On Monday, the House GOP presented a Bill to make good on the Party’s – and President Trump’s – promise to ‘repeal and replace’ the Patient Protection and Affordable Care Act (PPACA), better known as Obamacare.
We’ve seen immediate headlines about “Trump blowing up Obamacare”, but the reality is naturally a little more subtle.
The lyrically-titled Budget Reconciliation Legislative Recommendations Relating to Repeal and Replace of the Patient Protection and Affordable Care Act and its equally poetic companions make a range of significant revisions, including:
- Removing penalties for those who don’t take out private health insurance: the so-called ‘individual mandate’;
- Repeals the Medicaid expansion provisions from 2020;
- Allows States to exclude high-value lottery winners from Medicaid, despite the fact that there may not be a massive saving;
- Compensation for States who did not expand under Obamacare;
- Repeals s.1402 of the PPACA which requires insurers to curtail cost-sharing, or out of pocket expenses, by members;
- Introduces the Patient and State Stability Fund, which funds programs to ensure current high-cost members of insurance plans remain covered, smooths risks to insurers, and funds preventive health. Allocations for States for years 1-2 of the new regime are US$15 Billion, reducing to $10 Billion for successive years;
- Permits insurers to charge a 30% premium penalty for a break in continuous coverage;
- Repeals the 10% tax on indoor tanning studios;
- Repeals the net investment income tax, which isn’t strictly a health issue, but a supertax;
- Maintains but modifies tax credit incentives for insurance;
- Removes a range of other tax measures, including on OTC pharmaceuticals, health savings accounts and medical devices; and,
- Prohibits funding to most abortion and planned parenthood services.
The details of the Bills are likely to be heavily edited in order to ensure at least 50 of the 52 GOP Senators will support its passage.
This will require a deft hand to maintain the measures which return from the chimera of Obamacare to parallel public and private health insurances, without creating conspicuous losers. While measures, such as the individual mandate, are decried as threats to freedom, many who have gained otherwise unaffordable insurance via the PPACA will otherwise be in the Trump camp.
And the final form of other health-related promises in the President’s first speech to Congress, most notably: allowing purchase of interstate insurances; and reducing medicines costs by lowering the FDA ‘burden’ will be interesting to see.
As a sidenote, the form of the Bills is interesting. Despite being healthcare legislation, they come under the Title of Energy & Commerce as Budget Reconciliation measures. This is a form of legislated change introduced late in the Nixon administration, which has been enthusiastically implemented by both sides.
The short explanation is that budget measures are immune to filibuster so, even if they affect other legislation, they can be passed efficiently. It’s an interesting counterpoint to the Australian problem that outgoing Governments of all persuasions pass poison-pill legislation to protect their legacies, knowing that the Senate must pass the budget but can be very obstructive with subsidiary Acts.
Are there other lessons about the proposed changes – or at least the debate around them – from which Australia might learn?
Perhaps the most important is that the US has retained a genuine – and in many ways useful – tension between social and private insurances. While Obamacare’s main thrust was universal coverage, it did this via cost-shifting: placing a substantial burden on private insurances and penalties to higher-income individuals.
In response, the Republicans will retain part of this social goal – at least for those already enrolled – but will return much of the public good cost to the public purse.
We lack this debate in Australia. Leaving aside the increasingly inefficient tax penalty for high-income earners without private health insurance, there is no discussion of how universal coverage might be better managed via a more granular public-private mix. Medicare is the most immovable element of our social compact.
Given our increasing debt situation, looking to a model which distinguishes social insurance for those in need from authentic private subscription for those who can afford it is critical. Politically, this is unpalatable but, without this debate, Medicare and our current system of universal healthcare will inevitably become increasingly unaffordable.
The US debate is also one about market completion. President Obama’s instincts to address significant gaps in coverage was admirable. But it diluted the capacity of efficient insurers to cover their membership. How far the final response goes remains to be seen but it will permit a more competitive market.
Curious as it is coming from contemporary US politics, this is an adult conversation about what is affordable versus what is desirable. In addition, US markets permit private coverage of adjuncts to medical care, such as pharmaceuticals and aged care, contrasting with the tendency of Australian Governments to crowd out market solutions through well-meaning universal schemes.
We need to have an adult conversation about affordability and sustainability in Australia. We simply can’t afford not to.
Alastair Furnival & Catherine McGovern