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ObamaCare replacement likely to cost more in the short term; coverage transitions may take several years
None of which should surprise anyone.
I'm warning you right now: The replacement for ObamaCare is going to take shape over the course of the next several months, and you're going to hear things you don't like. You. Must. Remain. Calm.
You're going to hear that the replacement is more of a budget-buster than ObamaCare itself. You're going to hear that the subsidized, exchange-based policies aren't going away immediately. You might even hear that the federal government is paying some money to health insurers over the course of the next several years to stablize insurance markets.
You won't like the sound of this. You will read favorite conservative commentators who will scream bloody murder, insisting that this is merely "ObamaCare lite," and that the Republicans have actually institutionalized big-government health care forever.
And remember something: There is no going back to the pre-ObamaCare status quo. This really needs to be explained to some conservatives, who have a problem with repeal-and-replace because they think the "replace" part means substituting one big-government scheme for another. A true conservative would repeal ObamaCare only, and then let the free-market chips fall where they may! If you replace ObamaCare with anything at all, you're a sellout RINO BernieBro squish!
That is a principled, ideologically pure, and totally impossible way to go.
Among the many bad things ObamaCare has done, it has contorted health insurance markets beyond all recognition. It has used subsidies to twist pricing, such that high-utilizers are buying policies at cut-rate prices and driving up the overall costs of the market. Both the taxpayers and the insurers are taking a bath on this, and the only thing you can do about it is to transition these people into new plans that are priced to the market and reflect their actual usage. That is going to come with some pain, but if you transition them over time, you can do it without throwing the insurance markets into chaos in the meantime.
The worst thing you could do is to throw these people off the rolls in one fell swoop, causing premium revenue to tank about resulting in a flood of unpaid medical bills. Look, ObamaCare is terrible and it made a huge mess. Republicans ran on the promise of cleaning up the mess. OK. Time to clean it up. You don't clean up spilled milk by declaring it was never spilled. You have to clean it. The floor is sticky now. You have to mop it. You have to scrub in the corners. You can't say, "It's against my principles to clean the floor because that's a big-janitorial policy!"
That's what repeal-only would do.
In the following video, American Enterprise Institute fellow Tom Miller previews how the initial transition is likely to go:
That bit at the end about the cost being higher in the short term, and about deals to stablize the insurance markets, will bother conservatives. It bothers me. And if it's not the precursor to real market reforms in health care, it will be a waste and a shame. But what I'm telling you is that there's no way to get to the market reforms without doing this first - however much you may want to scream that this is contrary to "conservative principles."
What we need to see from the ObamaCare replacement is not the absence of these short-term measures. There's no way to avoid them, however much we may wish otherwise. What matters is what comes out on the other end. The new law needs to stop incentivizing employer-based, low-deductible policies in which users are only responsible for co-pays, and have no control over the dollars spent on their behalf in the form of premiums.
I clearly prefer higher-deductible policies because I think everyone is better off having control of their own spending decisions - and the costs in the system will be lower overall if people are price-conscious. Costs will also be lower if people depend on insurance less, and thus insurance is less powerful and not so gigantic as an industry. But people, doctors and insurers (and to the extent they are involved, employers) need to make their own decisions about how health care should be paid for. As it stands right now, ObamaCare specifically and the tax code in general herd people into a certain type of coverage that tends to inflate overall costs while decimating the quality and availability of care.
The GOP needs to design a new system that changes that direction as much as possible, while implementing short-term measures to keep the system viable during the transition period. At the other end, those who have been reliant on subsidized ObamaCare policies should be able to afford new options that are both cost-effective and more focused on patient responsibility and buying power.
But get ready: The path from here to there will be strewn with a lot of clutter, and some of it will be ugly. There is also some danger when it comes to subsidies and allocations that are called "temporary" and could very well be made permanent by the political class. We need to pay attention to details like that, and make sure that doesn't happen.
But the process of cleaning up a mess often looks terrible, and smells even worse. The key is how it looks when the process is complete.
Dan's new novel, BACKSTOP, is a story of spiritual warfare and baseball. Download it from Amazon here!