Republican health care

What do Republican lawmakers want?

Looking at the smoldering ruin of Republican attempts to repeal the ACA, it may be confusing what the Republicans' actual goals are. A snarky response might be "they don't have any", but I think that's not really accurate. It is true that the GOP does have a significant problem in that the ACA was originally a Republican idea and they didn't bother to come up with a new one after Obama took it from them, but I think there is something like a coherent vision of what Republicans think health care should like (if not an actual plan to effect it). At least, this is true among Congressional Republicans; it is not, I think, what in broad strokes Republican voters want, any more than the ACA was what Democratic voters wanted.

The AHCA foundered on the contradictory goals of two sets of Republican lawmakers. One set of lawmakers is against the Medicaid expansion under the ACA and fears it will become entrenched as another entitlement program; the opposed faction as far as I can tell thinks that entrenchment has already happened, and either can't or shouldn't be dug up. This is the sticking point, and barring some magical event I don't see a way for the numbers to work out because of it.

But that's a negative question; positively, what do GOP lawmakers want from a health care system? This is particularly important because twenty years ago, the ACA they are railing against now was a Republican idea: mandatory purchase and issue of insurance with a marketplace for plans. Obviously even back then they wanted lower subsidies and fewer requirements on the plans' features, but they have also in the past 7 years turned against the concept itself. So what would a clean slate Republican health care system look like? Nationally-sold catastrophic insurance, and tax-free (and even negatively taxed) savings vehicles for sub-catastrophic expenses.

When lawmakers and pundits write and speak about it, they most often compare this ideal system to Singapore's (though they either don't know or elide the fact that Singapore has strict government price setting on providers, though then again some of the nationalist faction are fine with that too). But the basic idea isn't unworkable: people receive tax benefits for saving money in an account that can only be used for health care expenses, and people under a certain income actually get money directly from the government in that account. Expenses over a certain amount are covered by a catastrophic health insurance plan (some have suggested public, others private). In addition, most of them want prices of procedures to be advertised so that people will seek out cheaper care1.

Roughly, Republicans want health insurance to be like car insurance: something you use when you have a large unexpected bill, not something you use for day to day purchases (you don't use Geico to buy gas or windshield wiper fluid). And, I have to say, this isn't an entirely bad point. Food is even more essential than medical care most of the time, and we purchase food under cost constraints (with, of course, a massive universe of regulations, subsidies, and inducements that operate as price controls). There are prepaid food services which operate the way health insurance operates (say, a CSA, or whatever that company is that keeps spamming my Facebook news feed), but these are mostly just conveniences for the richest 15% or so: most Americans buy food directly, with some subsidies for poorer people, and with in-kind NGO and government provisioning for catastrophic situations (food banks, FEMA MREs, etc.). Now, an expensive food month might be, say $200, whereas an expensive health care month might be "all of the money you have plus a lifetime of debt" (or, better, "all of the money you have up to the point where the catastrophic plan kicks in"). Also, plenty of months might go by with no medical expenses, which doesn't work for food. This is why a Health Savings Account might make sense in a way that a Food Savings Account wouldn't. But, at any rate, yeah: that is an existing-in-the-world working implementation of right-wing (but not libertarian) universal health care.

I don't know how many Republicans have really wrestled the fact that this setup would require either massive salary decreases for basically every medical provider or a regulation and support mechanism the size, complexity, and metaphysical horrificness of the Farm Bill (Republicans do not like the farm bill although they know they have to support it). But some have, and still think that would be a better situation than what we have now, particularly if people feel like they themselves are paying for healthcare.

Of course, all of that is as politically and bureaucratically unobtainable as the left's vision of extending Medicare to the entire population. So how do they want to nudge the system we have now? The last sentence of the previous paragraph is key: they want people to feel more like they are making consumer decisions when they get health care. So you may see pushes to make charge masters (the list of how much they bill Medicare for everything) public. Dentist offices often do this. You might see attempts to drive premiums down and deductibles (or, better from the Republican perspective, copays) up. This is the "skin in the game" argument that I morally dislike (I mean, you literally already have skin in the game, particularly if you're trying to see a dermatologist).

Right now, providers aren't really competing on costs at all. You have a copay or deductible, and the treatment costs whatever it costs (and they generally can't or won't tell you what that cost is beforehand). Republicans want that to change. But, being stuck with the employer-provided-major-medical-insurance-as-default model as we are, they're going to have to make the same kind of irritating practical compromises Democrats did in passing the ACA.

But that's what Republican legislators want. As I alluded above, that seems to me to be different from what Republican voters want. I've had lots of conversations about this with a coworker who's a Republican and Trump supporter. I'll call him Bob.

What does Bob want?

Bob is a coworker, but we're not fellow employees. He is a 1099. I'm putting this first because it's important. I have no data on this, but I will state with the absolute confidence that only comes from anecdote that 1099s like Trump a lot more than the general population.

Bob is a 1099, so that means he pays a marginal tax rate of about 45% (effective rate of about 38%). That's his normal income tax plus a 15.3% self-employment tax that is analogous to a W2 employee's FICA and Medicare levies. A W2 pays 7.65%, and the W2's employer pays the other half (the 1099 is his own employer). Since payroll levies make up so much of most American's tax burden, he ends up paying a lot more in taxes than I do.

This is a reason contractors' hourly rates are so much higher than employees'. Bob left employment to become a 1099, frankly, because he saw those higher hourly figures and interpreted them in the context of W2 employment rather than independent contracting. It was a mistake, but he's stuck with it at this point (plus, there are some intangibles that come along with contracting that he likes). Bob wants to pay the same 28% marginal rate and 7.65% payroll rate that a W2 earning what he earns would pay (of course, the whole point is that as a W2 he'd be much more expensive to the company, so his cash payment would decrease accordingly; he intellectually acknowledges that, but that can be hard to "own" when you're used to depositing a paycheck of a given size).

Before the ACA, Bob (who is married with two kids) paid about $300 per month for health insurance with a $1000 deductible. Now he pays $1000 per month for health insurance with a $6000 deductible. If he had had a pre-existing condition, he couldn't have gotten insurance at all. And his insurance company could have set a lifetime cap on the benefits it paid out to him. But he didn't have a pre-existing condition, and he has never had huge medical expenses. So what he sees is that his premiums and deductibles went up by an order of magnitude in order to help out people who were previously uninsured, while the W2s' premiums and deductibles didn't go up at all. That, at least in Bob's case, is what infuriates him about the ACA: he feels like people like him were singled out to pay for the improved access to health care. And, hell, he has a point. There is a huge and problematic gap in the experiences of people who get group insurance through their employers and people who purchase insurance as individuals. The ACA made the individual market more like the group market, but that market is much more expensive and people on the indvidual market are left paying the costs.

This was the danger of "if you like your plan you can keep it", dating back to Hillarycare in the 90s. People with employer-provided insurance like it, and don't want to have to deal with the crap that people on the individual market have to deal with. But group health insurance is absurdly expensive, and represents a huge percentage of the full burdened rate of an employee. This, again, is why contractors make a higher hourly rate than employees, in general. But none of this is particularly useful to Bob. I mean, yes: he was skating for years, in a lot of ways, but when you skate long enough you start to think that's walking, and there's not much somebody else can do to convince you otherwise.

I've thrown a few ideas to Bob, and I'm intrigued by the ones he has liked – this gets to the real break between Trumpian nationalism and conservatism:

  • An NHS. He loves this idea. "Just have the government tell the doctors that they are all Federal employees now"
  • Ending employer-provided health insurance entirely. Put everybody on the individual market, and prices will come down.
  • Put everybody on Medicare and pay for it by making giving them a claim on every estate that used Medicare services (basically a 100% inheritance tax to finance Medicare)

Bob does not like the idea of HSAs (he agrees with me that it's kind of stupid for that many people to have that much money they may or may not spend just sitting around). He also does not like the idea FQHCs (he wants to pay the same amount as someone poorer than him).

He gets that if you have guaranteed issue you have to have mandatory purchase, and would rather not have either and set up high-risk pools for people with pre-existing conditions (which he doesn't want to be taxed to pay for; ultimately he has a lot of "life is tough and unfair" responses which is something he doesn't like hearing about his own insurance problems).

So, what Bob wants is for the government either to nationalize the entire healthcare industry or to leave it the hell alone. Neither of which are what Republican legislators want, which is why he doesn't like them either, but still votes for them.

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