By Lambert Strether of Corrente.
Yesterday, we posted on the politics of “repairing” (Frank Luntz’s term) ObamaCare, and pointed out many possible repairs could undermine ObamaCare’s risk pool, creating coverage-crapifying insurance monopolies in many counties in key swing states, endangering Republican gains in 2018 and 2020. Slow-walking ObamaCare repairs would therefore make sense. Today, Trump did just that: “[M]aybe it’ll take til some time into next year.”
In this post, I’m going to write about a — the? — transition from ObamaCare to TrumpCare from a policy perspective. (This will, of course, immediately (d)evolve back into politics.) First, I’ll look at two high level reasons why changing health care policy from ObamaCare anything else, one from social psychology, the other from the nature of ObamaCare itself. After that, I’ll look at a set of proposals for compromise floated by Bob Laszewski of “Health Care Policy and Marketplace Review.” I’m going to ignore all the various Republican proposals (especially beardless wonder Paul Ryan’s 37-page PDF from his slick “A Better Way” website). The reason is simple: If any of these proposals were both sound policy and “politically feasible” — remember that phrase? — it would have been very easy for Republicans already to have coalesced behind one of them. But if that were going to happen, it would already have happened.
One reason changing from ObamaCare to Trumpcare is hard comes from social psychology: “loss aversion.” From John Goodman in Forbes:
The reason was explained by economist Robert Frank in the New York Times on Sunday. People view losses and gains asymmetrically. For example, you have to pay them twice as much to give up a coffee cup they possess as they would have paid for the cup in the first place. Even though the people who are benefiting from Obamacare probably didn’t vote for the people who gave it to them in the last few elections, they might well go vote against any politician who takes their benefit away.
According to Frank, “Research on loss aversion … suggests that the repeal would precipitate a political firestorm of epic proportions.” All serious Republican leaders seem to agree with him. Is Mitch McConnell going to vote to take health insurance away from the 231,000 Kentuckians who are newly insured under Obamacare? He has already said he will not. Other Republican leaders have said much the same thing.
So, what’s the answer to this problem? Any serious reform will have to grandfather people. Republicans are going to have to make the same promise President Obama made: If you like your plan you can keep it. Yet, with only one exception, letting people keep Obamacare if they like it is not part of any Republican replacement plan.
To return to the political for a moment, all the Republican policy proposals are, therefore, a recipe for losing those all-important swing states in 2018 and 2020.
A second reason changing from ObamaCare to TrumpCare is hard is that ObamaCare is already a Republican plan. It’s unsurprising then, that even though Republicans have had eight years to come up with an policy alternative, they haven’t been able to. For those who came in late, here’s the history:
Make no doubt. Romneycare was the model for Obamacare.
The conservative DNA of ObamaCare is hardly a secret. “The Obama plan has a broad family resemblance to Mitt Romney’s Massachusetts plan,” Frum wrote. “It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to ClintonCare in 1993-1994.”
Now let’s consider those Heritage “ideas,” because they ended up setting the boundaries for acceptable discourse in the policy debates that followed. In a 1989 Heritage Foundation brief, Assuring Affordable Health Care for All Americans, Heritage Foundation’s director of domestic policy strategies, Stuart M. Butler, Peter J. Ferrara (George Mason), Edmund F. Haislmaier (Heritage), and Terree P. Wasley (U.S. Chamber of Commerce) proposed the essence of ObamaCare: “[E]very resident of the U.S. must, by law, be enrolled in an adequate health care plan to cover major health care costs.” However, from the “political advantage” standpoint, the key goal of the Heritage plan was to fend off single payer. From the conclusion:
The mandate made its political début in a 1989 Heritage Foundation brief titled “Assuring Affordable Health Care for All Americans,” as and the employer mandate, which were favored in Democratic circles.
So, reminding ourselves of Jeff Sessions’ strictures on “anything goes” post-modernism, we have Democrats (Obama + Gruber) adopting a Heritage-inspired plan pioneered by Republicans (Romney + Gruber), whereupon the Republicans turn around and fight their own plan tooth and nail, while the Democrats, fighting back furiously, never mention they adopted the Republican plan. However, we also find Democrats, Republicans, Heritage, and Gruber in simultaneous agreement that “single payer” is verboten, taboo, unmentionable, “off the table,” and not politically feasible. So all parties noisily and venomously seek “political advantage” at a level of mind-boggling illogic and contradiction, but the real policy conflict — the policy both parties and the political class seek to avoid — is buried, and never mentioned at all.
In other words, all the Republican policy changes can really do is tinker round the edges. ObamaCare was a (very successful) political ploy to head off single payer. Single payer is, of course, a “universal benefit,” Medicare for All. To make ObamaCare “politically feasible,” it to must be seen to be (if not be) universal. But a market-based solution can’t provide a universal benefit. And so we got kludges: Means-tested benefits for those who can’t afford to enter the market is one kludge. Means-tested subsidies plus a carefully rigged “marketplace” are another. The mandate is yet another. The “metals” (Bronze, Silver, Gold, and IIRC Platinum plans) are still another. And all the kludges add up to a ginormous and rickety Rube Goldberg device that randomly sends some people to HappyVille and some people to Pain City, and it’s not really a universal benefit at all. So the Republicans could replace one kludge (the mandate) with another (continuous coverage). Now, people hate the mandate — who wants to be forced to purchase a defective product? — so maybe continuous coverage would be better and more popular policy, but it’s got its own problems, and in any case a kludge is a kludge is a kludge. You can’t buff a turd, as they say.
With that, let’s turn to Bob Laszewski’s proposal for bipartisan compromise, from his Op-Ed at CNBC:
An Obamacare replacement Republicans and Democrats can agree on. Really.
Laszewski reasons from a political premise:
It is not a question of whether or not Republicans and Democrats will come to a compromise over replacing Obamacare.
Since it will take 60 Senate votes, and the Republicans only have 52 seats, there is no way we can get to a solution to the Obamacare conundrum without a bipartisan compromise.
I’m not sure Laszewski’s is correct, technically. For one thing, McConnell could deploy the nuclear option and abolish the filibuster mid-session. For another, without getting into detail on parliamentary procedure, ObamaCare’s replacement could be based through reconciliation with a bare majority, just as ObamaCare was. That said, politically, both seem unlikely: If the filibuster were to have been undone, it would already have been undone at the start of the session. Second, Trump has given the Republicans a free pass to punt on difficult issue, so they are likely to.
Still speaking politically, are Democrats really going to help Republicans get to a bipartisan compromise? Who are the Democrats who are going to do that? Some Democrat factions are calling for “all out war” with Trump (to be sure, it’s tit for tat with McConnell’s own successful strategy against Obama). Will the Sanders faction really choose “ACA minus” as their hill to die on, and what price will they extract should they do so? And so on. But let’s assume bipartisanhip and look at the market-driven kludges Laszewski proposes, which is based on the 2012 Wyden-Ryan Medicare Reform Proposal; Wyden is the ranking Democrat on the Senate Finance Committee, and Ryan is House Speaker. (I was going to bracket “[Danger Will Robinson! Danger!“] before Ryan, but that’s neither fair nor correct, is it?)
Let’s forget that Wyden and Ryan are proposing yet another of what is in essence a neoliberal medical experiment on the American people without their informed consent — very much in contrast to simple, rugged, and proven singler payer — and move through some of Laszewski’s policy proposals. Laszewski cleverly frames them all using a “For Republicans,” “For Democrats” parallel structure. (Given that ObamaCare is already a Republican plan, this is a fine example of “What’s mine is mine, and what’s yours is negotiable.”)
First, “flexibility” for insurance companies:
For Republicans the ability for insurance companies to offer much more flexible plans so that the . For Democrats, the requirement that health plans continue to offer the standard Silver Plan as at least one option and that insurers provide detailed comparisons between the standard Silver Plan and any other option the consumer chooses so that consumers know what they are buying.
Neoliberal claptrap. For Republicans: The assumption is that people want, and are able, to shop for health care (for which the purchase of health insurance is a proxy). That’s not true. For Democrats: The assumption is that the insurance companies won’t be able to game the system with the “detailed comparisons” they must provide. They have and will. Oddly, in both cases the fact that health insurance companies are profit-making
parasites entities ignored. For Republicans, the concept seems to be that “plans consumers want to buy” is the driver, as opposed to profit (let alone plans that actually deliver benefits). For Democrats, the concept seems to be that insurance companies don’t profit by denying care, and hence have no incentive to game the system.
Second, “tax credits” for “consumers:”
For Republicans, enabling low-income consumers to be able to buy a low-cost plan plus a funded HSA for . For Democrats, the guarantee that low-income consumers could have a comprehensive insurance plan they could afford by being able to buy into Medicaid with the value of their tax credits, if the consumer decides the market plans available are not satisfactory.
For both Democrats and Republicans: First, tax credits won’t help many poor people because most of them don’t pay income taxes. (I’ve never heard of a tax credit working through the payroll tax). Second, think about it: I have health care decisions to make now, in part based on price (since the neoliberals have trapped us in a market). But I get a tax credit, in some unknown amount, at some point in the future. And if the tax credit is hard to calculate, I have to seek out a specialist. Such a deal!
Third, “Medicaid funding caps”:
For Republicans, establish federal ultimately tied to inflation. For Democrats, phase in the caps over five years. and then sunset Medicaid funding enabling the Congress to compare the two approaches and the states’ laboratory results for coverage and cost control before moving on.
For Republicans: Isn’t establishing a Medicaid cap blaming the victim? I understand the logic of forcing prices lower by the simple expedient of making it impossible to reimburse providers for products or services when the prices are “too high,” but what happens to the patients in the mean time? For Democrats, “Let the two approaches to Medicaid compete for ten years” is what I said it was: “a neoliberal medical experiments on the American people without their informed consent.” Rather than waiting ten years, wouldn’t it be simpler to send Ryan and Wyden on a junket to Toronto, have them ask around, and find out how Canadians like their single payer system?
There’s more on the Ryan-Wyden plan here, here, and here. It is true that Laszewski has dug up and dusted off a policy proposal that, in 2012, might have seemed feasible. The political atmosphere is very different today, not only because Republicans and Democrats have little incentive to compromise, but because the Sanders campaign put Medicare for All on the national agenda. Rather than conduct another decade — more than two Presidential terms! — of neoliberal experimentation on the body politic, wouldn’t it be better to advocate solutions known to work? And by giving Republicans cover not to “repair” ObamaCare, Trump also gave cover to Democrats to advocate for Medicare for All as the ultimate framework within which any “repair” must take place. Volatility creates opportunity!
 It is, of course, possible that the entire Republican caucus will ignore the cover Trump just gave them, take the bit between their teeth, turn Ryan’s PDF into legislation, and pass it. Color me skeptical.
 Laszewski comes from the health insurance world, but so far as I can know, he doesn’t make stuff up. These days, that’s a real plus.