Occam's Razor

Yesterday House Speaker Paul Ryan finally released a bill to replace the Affordable Care Act, i.e. Obamacare. The bill came out of the Capitol basement, literally, where it was under lock and key. Wonks are still sorting through the bill, which hasn’t been scored by the Congressional Budget Office. The plan is not to repeal Obamacare, but to effectively put it out in the desert and wait for it to die a natural death. The expectation is that if done this way Republicans won’t get blamed for its demise. Perhaps slowly and over time as subsidies are lessened, health insurance companies drop out and both revenue and cost containment parts of Obamacare go away no one will notice that Republicans actually killed it.

Meanwhile, it’s important to ram it through as quickly as possible before legislators have a chance to consider its implications, the big ones being the impact on their reelections. Reading the early tealeaves suggests this bill is more likely to die than survive. A majority of the Tea Party members are against it as they see it as a continuation of Obamacare. Meanwhile, at last count four Republican senators suggest that they will vote against it, meaning that if it gets to the Senate as a reconciliation bill (where a simple majority rules) the votes won’t be there to enact it. Curiously these senators are from states that chose to accept the Medicaid expansion in Obamacare. They are keenly aware that many of those voting for them have found they like their Obamacare Medicaid, even if they didn’t like it enough to vote for Hillary Clinton for president.

So like past similar attempts to take away benefits citizens have come to expect, the strategy seems to be to use smoke and mirrors to obscure what it really going on. The idea is to boil the frog slowly. You don’t want the frog to jump out so make sure to turn up the heat shortly after Election Day. So keep the Medicaid part of the ACA and kill it by stealth. Cap enrollment after three years. Also make it hard for those on Medicaid who find decent employment to reapply if their luck takes a turn for the worse. Then cap the amount of money states will get. Since there is nothing in the legislation to restrain costs other than the hope that Health Savings Accounts will make consumers shop around more, effectively states will end up covering fewer people, which means the ranks of the uninsured will grow again. This is exactly as God has intended, in the eyes of Republicans.

You can tell what Republicans really care about by what goes away almost instantly. To start, all those taxes on higher earners that effectively subsidized health insurance for those of more modest means. This has the effect of depleting the Medicare Trust Fund much sooner. This should not surprise anyone because if there is one thing Republicans always agree on is that people should carry their own weight, even when it’s impossible.

Just today Rep. Jason Chaffetz (R-UT) opined that the poors should stop spending money on $700 iPhones and use it for health insurance instead, even though $700 won’t even begin to pay the annual deductibles for the discount basic health insurance plans. Clueless Republicans like Chaffetz prefer to live in La La Land, you know where you will shop around for medical discounts even though when you usually need health care, it requires urgency. It’s hard to shop around for a discount emergency room when you are bleeding to death, unless you prefer to bleed to death while trying. This appears to be what Republicans really want. If you can’t afford insurance then naturally you shouldn’t get any.

Don’t fret too much. Obamacare isn’t dead yet but it’s already bleeding profusely from inattention. It is lying on the sidewalk and is having trouble staggering to its feet. So it’s dying a slow death, mostly due to lack of consensus on how to fix it. That’s because only the Democrats want to fix it. The Affordable Care Act was launched with the expectation that its flaws would be fixed by a future Congress working (here’s the funny part) in the best interest of the American people. What it really did was give uninsured people a taste of what it feels like to be insured. What they discovered is what the rest of us discovered: it’s great, except for the paying for it part, which is hard even with subsidies.

Real insurance is basically risk mitigation. I pay homeowner’s insurance but it’s likely I’ll never get back in benefits what I pay in premiums. If my house burns down though I won’t regret paying those premiums. Health insurance works similarly but not identically. It works better when everyone participates and it works best with intelligent government oversight. Effectively the young subsidize the old because they require fewer services. Take away the mandate to have insurance as the bill allows and the pool gets older and sicker. Unsurprisingly, rates go up.

Health insurance though also requires redistribution of wealth. So the young don’t entirely subsidize the old and the sick, most require subsidies of their own to afford the insurance. The rich have the money so it’s logical that they should provide the subsidies. When the rich don’t subsidize the insurance pool anymore, it raises costs for all left in the insurance pool. Given the rules of supply and demand costs will go up and as they do fewer will be able to afford insurance at all.

There is no way to stick this Republican square peg of a bill into the round hole of health insurance because it does not recognize the way health care actually works. In fact it actively works to undercut it. All of this is fine with Republicans. Like block grants to states without accountability that shrinks every year, the goal is to make the existing system more dysfunctional every year with little oversight and no accountability.

The irony is that most Republicans really aren’t hostile to the idea of health insurance for everyone. They just refuse to have it based in part on the transfer of some wealth from the rich to the poor. If before the system collapses altogether we add a trillion dollars in new deficits, those deficits don’t matter. The money that does matter is the amounts in their bank accounts.

As for the rest of us, we’ll be bleeding on the sidewalk too.