GOP attempts too much in ‘Obamacare’ replacement

From the political notebook: » Congressional Republicans should have considered fixing the individual health insurance market and Medicaid reform separately. It’s true that Medicaid expansion was part of “Obamacare,” which Republicans vowed to repeal and replace. But these are two distinct issues, with different timetables. The individual insurance market is imploding now. Medicaid reform is a longer term necessity.

Dealing with the issues separately might make finding a consensus, at least among Republicans, easier.

The immediate focus should be on fixing the individual health insurance market. The Obamacare exchanges are dying as losses and rising premiums chase insurers and customers away. Obamacare restrictions have dried up the individual market outside the exchanges as well. Those without access to group insurance are being left high and dry.

Democrats are blaming the uncertainly of funding for cost-sharing, an additional subsidy for lower-income enrollees, for the instability in the individual market. But fully funding cost-sharing would just slow the rate of implosion, not reverse the direction. The individual market as structured by Obamacare just

doesn’t work.

Republicans have yet to come up with a sound alternative. But that’s in part because of a lack of focus on it and the need to thread health care reform though the budget reconciliation needle.

Republicans should have no illusions. They are in charge. The public will hold them accountable if they don’t fix the dysfunction in the individual health insurance market. Not the Democrats for causing the dysfunction to begin with.

That may be unfair. But it is political reality. And they don’t have a lot of time.

Ultimately, Medicaid reform is necessary. The current projection is for Medicaid costs to the federal government to grow 6 percent a year. That’s not sustainable.

Something that caps the federal contribution and shifts more of the cost and decision-making to the states, the approach taken in both the House and Senate Obamacare replacement bills, is inevitable. Projections about how many people will be booted off of Medicaid as a result are useless speculation. It depends on what states do in response. That’s unknowable.

Nevertheless, unlike fixing the individual market, Medicaid reform doesn’t have to be done right now. And dealing with both at once precludes a focus on the unsustainability of the current Medicaid program, a prerequisite to developing the political support for the necessary reform.

After complaining, accurately, that Obamacare tried to do too many things at once, Republicans are repeating the error in their attempt to enact an alternative.

» By postponing the payment of pension contributions for firefighters and cops, the City of Phoenix is kicking what seems clearly a structural deficit down the road and making it bigger.

The city faces a deficit estimated at $43 million to $64 million next year. A shortfall in the range of $50 million has been a recurring issue.

Phoenix is not inadequately funded. Its sale tax rate has increased from1 percent in 1980 to 2.3 percent today. To patch a previous outbreak of the recurring deficit, the city added a tax to water bills, breaking faith with the user fee concept.

The recurring deficit cannot really be regarded as resulting from economic variability. The metro area economy turned around seven years ago.

Phoenix Mayor Greg Stanton keeps bragging that, because of its progressive politics compared to the rest of the backwater state, Phoenix already has the best economy in the universe. So, the claim can’t really be made that the city will grow out of it.

The deficit, while recurring and seemingly structural, is small. The city’s total budget is $4 billion. Non-enterprise functions – excluding services paid through user fees – clocks in at over $2.5 billion. Even the city’s general fund, which is an arbitrary accounting device at this point, is well over $1 billion.

So, to actually fix the structural deficit would only require economies of less than 5 percent of the general fund, or less than 2 percent of the larger enterprise.

Instead, the city voted to extend paying what it owes to the public safety pension fund, at an additional cost of a billion or two, depending on the duration of the extension. That makes the structural deficit bigger over time.

Incurring billions in future costs that could be avoided with small current economies is a failure of leadership and management.