Why the GOP Healthcare Plans Won't Fill the Prescription |
During his first term, after repeatedly promising the country a terrific healthcare plan, Donald Trump famously commented, “Nobody knew that healthcare could be so complicated.” In fact, everyone who spent even a few minutes looking at the issue knew that healthcare was complicated. That is why Obamacare ended up being a hodgepodge that was pasted together to extend healthcare coverage as widely as possible. It is also the reason Trump and the Republicans never produced a healthcare plan in Trump’s first term.
The basic problem is that healthcare costs are hugely skewed. Ten percent of the population accounts for more than 60% of total spending, and just 1% accounts for 20% of spending. Most people have relatively low healthcare costs. The trick with healthcare is paying for small number of people who do have high costs.
The Republicans in Congress, along with Trump on alternate days, are pushing plans that are supposed to give choice to individuals and somehow take it away from insurers. It’s not clear what they think they are saying. They seem to still envision that people will buy insurance, as they do now in the Obamacare exchanges, but somehow that they will have more control in the Republican option.
There is one story they could envision, which would make it much easier for insurers to skew their pool. The Affordable Care Act (ACA) restricted what sort of plans could be offered in the exchanges in order to limit the ability for insurers to avoid high-cost individuals.
It would be possible to relax these restrictions to allow insurers to cherry pick their enrollees. For example, they could offer high-deductible plans, say $15,000 in payments, before any coverage kicked in.
The Republican healthcare plan is a rerun of the bluff and lie strategy they have been doing for more than 15 years.
No person with a serious health condition would buy this sort of plan since they know they would be paying at least $15,000 a year in medical expenses, and then a substantial fraction of everything above this amount, in addition to the premium itself. On the other hand, a low-cost plan with $15,000 deductible might look pretty good to someone in good health, whose medical expenses usually don’t run beyond the cost of annual checkup.
The Republicans can look like the great promoters of individual choice by allowing insurers to market these high-deductible plans. The problem is that healthy people will all gravitate to high-deductible plans, leaving only the people with serious health issues—the 10%—to buy plans with more modest deductibles.
These plans will then be ridiculously expensive since insurers are not going to insure people at a loss. If they have a pool with four or five times the average per person healthcare costs, they will charge a premium that is four five times the average cost, plus a margin for administrative costs and profits. This means that cancer survivors, people with heart disease, and other serious health conditions will be screwed, given the option of ridiculously expensive insurance or none at all.
The most painful part of this story is that we have all been around the block many times on this story. Unless Trump and the Republicans are extremely ignorant, which can never be ruled out, they are simply lying and hope that the media will let them get away with it. They have no brilliant plan to lower healthcare........