- J. Scott Applewhite/AP
To the extent that the Republicans urging people – in advance – not to pay too much heed to the nonpartisan Congressional Budget Office’s analysis of the GOP’s healthcare-reform plan have a point, it is this: Some pieces of legislation have more uncertain effects than others.
This bill, with novel provisions (such as its 30% premium penalty for people who drop and then restart health-insurance coverage) will have uncertain effects on the health insurance markets. Therefore, CBO’s analysis of how much it will cost and how many people it will cover – like anybody’s analysis – will be speculative to a significant extent.
This, however, is a reason to take more time working on the proposal to try to establish its effects – not a reason to rush headlong into enacting it without having any idea what it might do.
Republicans in the administration and outside it plainly have no idea what their plan will do to health-insurance premiums or government expenditure, let alone to the fraction of Americans who go uninsured. It’s not as if President Donald Trump’s Office of Management and Budget has its own rigorous estimates of the plan’s coverage effects to challenge CBO’s.
Republicans are guessing. And whatever the limits of the CBO’s methodologies, they are superior to guessing.
If you don’t know what a bill will do, you might want to assemble a lot of experts to provide testimony on its likely effects so you can tweak its provisions. Instead, Republicans held zero hearings on this legislation and are trying to rush as quickly as possible from introduction to enactment.
Even if you were ideologically committed to the broad framework of this plan (and, let’s be honest, nobody is actually ideologically committed to this framework; it’s a compromise everybody hates) you should want an analytical process to fine-tune its provisions.
For example, the proposal would impose that 30% premium penalty on people who have gaps in insurance coverage. The purpose of this provision is to encourage people to maintain coverage even if they are healthy while still repealing the individual mandate, to which many Republicans have an ideological objection.
But why is the penalty 30%? Why not 20%, or 40%? Why does it run for one year, not more or less?
Nobody seems to know exactly where the 30% figure came from. Avik Roy, a conservative health-policy expert, speculates that it comes from estimates promulgated by insurers, on earnings calls and elsewhere, about how much more expensive it is on average to cover someone who buys coverage during a “special” enrollment period versus during regular open enrollment.
If you ask health-policy experts about this provision, you won’t find any consensus about what this provision will do, let alone whether it is a good idea.
Some think it will cause a “death spiral” – once they drop coverage, healthy people would wait until they get sick to buy coverage, instead of paying the 30% penalty. But sick patients who know they will have high costs will buy despite the penalty. The preponderance of sick customers would force insurers to raise premiums, which would further discourage healthy people from buying coverage, which would require even higher premiums, and on and on.
That is, even if 30% is a good estimate today of the cost difference between a regular customer and one who develops an unscheduled need for insurance (and I would note, Avalere Health’s estimates are lower), it won’t be a good estimate anymore after you impose the penalty.
Some other experts think this proposal might work about as well as the existing individual mandate to discourage people from dropping coverage in the first place. It’s hard to say – the existing mandate has its own weaknesses, and this policy would put us in uncharted territory.
“How high should the penalty be, and how well will it work?” seem like questions you might want to get a better read on before passing the law, if you cared about what the law would do to consumers.
The only reason to rush like this is that you don’t care what the law’s effects are – you are unconcerned about how many people end up with insurance coverage, how much the government has to spend on premium subsidies, or whether the premium penalty causes a death spiral.
From a political perspective, it makes little sense to be unconcerned about these matters. If lots of people lose coverage, and lots of people who keep coverage end up paying higher premiums, and lots of insurers exit insurance markets because they’re having trouble keeping healthy people in their coverage pools, those facts will impose significant political costs on Republicans who vote for the law.
But from an ideological perspective, there is a reason Republicans don’t care. Their revealed value set is that they care almost entirely about the taxes imposed to pay for healthcare benefits.
Their plan would repeal most of the taxes imposed by the Affordable Care Act, and unlike the coverage provisions, the effect of repealing those provisions can be (indeed, already has been) scored with good precision by the Joint Committee on Taxation.
We know with a fair bit of precision what the Republican plan would do on the tax side: It would give a large tax cut to the wealthiest Americans. And that’s all some Republicans need to know.