Two Health Insurance Markets?

The Wall Street Journal has misunderstood the situation and the proposal [emphasis added].

President Donald Trump’s executive order on health insurance, the most significant step so far to put his stamp on health policy, is designed to give more options to healthy consumers. It also could divide the insurance market in two.

What Trump is purportedly going to do with his Executive Order is

  • instruct[] federal agencies to loosen rules on health plans that the administration says have driven up premiums and reduced insurance offerings
  • direct the Health and Human Services, Labor, and Treasury Departments to lay the groundwork for the growth of association health plans, coverage that would have fewer mandated benefits than many current plans available to small employers and individuals [and] that wouldn’t be subject to the full range of ACA requirements, such as the mandated package of benefits.
  • departments, in addition, will be told to take steps to expand the availability of short-term medical plans …  allow people to once again buy plans in that category that could last for almost a year.

However, rather than create two health insurance markets, these actions would do no more than begin to create one health insurance market.  There is no extant health insurance market; there is nothing present to become part of “two markets.”  What we have presently is neither insurance nor a market for it.  What we have is a health coverage welfare program that has some (very poor) options from which we’re required to select one for ourselves.

The beginnings of a health insurance market, in addition to being an actual market for health insurance, would, though, lessen the importance of the mandated welfare program—to the benefit of all of us, including those trapped in that welfare program.

The Not Good Enough Legacy

Here are some stats regarding Obamacare’s impact on our poor, courtesy of The Wall Street Journal.

More than one in three of taxed [via the individual mandate penalty] households earned less than $25,000, which is roughly the federal poverty line for a family of four.

And

More than 75% of penalized households made less than $50,000 and nine in 10 earned less than $75,000.

And

Fewer families paid the tax in 2015 than in 2014, yet government revenues increased to more than $3 billion from about $1.7 billion, as the financial punishment for lacking coverage increased.

Never mind that these honest Americans can’t afford what Obamacare has on offer, they still have to pay the tax.  Never mind that what is on offer is so bad they won’t buy it; they’d rather pay a tax they can ill afford.

This is what Senator John McCain (R, AZ) has said he prefers to Graham-Cassidy, never minding that the Arizona governor (for whom McCain claims great admiration) has strongly endorsed the bill.  This is what Senator Rand Paul (R, KY) has said is better than a bill that repeals much of the funding for Obamacare and sends it instead to the States so they can set up their own health insurance/health coverage plan markets—including State-level Obamacare, if that’s their preference—never minding that States’ Rights has been part of his mantra since his first Senate election campaign.  This is what Senator Lisa Murkowski (R, AK) seems to want to preserve over Graham-Cassidy‘s elimination of her State’s exploding premiums and imploding plan provider participation.  This is what Senator Susan Collins seems to want to preserve, never minding Maine’s governor endorsement of the bill.

The WSJ pointed out that

…the point of this coercion was to substitute the government’s political preferences for individual judgment….

Just as these four Senators are substituting their own political preferences for the individual judgments of their constituents—whom the four are betraying with their support for Obamacare over Graham-Cassidy.

Remember this for the coming primary election season.

Some Thoughts on Graham-Cassidy

These are…triggered…by Thursday’s Wall Street Journal piece on how the Graham-Cassidy Plan Would Change Health Coverage.

The Congressional Budget Office has said that, without a rule requiring insurers to charge all customers comparable premiums, health plans could become prohibitively expensive for some people with pre-existing conditions.

The plans wouldn’t be insurance plans, either, since the premiums wouldn’t have anything to do with the risk being transferred.  The plans would be welfare plans.

Separately, states could also waive a requirement that insurers provide a set of medical benefits like mental-health services and prescription-drug coverage. If those benefits aren’t required, people with costly medical conditions could have difficulty buying insurance with the relevant services or medications.

Certainly a possibility. However, that’s a matter between a State’s citizens and their State government. The Federal government has no legitimate role to play in this.

The bill seeks to distribute funding roughly equally among states. But under the ACA, 31 states expanded Medicaid, and some states had considerably higher enrollment in subsidized plans. Because that funding would go away to be replaced by block grants, some states would see a net funding gain and others would see a loss.

This is the only problem I have with Graham-Cassidy, albeit not for the reasons the WSJ cites others as having.  With roughly equal funding across States, low-population States will get more per capita money than those with larger population without regard to the relative health of the populations.  The block grants should be sized to each State’s population of citizens and legal immigrants, so that the per capita funding is roughly equal, not the per-State funding.  The biggest “losers” would still tend to be States with Progressive-Democratic Party-led governments, but these also are the States with the most profligately wasteful spending, and on a host of programs, not only on Medicaid.  There’s no valid reasons other States should be forced to continue to subsidize these wastrels with continued taxpayer dollar redistributions.

The bill rescinds the ACA’s Medicaid expansion, which for the first time extended coverage to childless, low-income adults. So states couldn’t use their block grants to cover these low-income adults under Medicaid.

Money is fungible, though, and Medicaid is a State program, even if it is heavily subsidized with Federal (i.e., your and my tax) dollars.  If a State thinks covering childless, low-income adults, et al., is a good idea, it certainly can reallocate monies from other spending to its Medicaid program for the purpose.

[T]he bill also for the first time places funding caps on traditional Medicaid and shrinks spending on the program significantly over time. Analysts say the reduced federal spending could blow a hole in state budgets….

It’s a start.  The Federal block grants should be put on an annually declining basis so that over 10 years (say), the grants disappear, and the States would be free to—and responsible for—designing and funding their own Medicaid programs without Federal strings, without subsidization with the tax dollars of other States’ citizens, and without having to send their own citizens’ tax dollars to subsidize other States.

Too, the analysts are wrong on this, and they demonstrate a breathtaking lack of understanding of responsibility.  Reducing Federal transfers to the States won’t blow a hole in any State budget.  The only thing capable of blowing holes in State budgets are those States’ governments via their spending decisions.  State governments just will have to spend their own citizens’ money, with less OPM coming in.

Unfortunately, guys like Senators John McCain (R, AZ) and Rand Paul (R, KY) prefer Obamacare to even this much compromise-y progress, and so they’re going to betray their constituents by voting to preserve Obamacare rather than replace it with Graham-Cassidy.  Their reasons for preferring Obamacare?  In McCain’s case, it’s all about ego and his precious Maverick status.  Nothing will ever be pure enough to suit Paul, so he’ll just vote “No,” no matter what.

If this bill fails, that’ll be these two Senators’ legacy–voting to keep Obamacare intact.  Senate Majority Leader Mitch McConnell (R, KY) should bring the bill to a vote this week regardless of his vote count.  He needs to put those Republicans who prefer Obamacare on the voting record for the coming Republican primaries.

Medicare for All

Senator Bernie Sanders (I, VT) is beating that drum, again, and has support from some Progressive-Democratic Party Senators.

The health proposal, dubbed Medicare for all, would offer the same suite of medical benefits required for some insurance plans under the Affordable Care Act and eliminate most out-of-pocket costs. Mr Sanders argues that although taxes would likely rise to support the new system, families would save money by no longer needing to purchase health coverage. The government, he says, could also secure lower prices for medical services.

Of course it has the same stuff as Obamacare—it’s the planned evolution of Obamacare into a Federally mandated single-payer system.  Because Government Knows Better, especially one run by Progressive-Democrats and their Social Democrat crony.

“Taxes would likely rise”—yewbetcha, to the tune of an additional $24,000 per family.  Whether we want that “benefit” or not.  Families can save money by not having actually to purchase coverage?  That’s rich: what do these guys think those 24 stacks are, if not coverage purchase costs inflicted on us whether we want or need coverage or not?  Aside from that, lots of folks, my family included, don’t use health care services very much; we don’t need coverage against costs we don’t incur.  That’s for one geezer family.  Those 24 stacks represent no net savings for us at all.  The young families also are healthy, don’t use health care services very much, and so have no need of health coverage.  And as they’re just starting their lives, they don’t have those 24 stacks to begin with.

Government can get lower prices?  That’s, um, rich.  Just like it (doesn’t) get lower prices on so many other “services” it provides, what with requiring contractors to pay prevailing union labor wages, whether the contractors employ union workers or not.

[P]rivate insurers wouldn’t be permitted to compete with the government plan for basic coverage….

This, I suppose, is one way in which Sanders’ government would get lower prices—competition raises prices, after all, in his and his Progressive-Democrat cronies’ fetid imaginations.

The 96-page bill offers no mechanisms to pay for the plan….

Of course not.  Money grows on trees.  Or, as I speculate Sanders will tout in his promised for “tomorrow” white paper on funding, money is in the bottomless wallets of the rich.

Republicans and Obamacare

Too many now are begging for surrender on repeal and replace.

[F]ew congressional Republicans have signaled they are ready to let the health-care market deteriorate while their constituents are still battling higher premiums and fewer insurers to choose from on the individual marketplace.

This means those Republicans are signaling that they don’t have the stomach to repeal Obamacare at all, which would be the ultimate deterioration of it.

This is a betrayal of their constituents along two dimensions: the cynical destruction of their promise to repeal and replace, and their decision to continue inflicting Obamacare with its steadily increasing premiums and fewer insurers to choose from on their constituents.

President Donald Trump’s move to just let Obamacare die on the vine and hope for something better to rise out of the sewage is just as foolish and immoral.  Republicans need to remember what they promised and who sent them to Congress to honor their promise and get back to work on repeal and replace.  On that score, Trump is entirely correct, even if the doable path is stages as originally proposed last winter or via another path proposed by Senators Lindsey Graham (R, SC) and Bill Cassidy (R, LA) whose bill (as an interim step, I say) would “take ACA funding and distribute it to the states through block grants.”

Voters should remember this pending abject failure in the upcoming primary elections.