wallace.  And just like Mel Gibson didn’t exactly have his facts correct about whether Scots wore kilts during that time period or if William Wallace was a national hero, neither did these “teabaggers” have any clue about what is in the law, what is meant, or who came up with the idea in the first place.

Fast forward the next six years, and Congress, now firmly in the control of the Tea Party (a minority group of the Republican Party, but louder and less steeped in facts) has attempted to repeal Obamacare over 50 times.  With no concept of how to “replace” and no plan moving forward whatsoever, they took vote after vote to repeal it, knowing full well that if it passed, the President would have the sense to veto.  Democrats in the meantime, knowing full well that there were problems with the law (what do you mean the employer penalty is smaller than the cost of the actual healthcare?), become entrenched and prepared to defend Obamacare and the individual mandate, which they were once very skeptical of, to the death.

Keep in mind, Congress could have fixed the law and moved forward.  Provided additional subsidies, changed the penalty requirements, adjusted the essential health benefits, or found ways to encourage insurance companies to sign up for exchanges.  Republicans in Congress could have even taken credit; in the same way they could have taken credit when the law originally passed.  But no – 50 repeal efforts, two Supreme Court cases, and a lot of talk about socialism and freedom, and here we are with Donald Trump as President promising to repeal the law on Day One (he can’t actually do that, but the actual process doesn’t fit in 140 characters).

 

State of Obamacare Enrollment

So, here’s the thing – under Obamacare 20 million people have obtained coverage.  This is a combination of sign-ups through the federal or individual state marketplaces, Medicaid expansion, and young people who stay on their parents’ insurance through age 26.  Here in my State of Maryland, approximately 94% of the eligible population is covered by some form of health insurance.  Bankruptcy because of medical bills have cratered.  Pre-existing conditions are no longer an issue (including, by the way, pregnancy as a pre-existing condition.  Yeah, that was a thing).  A basic set of essential health benefits that makes sure that a minimum standard of coverage is afforded to everyone is also provided.  The Medicaid expansion was primarily financed by the Federal Government, so the only States that didn’t take advantage were hardcore red states that were more interested in making a statement than helping their population.

So, what do people really object to about Obamacare, other than the Obama part?  They generally fall into two categories:

1. The individual mandate.  “I don’t want to be forced to buy insurance if I don’t want to,” they would say.  Yeah, except you already are.  As mentioned previously, there are a whole host of insurances that you are required by law to purchase if you chose to participate in the act.  Want to own a car, own a home, have a mortgage, live in a flood plain, own a business, etc.  Health insurance is no different, except that the only act in question is living.  Literally everyone you know will take advantage of the health care system at some point, if not regularly.  And just like if you choose to not have a car and take a public bus, it’s the same as you choosing not to get health insurance and then going to a public hospital.  Either way, the rest of us get to pay the bill.

As stated earlier, before Mr. Butler backpedaled, to achieve universal coverage, you need an individual mandate.  This is not a liberal or socialist idea, it’s a conservative one.

2. The rates of coverage.  In October it was reported that rates under the Obamacare-sponsored plans would increase an average of 22%.  Despite the fact that most of the subscribers to the plans still get significant federal subsidies and most will never see much of a difference in what they actually pay.  This is why, despite all of the press about the increase in rates, the number of subscribers to Obamacare actually went up during the current enrollment period.  By the way, who remembers what annual increases were for insurance rates before Obamacare for individual plans?  In case, you can’t remember that far back, it was double digit annual increases and there was no government subsidy.

There are other objections, of course.  The deductibles are a problem, and the lack of real choice on some exchanges of either plans or insurance   providers are another, but let’s be honest, how much choice did people have before?  

 

So Now What?

Frankly, I think Republicans are screwed.  After over 50 votes to repeal and Trump promising repeal as part of his platform, they don’t have a choice but to repeal.  But do they kick 20 million people off health coverage?  Send Medicaid recipients back into emergency rooms?  Reinstate preexisting condition restrictions on 53 million Americans?  That would be a populist uprising that I would love to see. 

The Republican-led House and Senate have now taken the first steps to repealing Obamacare, but what are they going to do?  We are going to get a lot of talk from Republicans in the coming months about voluntary coverage and government incentives, being able to sell insurance across state borders, and tort reform.  They are going to promise all the good parts of Obamacare like keeping the prohibitions on pre-existing condition discrimination.  Let’s be blunt, it won’t work. 

You can’t allow pre-existing conditions within a risk pool and not balance it with healthy, paying subscribers.  I don’t care how many subsidies and incentives you offer; the price of insurance will continue to go up if your spouse can buy insurance online while you are in the ambulance having a heart attack on the way to the hospital.  There will just never be enough offset to the risk that insurance companies must bear without a significant enough price.

No amount of tort reform or selling across state borders to generate competition is going to fix the problem either.  Medical malpractice tort claims, litigation costs, and malpractice insurance account for approximately 1.5% of total medical costs and have stayed fairly constant even as the cost of insurance continues to rise.

As far as selling across state lines?  Most licensed health insurers already sell in multiple states, and the top 25 insurance companies control 2/3rds of the entire country’s market share.  Rates aren’t determined on some national scale, but based on local market conditions – the health of the local population, the contracted payments to doctors and other medical providers, etc.  Do you think an insurance company is going to offer a coal miner in West Virginia with a high risk for black lung disease a better rate because that insurance company is from California?  The requirement to vet your rate increases through a State Insurance Commission is the only thing keeping rates from being even higher.

I suspect that the Republicans will pass “a repeal and delay” for at least a couple of years as has been eluded by reports.  Either they will come up with their own plan or eliminate funding slowly through reconciliation while allowing people to retain many of the law’s benefits.  In two years one of two things will happen. They will have passed a bill that will look remarkably like Obamacare, but with a few tweaks, and call it Trumpcare.  No doubt Trump will tweet about it and call it “bigly” and “the greatest” and take all the credit. Or, after two years of Trump in the White House and Republicans in Congress, the American people get fed up and flip the majorities to Democrats, in which case we will get a stalemate between Congress and the White House.  Obamacare will expire and Republicans will blame the Democratic majority in Congress for taking away people’s healthcare. 

Then again, for a party that wants to eliminate Medicaid, voucher Medicare, and privatize Social Security, nothing is hard to imagine, so I could be completely wrong. 

Delegate Kirill Reznik has been a State Delegate in the Maryland House of Delegates since 2007 representing District 39 in Montgomery County, and is the Chairman of the Health and Human Resources Subcommittee on Appropriations.



[1] For those that don’t know, single-payer healthcare is not socialized medicine or a national health system, like we see in the United Kingdom (that bastion of communist rhetoric).  Single-payer is a system, like in Canada, Japan, Israel, and many others, in which the health care delivery system, (i.e. doctors, hospitals, and those providing healthcare) consists of private operators, while all the bills are paid for by a single source, the government, rather than a multitude of insurance companies and a variety of government sources (Medicaid, Medicare, Tricare, etc.).  Though the money would come from taxpayers and may require in an increase in tax rates to pay for it, employers would not need to contribute to health care plans for their employees and efficiencies of scale keep costs lower.  This is the theory anyway, and has worked with varying degrees of success in various countries.  There are also numerous and legitimate problems with this system, as there are with any system.

[2] By the way, I have no insight into what President Obama was thinking and was not in the room when these decisions were made.  I’m making a calculated guess based on my knowledge of the legislative process.

[3] The bill never got a hearing and the more hardline Republican Senators still hated it, but it does exist.

[4] The Massachusetts legislature amended several provisions in Romney’s bill, and in turn, Romney vetoed eight sections of it.

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