Republicans' Health-Care Plan: Not Much Care, Not Much Plan

Not always the numbers guy.

Photographer: Mandel Ngan/AFP/Getty Images

Republicans’ long-promised health-care plan has arrived -- though it’s light on the health care and offers too little detail to tell whether it’s a realistic plan.

Many aspects of House Speaker Paul Ryan’s proposal are clear: It would permit health insurers to cover far fewer services than they have to cover under Obamacare, and it would reduce federal subsidies for buying insurance, pare protections for people with pre-existing conditions, roll back funding for Medicaid, and convert Medicare to a voucher-type program. Ryan hasn’t said what this would cost, or how many people would end up with insurance -- perhaps because that number would be far smaller than it is under Obamacare.

The question is: What problem is the plan meant to solve? Before Obamacare took effect six years ago, Republicans questioned whether it would meaningfully expand insurance coverage and warned of soaring health-care costs. Employers might stop providing insurance to their workers, they said, the labor participation rate might plummet, and the federal deficit might soar. No one knew how many people would buy insurance on the new state exchanges, or how they would like their coverage.

QuickTake Obamacare, Assessed

But these problems never materialized. The share of Americans without insurance has dropped to 9 percent, from 15 percent in 2011. Health-care spending from 2015 to 2019 now looks to be $2.6 trillion lower than projected when the Affordable Care Act was signed. The share of working-age adults in the workforce has risen. The federal deficit has shrunk. The number of people with employer-based coverage remains stable. More than 12 million people have enrolled in Obamacare plans, and two-thirds of them say they’re happy with the coverage.

One Republican worry has come to pass: Obamacare has increased federal spending, and has paid for it in part by hiking taxes on higher earners. Reversing those hikes is a legitimate, if narrow, policy preference. But if lower taxes and spending are what drive the Republicans to want to replace Obamacare, they should say so. Otherwise, their proposals seem designed to make adequate care harder to obtain. 

The U.S. health-care system continues to face two big challenges: to insure still more people, and to more quickly bring costs under control. Meeting the first of these will require innovations that may not be popular, such as automatically enrolling every eligible American into an Obamacare plan, or giving undocumented immigrants the option to buy unsubsidized exchange coverage.

Taming price growth is harder still. Critics of Obamacare are right that deductibles and premiums are rising fast. But the way to fix that is to lower the underlying cost of care, not to let insurers arbitrarily cut benefits. America needs innovative ways to pay doctors and hospitals that don't incentivize overtreatment, as well as mechanisms for pricing drugs and procedures according to how well they work. On all these counts, Republican ideas would be most welcome.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.