Thursday, September 19, 2013

Republican Health Care Reform Bill

At long last. Three and a-half years after the passage of the Patient Protection and Affordable Care Act, after focusing all this time on only repealing the Patient Protection and Affordable Care Act, just in time for the upcoming manufactured debt limit crisis and following the summertime anti-Obamacare emphasis patrol, the Republican Study Committee has proposed a bill called The American Health Care Reform Act.

The first step of the bill--repeal the Patient Protection and Affordable Care Act in its entirety.

"...the provisions of law amended or repealed by such Act are restored or revived as if such Act had not been enacted."

Just yank the rug right out from under everybody. Second, increase access to portable, affordable health insurance through tax breaks.

Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

Individuals could claim a deduction of $7,500 against their income and payroll taxes, regardless of the cost of the insurance and families could deduct $20,000. Of course, that doesn't do you much good unless your income well over that.

Next up, it improves access to insurance for vulnerable Americans by removing a couple of eligibility requirements, providing $5 million to states to establish a qualified risk pool, and verifying that only citizens and nationals of the United States are eligible.

Fourth, it says it encourages a more competitive health care market. It's confusing. The insurance policy issuer designates one state as the primary state for a particular policy and the health care laws of that state govern the policy. They can change the primary state designation when the policy is renewed. Other states where that policy is offered are considered secondary states, but the laws of the primary state governing that policy trump the laws of the secondary states. Essentially, any single state, district, or territory could pass laws governing health insurance that are favorable to insurance companies. Those companies could designate that state, district, or territory as a primary state. All other states where that policy is offered become secondary states whose laws become toothless with respect to those policies because they are now governed by the laws of the primary state. Imagine your state's Insurance Commissioner telling you, "Sorry, I can't help you. For your policy you'll have to contact the Insurance Commissioner in Alabama."

Fifth, it reforms medical liability law. You get three years to file a lawsuit. The amount of damages for actual economic losses is unlimited.

Economic damages are defined as "...objectively verifiable monetary losses incurred as a result of the provision of, use of, or payment for (or failure to provide, use, or pay for) health care services or medical products, such as past and future medical expenses, loss of past and future earnings, cost of obtaining domestic services, loss of employment, and loss of business or employment opportunities."

Noneconomic losses are limited to $250,000.

Noneconomic damages are defined as "...damages for physical and emotional pain, suffering, inconvenience, physical impairment, mental anguish, disfigurement, loss of enjoyment of life, loss of society and companionship, loss of consortium (other than loss of domestic service), hedonic damages, injury to reputation, and all other nonpecuniary losses of any kind or nature."

A jury won't be informed of the $250,000 noneconomic loss limit. If a jury awards more for noneconomic losses then the award will be reduced to $250,000.

Punitive damages are allowed only "...if it is proven by clear and convincing evidence that such person acted with malicious intent to injure the claimant, or that such person deliberately failed to avoid unnecessary injury that such person knew the claimant was substantially certain to suffer."

If there are no compensatory damages then there shall be no punitive damages. But here's the kicker.

The amount of punitive damages, if awarded, in a health care lawsuit may be as much as $250,000 or as much as two times the amount of economic damages awarded, which ever is greater. The jury shall not be informed of this limitation.

Plus, there are no punitive damages for medical products and devices that comply with FDA standards.

Last of all, the bill says it respects human life by not requiring any health plan to provide coverage of or access to abortion services. Separate policies that do offer coverage may be offered, but back in the tax break section it states that the costs are tax deductible only if the pregnancy resulted from an act of rape or incest, the woman's life is endangered by the pregnancy, or it's for treatment of infection, injury, disease, etc., caused by or exacerbated by an abortion.
I'm just not feeling the love here.


Risk Pool Toy said...

At least in Washington State, Obamacare has gotten closer to affordable post-subsidy premiums in the exchanges. Government is pressuring insurance corps to take a profit cut to lure young uninsured. Democrats have begun to realize that moralistic hectoring and bragging about subsidy size is not going to change home budgeting decisions. The low mandate penalty in Year 1 is basically forcing further fiat rate reductions.

That makes employer based insurance the more profitable insurance product. But, employers are already dumping employees into the exchanges, and can do so legally and without penalty. Now they have more incentive to do so. No additional tax/penalty revenue from them, but they make more taxable profit with fewer deductions.

We don't think any wonk can pencil out numerical predictions, particularly considering unquantifiable variables like the political clout of the insurance companies or uneven adoption across states etc etc.

What is obvious is that Year 1 of Obamacare will bear little resemblance to Year 5+ (if the program still exists). Optimistically, year 5 could come to resemble Medicare, with low profit margins, de facto socialization, broader tax basis, and a diminished role for employment based insurance.

Pessimistically, it might be a mandated exploitative chaos worse than the Republican plan. Year 1 exchange premiums are probably as low as they will get, particularly as increased mandate penalties (and increased campaign bribes) reduce pressure on Dems to rein in insurance corp greed.

When structural rules relax in 2017 (assuming the President then doesn't unilaterally rewrite the law again), progressives will be looking to Vermont and other single-payer efforts. There is no fiscal/pool reason Washington State can't adopt single payer.

We think declining absolute premiums mean Dems will benefit politically from a Republican shutdown over defunding. People want more, not less funding, and both citizens and corps want more, not less regulation of insurance profit. However, this political advantage is like getting a mortgage with a massive balloon payment in five years. Don't spend too much on well-measured curtains. The Democrats' respite from their split from Progressives will be short-lived.

We have our eyes on the prize of single payer, Medicare for all.

Kaisergesellschaft said...

I agree with Pool Toy, except I want to emphasize that the dynamic of the low mandate is completely different in Republican-led states like Idaho that have rejected Medicaid expansion. Here, almost any premium will make the penalty look like a relatively rational microeconomic choice, and even more so for people who don't have to file anyway. Obamacare will get the blame.

But, if Obamacare survives the 2016 election, other dynamics would be generally be supprtive: 1) interstate business competition where a viable state plan attracts business, particularly startups 2) if health care declines as a percentage of total gdp, funding would seem more incidental and less a speculative venture and 3) the effect of increased insurer/provider size politically. Obama and Washington state are obviously aiming for Kaiserification, not single payer. Big corporate political actors, a positive for Obamacare in the intermediate term.

The noneconomic variable is privacy. The achilles heel of Obamacare may well prove to be workplace health incentive programs which play perfectly into a presidential bid by Rand Paul. Nudgers seriously overreached--Republicans will be happy to keep these programs in place going into 2016. These programs are politically stupid, morally offensive, and economically counterproductive.

I agree that the political viability single payer has increased compared to the alternatives in the long term. Democratic Medicare Davids vs Kaiser Goliath.

Cramps said...

If corporations are going to "Walmart" their employees healthcare costs unto taxpayers, then we by God better slap a tax on their gross revenues and a surcharge on their cap gains.

The Walmart Trader Joe Fair Taxation Act.

Anonymous said...

I'd suggest a 90% tax on total Walmart etc executive compensation unless execs and their families also use the exchanges for all their own health care needs.