The relationship of the Republican bills to tax breaks resembles that of water crackers to cheese: a delivery device with little independent function of its own
By Adam Gaffney, M.D.
The Guardian, June 23 2017
“Dead on arrival,” some said. That was to be the fate of the House’s Obamacare repeal bill in the Senate. Yet Trumpcare has risen again: on Thursday, the Senate released its Obamacare repeal bill, though its fate is still uncertain. The Senate draft is in some respects a watered-down version of the House’s, yet it is no less toxic: watering down cyanide, you see, only makes it so safe.
But first, some credit where it is due. Senate majority leader Mitch McConnell was faced with a daunting task after the American Health Care Act (AHCA) slithered its way through the House last month: the creature was about as popular as Count Dracula.
In a late May Quinnipiac poll, a measly 20% of voters approved the bill, not surprising when one considers that the AHCA was arguably more vampiric than the Romanian nobleman. Whereas the latter would drain his victims one by one, the AHCA would extract health coverage from some 23 million to engorge the bank balances of the wealthy few.
Yet McConnell and colleagues rose to the challenge, and it is hard to not be impressed by their ruthless stealth and speed. The baker’s dozen of white men that crafted the bill kept it hidden not only from the public, but from their fellow Republican Senators.
The secrecy – nary a single committee hearing! – kept it out of the headlines, an admittedly savvy strategy in light of the AHCA’s utter unpopularity. As one senior aide told Axios, “We aren’t stupid.” Certainly not, though they are a coldblooded bunch.
Now the Senate bill is with us, and suffice it to say that Trumpcare hasn’t much changed. There is one major exception: the Senate bill features subsidies to help people buy private insurance plans that resemble those under Obamacare, though they are less adequate.
These subsidies would be indexed to income and available to those earning under 350% of the federal poverty level (as opposed to under 400% with Obamacare). Libertarians can whine with some justification that, in this respect, they are being served a glass of Diet Obamacare.
But in other respects, the Senate bill looks very much like the House’s, retaining, of course, the lavish tax cuts for healthcare corporations and the rich. Over a decade, the House version of the bill was estimated to redistribute $230.8bn to high income earners, $144.7bn to insurance companies, $28.5bn to pharmaceutical companies, and $19.6bn to medical device manufacturers (healthcare stocks are jumping accordingly).
The relationship of the Republican bills to these tax breaks increasingly seems to be that of water crackers to cheese: an effective delivery device with little independent function of its own.
Yet hundreds of billions of dollars of tax cuts do not, as the saying goes, grow on trees. And who easier to take the money from then the poor? Thus, the Senate bill, like the House’s, goes for Medicaid’s jugular, and in the long term, actually sinks its teeth deeper.
To be fair, the Senate bill does bleed the program a bit slower at first – funding for Obamacare’s Medicaid expansion will be phased out over three years. Yet like the House bill, it ends Medicaid as an entitlement program wherein state spending is matched by federal dollars, constraining it instead to a per capita capped system – a long-winded way of saying that Republicans will shrink the program. Indeed, the hemorrhage of cash will ultimately be more brisk in the Senate version, as the bill dials down the rate of growth of the program beginning in 2025.
Like the House bill, the Senate bill also aims to appease conservative true believers by allowing states to apply for waivers to weaken Obamacare’s insurance regulations (albeit now via Obamacare’s 1332 waiver program). The true believers assert that jettisoning such regulations – like those that require coverage of a full set of healthcare benefits – would bring down premiums.
They are obviously right. Similarly, as Megan McArdle recently argued in Bloomberg, requiring sprinklers in tall residential buildings like the one that burned to a crisp in London last week (current death toll: 79) increases, to some extent, the cost of housing construction.
Which is not to say that, as with housing, the affordability of healthcare is not an issue. When conservatives critique Obamacare by asserting that premiums and deductibles are unaffordable for many, they are right, albeit disingenuously so. Just as the solution to unaffordable housing is not to let more buildings go up in flames, the solution to high healthcare costs is not to make health insurance plans increasingly worthless.
In the case of healthcare, the answer to this conundrum is simple: fund the healthcare system not through premiums or deductibles, but instead through progressive taxes, such that nobody is liable to pay more for healthcare than they can afford.
Of course, if you are trying not to reduce inequality, but to exacerbate it, this makes little sense: better to bleed Medicaid, transfuse the cash into the pockets of the rich, and call the whole bloodsucking endeavor an exercise in “freedom.”