GOP #ObamaCare Repeal Will Transform American Health Care

From Avik Roy, at Forbes, via Memeorandum, "The New Senate Republican Bill Will Transform American Health Care":

Finished reading the Senate HC bill. Put simply: If it passes, it’ll be the greatest policy achievement by a GOP Congress in my lifetime.

— Avik Roy (@Avik) June 22, 2017

I’m very open to thoughtful critiques of the Senate bill from the left. “MILLIONS WILL DIE” is not it.

— Avik Roy (@Avik) June 23, 2017

The hotly-anticipated Senate Republican health care bill came out on Thursday morning. The airwaves quickly filled up with predictable talking points from both sides. But once the dust settles, it will emerge that the Senate bill will have far-reaching effects on American health care: for the better.

Substantial improvements to the House bill

In March, when House Republicans published their bill to replace Obamacare—the American Health Care Act—I described it in Forbes this way: “GOP’s Obamacare Replacement Will Make Coverage Unaffordable For Millions—Otherwise, It’s Great.” I meant it. There were great things about the House bill, in particular its far-reaching reforms of the Medicaid program.

But Paul Ryan’s bill contained a fatal flaw. Its flat tax credits, which provided identical assistance to the poor and the wealthy, would price millions of near-elderly low-income workers out of the insurance market and trap millions more in poverty.

Fortunately, buried in the House bill was a way out of the morass. Section 202 of the bill contains a transitional schedule of tax credits that was meant to serve as a bridge between the old Obamacare system, ending in 2017, and the new Paul Ryan system, beginning in 2020.

It turns out that if you simply kept that bridge in force, and tossed overboard the Paul Ryan flat tax credit, you’d solve all of these problems with the House bill. By making that change, the near-elderly working poor would be able to afford coverage, and the poverty trap would be eliminated.

And that’s precisely what the Senate bill did! Section 102 of the Senate bill—the Better Care Reconciliation Act of 2017—closely mirrors Section 202 of the House bill, with age- and means-tested tax credits up to 350 percent of the Federal Poverty Level.

Making this change not only solves the problems I described above. It also makes it easier to reform the Medicaid program.

Real Medicaid reforms

The Senate bill includes and refines the best part of the House bill: its reforms of Medicaid, the dysfunctional government-run health care program for the poor whose enrollees have no better health outcomes than the uninsured.

Because the Senate bill’s tax credits are robustly means-tested and available to those below the poverty line, the bill is able to repeal Obamacare’s Medicaid expansion while offering higher-quality coverage to individuals who signed up for Medicaid under the expansion.

The reason that Medicaid’s health outcomes are so poor is because the outdated 1965 Medicaid law places a laundry list of constraints on states’ ability to manage their Medicaid programs. As a result, the main tool states have to keep Medicaid costs under control is to pay doctors and hospitals less and less each year for the same care. Hence, many doctors don’t take Medicaid, and Medicaid enrollees struggle to gain access to care.

The Better Care Reconciliation Act of 2017 addresses these problems in several ways.

First, the bill repeals Obamacare’s Medicaid expansion, and replaces it with tax credits so that low-income Americans can buy the coverage of their choice at an affordable price.

Second, the bill gives states a new set of tools to make their Medicaid programs. For example, under Obamacare, states are only allowed to check if someone is eligible for Medicaid once a year, even if that enrollee has moved to a different state, or becomes no longer eligible, or is no longer alive. Jonathan Ingram of the Foundation for Government Accountability, in a recent report, recommended allowing states to redetermine eligibility more frequently and thereby culling their rolls of ineligible individuals.

Third, the bill puts the legacy Medicaid program on a long-term per-capita cap tied to medical inflation through 2025, and conventional inflation (CPI-U) thereafter. This change is important, because Medicaid per-enrollee spending is growing at a slightly slower rate than Medical inflation; hence, making the program sustainable requires the use of CPI-U. The fiscal sustainability of Medicaid is essential to making sure that those who depend on the program can know it will be there for them in the future...

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