Maine-style guaranteed coverage pools.
Is Obamacare here to stay? One is certainly tempted to think so, in the wake of the recent, Hindenburg-style crash of House Speaker Paul Ryan’s Obamacare ‘repeal and replacement’ bill.
But it’s too soon to despair. For two reasons.
First, negotiations continue quietly between President Trump and members of the conservative House Freedom Caucus, despite Mr. Trump’s mostly empty twitter-threats of ‘primarying’ Freedom Caucus holdouts and/or of negotiating a bipartisan health care deal with Democrats. Such kabuki comes off as faintly ridiculous when, in polls, only 17 percent of Americans support the bill that has come be known as ‘Ryancare’ and ‘Trumpcare.’ /1
Second, and more important, the key to a Republican-unity bill is hiding in plain sight. The Ryan bill’s fortunes will revive the minute Mr. Trump and moderate House Republican holdouts recognize that the answer has been right there in front of them, all along, in the bill itself.
The solution is found in a big, but overlooked $110 billion pot of money, known as the ‘patient and state stability fund.’ If that fund is spent entirely or mostly on funding state-level ‘guaranteed coverage pools,’ it will fully address the so-called ‘pre-existing conditions’ problem, which is ultimately the main reason the Ryan bill has stalled out.
Fix the ‘pre-ex’ problem, and replacing Obamacare becomes not only doable but relatively easy.
What’s causing conservatives to choke on the Ryan bill? The bill’s failure to reduce health insurance premiums. Which is due to the bill’s failure to repeal the core Obamacare insurance regulations.
Meanwhile, what’s causing moderate Rs to resist repealing those regulations? A desire to retain Obamacare’s most popular promise: the one that says ‘No one shall be denied health insurance due to the existence of a pre-existing medical condition.’
Obamacare’s way of keeping that ‘pre-ex’ promise is to remake one-sixth of the U.S. economy, by imposing a host of costly and destructive regulations — the ones that are (rightly) causing conservatives to choke on Ryancare.
But the stability fund obviates any need for those regulations. How? By providing states $110 billion over a decade ($11 billion a year, on average) to ensure that Americans cannot be denied insurance coverage due to a pre-existing condition. That amount is enough to protect every person in America who cannot afford insurance because of a pre-existing condition. And the fund would be operational in every state, administered either by the state government or by the feds at the state’s option. Thus, the fund, being universal in extent, and sufficient in amount, fully obviates the need for the Obamacare regulations. You don’t need both. Heck, it is incoherent to have both.
With the fund, Congress can repeal the regs without fear of political backlash. And in fact, doing so would make the Ryan bill an easier sell, because (unlike the unamended Ryan bill) it would actually cause premiums to come down.
Good policy is good politics. Repeal the regs, and ‘Ryancare’ becomes a true repeal bill — one that virtually all conservatives can support.
But won’t moderates Republicans oppose that? After all, it’s the moderate ‘noes’ who have really been the obstacle to the Ryan bill, not the numerically smaller group of conservative ‘noes.’
To figure out what moderates will do, it may be helpful to recall the four main promises that virtually every Republican candidate in America has made on health care. They are:
- Repeal Obamacare’s insurance regs.
- Reduce premiums.
- Minimize coverage loss.
- Prevent people from being denied coverage due to a pre-existing condition.
As Republicans have moved to act on those four promises, a divide has opened up between ‘repealers’ and ‘replacers.’ The repealers tend to care more about promises 1 and 2, the replacers about promises 3 and 4. Happily, Ryan’s stability fund (I prefer to call it a pre-ex or guaranteed coverage fund) provides the pathway to keeping all four promises, because it makes it possible to keep promises 1 and 4 simultaneously and thus to keep promises 2 and 3.
Now, to defend the ACA’s pre-ex mandate, some Democrats make the hyperbolic claim that Obamacare’s regs must be preserved because ‘133 million Americans have a pre-existing condition.’ Well, that may be factually true, but it’s extremely misleading. Yes, lots of us have conditions. But virtually all of us also have access to guaranteed-issue coverage, be it at work or through a government program like Medicare or Medicaid.
In truth, no more than 500,000 Americans suffer from the sort of pre-existing condition that is so costly as to make insurance unobtainable at any price. The ‘pre-ex’ problem is actually a relatively small, discrete problem that can be easily solved — with Ryan’s pre-ex fund.
To assuage moderate Republican fears, of course, it will be necessary to ensure that states spend the money on this small population (as opposed to frittering it away on trivia and boondoggles).
The state of Maine has shown the way to do this right, with an innovative and highly successful ‘invisible risk pool‘ model that every state should be encouraged to emulate.
Established in 2011, the Pine Tree State’s invisible risk pool (again, I prefer to call it a guaranteed coverage pool) ensures that all private insurance applicants with pre-existing conditions have access to coverage. It’s basically a hybrid of a traditional high-risk pool and a reinsurance mechanism. Under it, applicants must answer a few questions about certain high-cost health conditions, and those who have such a condition are automatically (and silently) placed into the pool, which enables them to obtain private insurance at rates comparable to their neighbors’. They don’t even know they’re in the pool. Peace of mind, without stigma. The model works because it focuses help on the tiny group of people who actually need financial help — and otherwise leaves markets free to do what free markets do.
But here’s the best part: in stark contrast to both Obamacare and Ryancare, the guaranteed coverage pool actually reduces premiums for everyone in the individual market. Not just slows, reduces. Which means more people can get covered in the long run.
Think of the message: lower premiums, more people covered.
Republicans, does that sound like the sort of positive message you might like to have for your bill? It’s within your grasp.
But wait a minute. What about all that talk we hear of ‘budget reconciliation’ and the Byrd Rule and Speaker Ryan’s claim that repealing the regs is simply not possible under Senate rules? There is no need to bore the reader here with a detailed answer. Suffice it to say there are strong reasons to believe Ryan’s understanding is mistaken. And in any case, the only way to test his thesis is to let the Senate interpret its own rules in response to an actual House-passed bill that repeals the regs.
At the end of the day, Republicans need to ask themselves two questions:
1. Do we trust the states to take care of their own people?
2. Do we trust private markets to work better than government mandates?
If they can clearly answer ‘yes’ on spending issues (such as their $110 billion stability fund, and their big quasi-block-grant reform of Medicaid), why wouldn’t they also answer ‘yes’ on the regulations?
And while we’re at it, if they can answer ‘yes’ on health care, why not on other issues? Why not on welfare, and education, and minimum wage laws, and the drinking age, and marijuana regulation, and medical malpractice reform, and so on? You get the idea.
The GOP could avoid a ton of future fights — and Hindenburg-style crashes — by consistently following its own professed principles of federalism and decentralization.
Is Obamacare here to stay? Only if Republicans want it to!
The solution — federally funded guaranteed coverage pools — is hiding in plain sight.
[Originally published at The American Spector, April 5, 2017. @amspectator. Republished at deanclancy.com.]