The 7 Biggest Cons In The GOP’s Obamacare Repeal Pitch

In the face of bad reviews from health care policy experts, the insurance industry and providers, and a revolt from some members of their own caucus, Republican leaders are scrambling to sell their Obamacare replacement bill by employing a boat loads of half-truths, inaccuracies, contradictions and metaphors.

The legislation, the American Health Care Act, would pay for a major tax break for the wealthy with massive cuts to Medicaid, while shifting around the tax credits provided by Obamacare to the benefit of young people and middle-income earners, with the old and low-income earners bearing the burden.

Here are the seven biggest cons Republicans are peddling in their pitch to sell Obamacare repeal.

Obamacare is “collapsing.” –House Speaker Paul Ryan

This is the con of yesterday, the con of today, the con of tomorrow. It plays twin roles of justifying Republicans’ rush to repeal the Affordable Care Act, and giving them cover if and when there is dissatisfaction with what they replace it with: You think this is bad, but it would have been worse if we let Obamacare collapse.

However, the CBO last week made clear — backing up what multiple other analyses have said — that Obamacare is not in or heading towards a death spiral.

“In CBO and JCT’s assessment, however, the nongroup market would probably be stable in most areas under either current law or the legislation,” the CBO said.

Yes, there have been some trouble spots, but the premium spikes seen this year were predicted by many to be one-time correction after insurers had underpriced their plans when first entering ACA marketplaces.

“Although most insurers will still report an underwriting loss for 2016, the losses will be smaller than in 2015. This means the changes made to network design and premium pricing are gaining traction, though more still needs to be done,” a report by S&P Global said late last year. “For 2017, we expect continued improvement, with more insurers reporting close to break-even or better results for this segment.”

To be fair, the CBO also said that the Republicans plan was not likely to lead to a market collapse either. It would, however, produce a new system of winners and losers, with insurance being more attractive and cheaper for younger people, as older consumers are pushed out.

“A lot of Obamacare, you really don’t have insurance because the deductibles are so high.” –President Donald Trump

Republicans aren’t wrong in that there has been a trend towards higher deductibles, as consumers under the ACA have veered toward lower-premium, narrow-network plans. But as the CBO pointed, deductible and other out-of-pocket costs will rise even higher under their legislation.

There are a number of reasons that this stands to happen. One is that the bill repeals in 2020 the ACA’s cost-sharing reduction payments, which subsidizes insurers so that they can keep out-of-pocket costs down for low-income consumers.

It also repeals the ACA’s actuarial values requirement, which under the ACA set the standard for how much of a patient’s care plans have to cover. This will incentivize insurers to offer plans to that cover a smaller share of total medical costs, but with a cheaper premium that will be more attractive to young people. The repeal of actuarial values will also make it harder for consumers to compare the plans their shopping for, the CBO said.

We’re being more transparent than the Democrats’ “back-room deals, in the middle of the night, last-minute deals.” –Rep. Doug Collins (R-GA)

Even before Republicans had the opportunity to repeal Obamacare, a favorite GOP talking point is that the law was rushed through on a party line vote. This account skips over 15 months of of public hearings and the attempts by Democrats – led by the late Sen. Ted Kennedy (D-MA) and then Senate Finance Chair Max Baucus (D-MT) – to get Republicans to the table in health care reform, not to mention a presidential primary where some of the major questions Democrats were grappling with were extensively litigated in public.

Yes, towards the end of the process, some last-minute changes were made to the bill to shore up its needed 60 votes in the Senate. But that doesn’t compare to a process where a bill was dropped publicly on a Monday, marked-up in two simultaneous overnight committee hearings on a Wednesday, with the intent of bringing it to the floor two weeks later, and with a CBO score coming somewhere in between.

“Medicaid is a program that by and large has decreased the ability for folks to gain access to care.” –Health and Human Services Secretary Tom Price

The GOP line about Medicaid, which stands to see the biggest changes of all the aspects of the Republicans’ legislation, is that it’s already useless for its enrollees – an assertion thats been contradicted by numerous studies, including Commonwealth Fund’s recent finding that states that expanded Medicaid saw greater gains in health care access than those that didn’t.

Here’s White House Press Secretary Sean Spicer trying to argue otherwise:

And I think it’s really interesting — I mean, one of the things that Dr. Price mentioned that is so apropos of this is, having a card does not mean you have insurance. It’s like handing someone a blank check — it doesn’t mean that you have money, it means you have a check. And I think what we’ve seen over the last few years with Obamacare is you can have an insurance card, but that doesn’t mean someone is going to take it, and it sure doesn’t mean that it’s going to be affordable. And there’s a big difference between having a card and having healthcare that’s affordable. And that’s the difference that we’re trying to solve right now.

Not only are Republicans misrepresenting Medicaid in its current state, their proposal to overhaul Medicaid stands to make coverage worse for enrollees.

Here’s why: the GOP bill transforms its federal financing from an open-ended match rate to a per capita cap where the funding states receive is limited by the number and types — in five broad categories — of enrollees in their programs each year.

Because the metric the bill uses to increase the cap rises at a lower rate than traditional Medicaid spending, and it doesn’t anticipate unexpected hikes in spending, like the introduction a new drug, the share of the program states will have the burden of paying will grow over time. States will either have to find new revenues — by way of taxes or budget cuts elsewhere — to make up for the shortfall, or cut their spending on the program. Shrinking the number of people on the program via work requirements, enrollment caps or otherwise, doesn’t make senses as a money saver in a per capita capped system because that means even less funding from the feds.

Instead, the pressure will be on states to reduce the benefits they offer enrollees, impose cost-sharing requirements, or squeeze providers on the payment side. All three options point in a direction where states will be less generous, less comprehensive and more narrow, in terms of providers, in the Medicaid programs they offer residents, instead of more.

“It will drive down reimbursement over time, and we’re going to start stripping care away,” Randy Oostra, president and chief executive of the provider network ProMedica Health System, told the New York Times. “They may have Medicaid, but it’ll be so stripped down that they basically won’t have coverage.”

The initial drop in coverage is no big deal, because “freedom.”

The CBO anticipated an immediate drop in coverage if and when the GOP plan is implemented due to the repeal of an individual mandate right way.

House Speaker Paul Ryan (R-WI) has spun this has a positive, arguing “[O]ur plan is not about forcing people to buy expensive, one-size-fits-all coverage.” The point has been echoed by other Republicans.

“CBO said that after we restore the freedom for people to buy health insurance if they want it, 14 million people will choose not to buy it. It will be their choice once again, no longer a mandate in Washington D.C.,” Rep. Jason Smith (R-MO) said at a mark-up of the bill last week.

But the lack of individual mandate has broader effects.

Healthy people will be the most likely to abandon their insurance plans without the mandates, creating sicker risk pools and driving up premiums for those who remain.

“In 2018 and 2019, according to CBO and JCT’s estimates, average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher than under current law, mainly because the individual mandate penalties would be eliminated, inducing fewer comparatively healthy people to sign up,” the CBO said.

CBO does a “pretty good job with numbers — coverage is not their strong suit.” –Tom Price

Not surprisingly, Republicans are cherry picking the news they want to tout from the CBO report. The ugly coverage numbers are not to be taken too seriously because the CBO is “notoriously bad at anticipating what’s going to happen in the marketplace,” according to Sen. Roy Blunt (R-MO). But the CBO’s findings concerning government savings – which the GOP needs, both to meet Senate rules and shore up conservative support – is “an accurate reflection,” Sen. Mitch McConnell said.

The distinction makes no sense because the two numbers are intricately linked. The CBO’s deficit analysis is derived from the same modeling that determines coverage levels, and thus, how much the government would be spending on tax credits for those on the nongroup market and other costs of the GOP legislation. So if Republicans are right, and the coverage loss isn’t going to be as bad as the CBO says, then the deficit reduction is also not going to be as good.

Republicans can use the “regulatory apparatus” to “make certain that patients are helped and that costs are decreased.” –Tom Price

Another vein of GOP CBO-bashing is that it was “not believable,” as Health and Human Service Secretary Tom Price said, because it did not study the effects of “phase 2,” meaning the regulatory reforms the GOP has also planned to take on alongside the legislation. For one, Republicans haven’t been very clear what Price intends to do regulation-wise — beyond a handful of small-scale insurer gimmes that probably won’t lower premiums much. So it’s hard to see how they expected the CBO to take that into account in their scoring.

But there is a bigger problem in Republicans’ reasoning, beyond what the CBO did and did not score. It’s widely assumed that Price’s approach to watering down the ACA’s requirements will focus on the the 10 Essential Health Benefits. Here, still, his abilities are pretty limited, at least in regards to moves that could actually bring down premiums. Anything too aggressive invites the possibility of a lawsuit.

“Because Price can’t exclude big categories from coverage, he’ll struggle to redefine the essential health benefits in a manner that will drive down costs,” University of Michigan Law School professor Nicholas Bagley wrote on the TakeCare Blog.

Ed. note: Due to an editing error, this piece was mistakenly published with an additional “con” listed, involving Medicaid flexibility for the states, that didn’t take into account the changes to the bill released Monday night. That item has been removed from the post.