ACA & The New Normal

Republicans May Not Be Able to Find a Replacement for Obamacare

Goodman Institute study: A very hard politcal-sell… on both sides of the aisle

DALLAS, Dec. 22, 2016 /PRNewswire/ — Finding a replacement for Obamacare that their colleagues will support may prove to be an impossible task for Republicans on Capitol Hill, says a health economist familiar with the obstacles involved.

“All Republicans want to repeal and replace Obamacare,” says John Goodman, who is president of the Goodman Institute and is often referred to as the Father of Health Savings Accounts.

“Many Democrats would also like major changes. But there may be no practical way to get that done.”

Four Political Restraints

Goodman says four huge political constraints stand in the way.

Most members of Congress — whether Republican or Democrat—will not vote for a plan that takes health insurance away from 23 million people. That means those who have been insured by Obamacare are going to have to be grandfathered to some degree, so they can keep the insurance they now have. Only one Republican proposal actually does this.

To pay for the subsidies for those 23 million people, most replacement plans are proposing a Republican version of a Cadillac plan tax on employer-provided health insurance. Yet Donald Trump says he wants to lower taxes on the middle class not raise them, and most Republicans in Congress are on record as opposing a Cadillac tax.

While imposing a Cadillac tax, most replacement plans would at the same time repeal all other Obamacare taxes – including taxes on insurance companies, drug companies, big business and big labor. This risks creating a politically toxic image of a shift in the tax burden from special interests to ordinary workers.

To lessen the burden of the Cadillac tax, some plans (including Speaker Ryan’s plan) would keep Obamacare’s cuts in Medicare payments to doctors and hospitals – cuts that Republicans themselves have warned could threaten access to care for future beneficiaries. But the same proposal abolishes Obamacare’s Medicare payroll tax on high income earners – creating a politically dangerous image in which costs are shifted from the very rich to the elderly and the disabled.

“Obamacare at least had the appearance of fairness” said Goodman. “Every sector had to bear part of the burden of reform. The Republican proposals, by contrast, are great for K Street and great for the top 1 percent, but they shift the burden of insuring the uninsured to those least able to pay for it.”

Excerpts: Three Big Mistakes

Obamacare at least had the appearance of fairness...

Turning 23 million people into anti-Republican voters
 Sen Chuck Schumer explained sometime back where the Democrats went wrong. Almost everyone who votes (95%) already has insurance. So, in creating Obamacare, the Democrats spent a great deal of money on people who don’t vote. How is that good politics, he asked?

Imposing a Republican Cadillac plan tax on blue collar workers
Many Republican replacement plans begin by abolishing Obamacare — including all the revenue that funds Obamacare. An example is the bill sponsored by Tom Price, Donald Trump’s choice to head the Department of Health and Human Services. Then, in order to avoid taking insurance away from millions of people, they have to find a new source of revenue. In almost every case that means a new tax on the health insurance benefits of ordinary workers, or a Republican version of the Cadillac plan tax. Specifically, the Republicans imagine limiting the amount of pretax spending on health insurance that can be excluded from income and payroll taxes.

Shifting burdens from the wealthy and the special interests to the middle class
When Obamacare is repealed, along with its revenues, that will lower taxes on insurance companies, drug companies, big business, big labor, device companies and a host of others. For the most part, these are the special interests who helped give us Obamacare. They almost all agreed to be taxed because they expected to profit in one way or another from health reform. If truth be known, most aren’t even asking for their money back. Yet, Republican proposals are determined to give it back anyway.

“Politically, that’s a hard sell — even to Republican voters,” he added.

See more at Why The Republicans Don’t Have An Obamacare Replacement Plan.