A first look at the health care unicorn

As long as Barack Obama was president, Republicans in congress had a luxury. They could rail against the Affordable Care Act and even pass bills, more than 50 times, to eliminate it, without any consequences, either political or in policy. They promised to ‘repeal and replace’ the Act, but their replacement plan remained, for years, a unicorn, beautiful, wondrous, and entirely mythical.

But now, under pressure from multiple sides to come up with something, and with a president of their own party, Paul Ryan and his colleagues have come up with their plan. It isn’t nearly as pretty as the myth. The plan leaves in place the most popular feature of the Affordable Care Act, the requirement that insurance companies not discriminate against those with pre-existing conditions. But, they allow a 30 percent surcharge for those who have allowed their coverage to lapse. The practical effect of this is likely to be to make coverage unaffordable for those most in need of it.

The new bill ends, starting in 2020 (presumably to minimize the impact on the 2018 mid-term elections) the subsidies for Medicaid and revamps the funding formula for the entire Medicaid program. That program currently covers about 70 million Americans and with the federal match being limited, the costs would be shifted to the states, many of which would be unable or unwilling to cover their citizens.

The subsidies for low-income people in the individual market would also be reduced or eliminated, though in a way that allows congress to blame the individuals for lapses in coverage.

Older people, particularly those in their 50s and 60s (not yet eligible for Medicare) would be hit the hardest, not only by the reductions in subsidies, but by other policy changes as well. One of the provisions of the Affordable Care Act was that older people could not be charged more than three times the rate of younger ones. The new bill, entitled the American Health Care Act, raises that ratio to five to one. One of the primary features of the ACA was that younger people would subsidize older ones, so it is possible that the new law will allow for cheaper rates for young, healthy people, but older ones would be left in the cold.

The bill also reduces the coverage requirements of the ACA, which again, could benefit those who are young and healthy, possibly allowing for coverage at lower rates, but at the expense of older and sicker Americans.

There is another group that will benefit — enormously — from the new bill, the wealthy. The Affordable Care Act paid for its costs with tax increases on the rich, and on certain medical devices and drug manufacturers. These would be dropped.

Insurance companies get a tax break as well. The ACA set a ceiling on the deductibility of CEO compensation at half a million dollars a year (which would be a nice salary for anyone). The new bill eliminates that limit.

These mechanisms for paying for the program were important as President Obama insisted that the Affordable Care Act be deficit neutral, and it was. The nonpartisan Congressional Budget Office confirmed this, but congressional leaders are rushing the new bill through multiple committees without the typical CBO review that the existing law received. Some Republicans are even going on the offensive, attacking the integrity of the CBO before it gets a chance to rate the bill.

Those pre-emptive attacks on the CBO proved prescient, as when their analysis was finally done, it showed that 14 million would lose coverage right away, and 24 million within a decade.

The American Health Care Act is, essentially, a massive tax cut for the wealthy coinciding with millions of Americans losing health coverage. The political impact is designed to be delayed or hidden, at least until after 2018, and some until 2020.

Even with all of this, the bill is coming under attack from Republicans in safe districts who think it doesn’t go far enough to dismantle the ACA. If enough of them refuse to vote for it and the Democrats hold firm, it is possible that the entire proposal could fail.

In this political environment, perhaps that would be the best outcome. Because although the ACA could use some revision, this is the ugliest unicorn I’ve ever seen.