Missing: The Individual Mandate
The Republicans’ plan to change the American health-care system would not be an improvement over Obamacare.
To understand why, it may be helpful to step back -- to ask about the purpose of this or any other health-care plan. America has already decided, as a society, that people should not be allowed to die in the street for lack of health care. President Donald Trump himself has said it, and federal law requires that almost all emergency rooms treat all patients regardless of ability to pay.
When patients lack the resources to pay the bill, or the insurance to cover it, their fellow citizens pick it up -- through federal or state and local income taxes. Whether they like it or not, Americans already bear the responsibility to share in this expense.
Under Obamacare, the collective responsibility is managed through insurance, rather than taxes: All Americans are required to have health insurance or pay a penalty -- the so-called individual mandate. The cost is still shared, but via health insurance, which is systematically tailored to fund medical expenses. You pay into the insurance pool but draw from it only when you find yourself in need of medical care.
Under the Republicans’ proposed American Health Care Act, there would be no such requirement to have health insurance. That would not bring an end to shared medical expenses, however. It would only mean returning to a system in which many people’s health costs are paid with tax dollars.
Republicans have argued that the government shouldn’t be able to force people to purchase something they don’t want. That may be true for many things people might buy, but health insurance is different, because the costs incurred by people without it will still be borne by everyone else. Keep in mind, the U.S. has a history of requiring all citizens to fund many essential services, such as education and security.
Republicans would prefer merely to encourage people to buy insurance, by offering them a modest tax credit and allowing insurers to hike premiums on people who fail to maintain continuous coverage. But those incentives are unlikely to keep as many young and healthy people in the market as the individual mandate does. And with an older, less healthy insurance pool, prices will rise. Health insurance can work, and remain affordable, only if the cost is spread widely.
How many could be expected to exit the system under the Republican plan? That’s a question for the Congressional Budget Office, which has yet to assess the proposal. The CBO will also appraise the budget damage likely to result from the bill’s other provisions, such as repealing almost all Obamacare taxes, and the health consequences of repealing the expansion of Medicaid that was a big part the Affordable Care Act.
That last change could do more than anything else in the Republican legislation to pull the rug out from Americans who have gained insurance under Obamacare. Over a period of years, the federal government would limit the amount of Medicaid money it pays the states, which would decide on their own how to cut costs.
Exactly how many people would lose coverage? Again, it’s essential to wait for the CBO to weigh in -- and wrong for Congress to push ahead on the legislation before it does.
In arguing for their revised health-care system, President Donald Trump and congressional Republicans continue to claim that Obamacare hasn’t worked. In truth, while the Affordable Care Act could use a tune-up, it has delivered decent insurance to millions of people and is on course to cover millions more in the years ahead.
It seems even to have convinced some Republicans -- none of whom voted to pass Obamacare -- of the wisdom of greater government involvement in the health-care system. But that requires a mechanism to ensure that the costs of health care are widely shared. The Republican plan fails to do this. If this is the best they can offer, it’s better to change nothing at all.
--Editors: Mary Duenwald, Michael Newman
To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at email@example.com .