A Bad Bill - Whatever the Name

Today’s Managing Health Care Costs Indicator is $145 billion

What if there was a proposed bill that would raise the federal deficit by $145 billion over the next ten years, would increase the projected number of uninsured in the country by 32 million (from 6% to 17%), and would raise premiums for those purchasing insurance both in the employer and in the individual market? Source: Congressional Budget Office. Further, what if this proposed bill would destroy 250,000 to 400,000 jobs annually over the next decade and reduce the number of workers who start new businesses, move to new jobs, or otherwise invest in themselves and the economy?  Source: David Cutler white paper. 

That bill would be pretty unpopular, right?

Actually, that bill would be HR 2, the ill-titled “Repealing the Job-Killing Health Care Law Act,” introduced with great fanfare by the new Republican majority in the House of Representatives.  The bill got 236 votes to pass its first procedural hurdle last week, and was expected to pass this coming week. (It will be delayed as the House suspends substantive activity following the tragic shooting of Representative Gabrielle Giffords and 18 others). The House leadership has announced it will prohibit amendments to the bill, and strictly limit debate.

The bill is symbolic, with no chance of passing the Senate or being signed into law.  However, it’s interesting to see that even apparent winners would be losers with this repeal bill.

è Insurers would not suffer the cuts in Medicare Advantage payments, a total of $145 billion over 10 years.  They would also not be subject to new regulations making it more difficult to withdraw insurance coverage after premiums had been paid, and would be able to continue to offer policies that limited total payments, including lifetime maximums and “mini-med” plans.   However, insurers would also not have millions of additional beneficiaries.  Even during the recession, small businesses have been adding employees to the insurance rolls due to a tax break incorporated into the Affordable Care Act.

è Providers including physicians and hospitals would not be subject to lower rates of Medicare increases over the next decade.  However, they would face a high level of uninsured Americans, which would likely cause increased pressure to lower prices. Further, the Medicare Trust Fund would “run out” much sooner, and it’s not clear that providers won’t have to accept cuts at some point anyway.  The Republican plan could include transition of Medicare to a series of vouchers, which would likely lead to further disruptions of revenue.

è Drug Companies and medical device companies could avoid explicit taxes or fees that would be levied under the affordable care act.  But both would face more uninsured individuals ill-equipped to pay premium prices for drugs or medical devices.  For the pharmaceutical companies, giving discounts to enlarge their market has always led to higher income and higher profits, as I’m sure will be the case with the 50% discount to Medicare beneficiaries within the ‘donut hole’

è Patients deeply desire many of the protections built into the Affordable Care Act, including guarantee issue, full coverage of preventive care, and protections against “recission,” or withdrawing health insurance when it is already in place due to minor errors on the original application.  Parents are relived able to let their adult children remain on their health insurance policies in these terrible economic times.  The big gain from repeal would be that people would be free to opt out of purchasing insurance at all.   This is sensible for rich people (who wouldn’t lose all their possessions if they got sick), but has worked poorly for those less fortunate – who get the most benefit from the community-wide risk sharing of health insurance. 

HR 2, whatever its title, is bad policy.  It’s good that it will be heading for the scrap heap.