Five Ways GOP Repeal of Obamacare is Taking From The Poor and Giving to the Rich
On Friday in a town hall meeting in Washington, President Obama said he would be happy to replace Obamacare with a better program but said Republican critics haven’t proposed anything that would bring better results by any objective measure.
“From the very start, in the earliest negotiations in 2009, 2010, I made clear to Republicans that, if they had ideas that they could show would work better than the ideas that we had thought of, I would be happy to incorporate them into the law,” the president said. “And rather than offer ideas, what we got was a big no, we just don’t want to do this.”
Republicans in Congress have already taken the first steps to repeal a program that brought health coverage to 20 million Americans, lowered health care cost inflation and saved the government hundreds of billions. They did so by this week passing a budget resolution with massive unspecified spending cuts, which will target the law’s individual subsidies and block grants to states for expanding their anti-poverty Medicaid programs. What congressional Republicans haven’t done, as Obama emphasized Friday, was say what they would replace it with—continuing their empty promise rhetoric.
“After the law passed, for the last six, seven years, there has been the argument that we [the GOP] can provide a great replacement that will be much better for everybody than what the Affordable Care Act is providing,” Obama said. “And yet, over the last six, seven years, there has been no actual replacement law that any credible health care policy experts have said would work better. In fact, many of them would result in millions of people losing coverage and the coverage being worse for those who kept it.”
What Obama didn’t say was that the Republicans don’t want to replace Obamacare, but instead are willing to let lower-income people fend for themselves with limited access to anything resembling preventative health care. And their health care reforms, which have been known for some time, will also results in a giant transfer of money from wealthier private hands at the expense of everyday Americans who will face fewer options.
Here are five takeaways showing why the known parts of the GOP’s repeal and (most likely not) replace plan amount to Robinhood in reverse: taking from the poor, working- and middle-class and giving to corporate Americans and Wall Street.
1. Millions will lose coverage. As Obama said, millions of people will be hurt by losing coverage if Republicans eliminate subsidies for households buying policies through the state-based exchanges or federal government. People will go back to not having health coverage because they cannot afford it, especially if they over age 50—which is when insurers really start raising premiums. But vast numbers of people will also lose it when Republicans roll back Medicaid expansion by turning that program into block grants for states, which leaves governors and legislature in the position of having to raise taxes to continue those programs.
2. The transfer of wealth begins. This upward redistribution comes as the GOP starts to repeal the tax penalties associated with the Affordable Care Act. While they will surely argue that removing individual penalties helps the little guy, they will also be letting large employers off the hook for providing coverage for employees, a bottom-line bonanza. It is unclear what the GOP will do with law’s income tax surcharge on the highest earners, as the GOP may seek to retain some revenue for what they will likely advertise as new tax credits to help lower-income people pay for private insurance. The problem, as is always the case with tax credits, is one has to first have enough income to use them.
3. Wall Street gets to cash in. House Speaker Paul Ryan and other Republicans have long-espoused expanding the use of health savings accounts, as a way to build up the sufficient funds needed when sickness or a medical emergency strikes. That is a very big way that financial institutions will get to make big money by skimming off of the top of these accounts under the guise of management fees. This entire approach is based on a false premise that’s akin to the was 401k savings plans were sold by right-wingers as a replacement for employee pensions—they put money aside, but it is a pale shade of what’s needed to cope with real-life living expenses. Nonetheless, Wall St. profits.
4. Cost shifts will hit consumers. Health care economics are not hard to understand. When profit-driven institutions like hospitals, drug makers and insurers lose money from unanticipated costs—such as people flocking to emergency rooms or facing big surgery after being denied access to preventative care—they stick to their profit goals by raising prices wherever they can. That dynamic is what is behind the recent rise in health care premiums, according to a series of recent astute analyses. Paul Krugman has written that what’s behind recent premium increases in states where insurers aren’t regulated, like California, is a temporary consequence of those without insurance catching up on neglected health issues. Obama, speaking Friday, said that insurers also intentionally offered low-cost initial plans to grab as big a market share as possible. There is no evidence that insurers, hospitals and drug companies will cease price-gouging. Thus, taking federal billions out of the system means either less care or higher costs for all.
5. The race to the bottom begins. Republicans have said they will push for allowing people to buy insurance across state lines. That is not the same as allowing states that regulate insurance companies from forming regional compacts to create bigger pools to support more insurance-buying choices. As Dean Baker, co-Director of the Center for Economic and Policy Research in Washington told AlterNet, that “means that every insurer gets incorporated in the least regulated state and the other states can't do anything to prevent them from ripping off their customers (e.g. get incorporated in Alabama and collect premiums and don't pay claims in California).” And that’s not all. “Also they will look to end pooling whereby the more healthy subsidize the less healthy, former tend to be richer, latter poorer,” he said.
The Only Replacement Alternative
The Republicans have no intention of replacing Obamacare with anything that will continue or maintain the same level of coverage that is now under the Affordable Care Act. If they did, it would have been presented by congressional sponsors in the 60 or so pieces of legislation that they passed to kill Obamacare—that the president vetoed. Not one Republican has ever seriously proposed anything close to imposing price controls, which Republican President Richard Nixon entertained amid a struggling economy in the early 1970s.
But there is an alternative to the system of private health insurance that is the status quo and Obama discussed that on Friday, when explaining the history of the Affordable Care Act—which he said was based on a place created by a Republican Massachusetts governor, Mitt Romney, and intentionally designed to attract Republican support.
“If you look at how this law evolved—and I’ve said this publicly before, if I was starting from scratch, I probably would have supported a single-payer system because it’s just easier for people to understand and manage,” Obama said. “And that’s essentially what Medicare is, is a single-payer system for people of a certain age. And people are very satisfied with it and it’s not that complicated to understand or to access services. But that wasn’t available; we weren’t starting from scratch.”
“So what did I then do?” he continued. “I said, well, where is a system out there that seems to be providing coverage for everybody that politically we could actually get through a Congress and where we could get Republican support. And lo and behold, in Massachusetts there was a plan that had been designed on a bipartisan basis—including by a Republican governor who ultimately became the nominee for the Republican Party—that came close to providing universal coverage. And I would have thought since this was an idea that had previously gotten a lot of Republican support that it would continue to get a lot of Republican support. And yet, somehow, magically, the minute we said this is a great idea and it’s working, Republicans said this is terrible and we don’t want to do this.”
Does anybody think that today’s congressional Republicans and the president-elect are going to magically reverse course and embrace Obamacare as a copycat GOP program—especially after years and years of vilifying it? No, it's likely they will revoke coverage for lower-income people, who are among there least-reliable voters, get Wall Street involved in skimming health savings funds and let everyone else fend for themselves in a chaotic system of higher prices and less care.
And it then will fall on Democrats, or another national political movement, to resurrect what everybody has known is the answer all along: a single-payer system.