Fixing Medicaid and the Obamacare Subsidy Program

On July 5, the Cato Institute ran “The Uninspiring Medicaid Debate” by Michael Tanner, whose big concern is Medicaid’s sustainability. He’s a numbers guy, and the numbers don’t look good for Medicaid, even without ObamaCare’s expansion of the program. Tanner lists five salient points, the second of which is: “The Medicaid expansion had nothing to do with women and children”:

While pregnant women and children make sympathetic victims in Democratic campaign commercials, changes to Obamacare’s Medicaid expansion don’t apply to them, because the expansion didn’t apply to them in the first place. It dealt almost exclusively with childless adults. Eligibility for pregnant women and children was raised to 138 percent of poverty as far back as the 1970s and ’80s. You could eliminate the entire expansion without necessarily hitting a single child or pregnant woman.

On July 1, the New York Times ran “Going Small on Health Care,” by Ross Douthat. Douthat thinks Republicans are in the same situation that the Democrats were in seven years ago when they enacted ObamaCare. He prescribes legislation that he thinks would help the GOP avoid the errors of the Dems in 2010, and proposes “a per-capita cap on future Medicaid spending.”

My idea of “going small” is cutting the number of statutes in the U.S. Code. Douthat’s fixes would add to the Code. But if employees of the failing New York Times who are neither insurance actuaries nor medical doctors can chime in on what America’s healthcare system should be, then I suppose I can too:

THE REPEALS: (Notice, it’s plural.) Either in whole or in part, ObamaCare and the McCarran-Ferguson Act both need to be struck down. I’d start with repeal of McCarran, and in a separate stand-alone bill. Why? Because if Democrats won’t support a repeal of the relevant parts of McCarran that have resulted in some of America’s counties having no insurers, then we’ll know they’re dug-in and won’t cooperate on anything, no matter how superior the GOP’s legislation might be. At that point Republicans will know they’re on their own, and will need to consider ending the legislative filibuster.

The repeal of McCarran should also contain a ban on the States interfering in the private insurance market. We’ve recently seen this out west, where the state of Oregon is mandating insurance companies to pay for abortions. In the health insurance market created by the repeal of McCarran, such interference couldn’t be allowed. The McCarran repeal should also ensure that insurance companies offer a variety of plans, including “catastrophic” plans for those who take assiduous care of their health. With the repeal of McCarran we should see a host of new insurance companies sprouting up in the newly-created national market.

Perhaps the worst thing the ACA did was to mix the public and the private; they need to be kept separate. Which means the subsidy program must not be duplicated in a replacement. Yet, we’ve seen a tax credit subsidy scheme emerge out of the House bill and the Senate is doing the same. Enough with the subsidies; the subsidy program, with all its very ill enrollees, is what has caused premiums to skyrocket in the individual market (i.e. the exchanges). Also, the subsidies cover those making four times the official poverty rate; that’s insane.

So here’s what we do: we put the neediest subsidy enrollees into Medicaid. By putting the patients with “preexisting conditions” into Medicaid, we’d socialize their costs, rather than heaping the costs onto the backs of those in the individual market, as ObamaCare has done. In trying to help a very small group of Americans, Democrats hurt another small group of Americans: those already in the individual market. In 2013, the year before the ACA went into effect, the individual market made up only 4 percent of the population. ObamaCare’s shunting of the very, very ill into the individual market, the smallest of the non-military groups, was sheer lunacy. The subsidy program needs to end.

But people don’t like Medicaid; it’s a crumby system; many healthcare providers don’t even accept Medicaid patients. And over the last 50 years, Medicaid has cost taxpayers hundreds of billions in fraud. These things need to be fixed, but in future legislation after we repeal ObamaCare. For the time being, though, the ObamaCare expansion of Medicaid could be retained, but with the promise to immediately reengineer that broken system.

There you have proposals for “going big” on replacing ObamaCare. We erase state lines to create a truly private national insurance market, we separate the public from the private, and we take care of preexisting conditions.

On July 8, National Review ran “Why Senator Toomey’s Medicaid Measure Must Be Preserved” by George Will. Toomey’s provision is “a gradually arriving, but meaningful, cap on the rate of growth of per-beneficiary Medicaid spending.” Like Tanner, Will is also a numbers guy, and he reports on the runaway spending of Medicaid, and how it affects not only the federal deficit, but the States, too. The main reason to read the Tanner and Will articles are because of their focus on numbers: i.e. costs. Fixing our healthcare system is a necessary part of getting control of the federal budget. Will reports (link and italics added):

On June 29, with the health-care debate raging, the Congressional Budget Office revised $134 billion upward, to $693 billion, its projection for the 2017 budget deficit. […] The main reason for the revisions is the CBO’s expectation of interest-rate increases by the Federal Reserve. These will raise the cost of servicing the national debt, which itself is becoming a major driver of its own expansion. Medicaid, however, is another important driver.

The federal deficit got down to -$438B (page 29) in fiscal 2015, lower than it had been since before Nancy Pelosi took over the budget in 2008, but now the deficit is headed upward again, and by an additional $255B. We’re at the mercy of numbers now. We can’t afford the open-ended, unlimited, off-budget, runaway entitlements that the Democrats have promised. We must get control of spending, and not in five or ten years, but now.

On July 12, Human Events ran “GOP Rallies Behind Idiotic Bill,” another witty and perceptive article by Ann Coulter:

Republicans would be better off doing nothing. They can survive the ridicule for running against Obamacare through four election cycles and then not repealing it. They cannot survive a bill that does nothing to fix the actual problems with Obamacare. […] The whole key to fixing Obamacare is not to repeal it, but to allow the rest of us to buy insurance on the free market.

But Republicans may want to repeal ObamaCare regardless of whether they have a replacement or not. Because if they don’t repeal ObamaCare, later this year they’ll be expected to prop it up and bail it out and spend yet more money on it and give it mouth-to-mouth resuscitation. And regardless of what they do they’ll be blamed, which will be on top of the usual accusations of not being ready to govern.

Jon N. Hall of Ultracon Opinion is a programmer/analyst from Kansas City. 

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