Wednesday, February 8, 2017

GOP Boxed In Replacing Unpopular Obamacare Coverage Mandate

The internal discussions could yet descend into the kind of drawn-out fight that eroded support for Obamacare.


By Paul Demko
Politico
February 8, 2017

The most hated piece of Obamacare is the mandate requiring most Americans to get health insurance.

The Republican alternatives on the table may not prove any more popular.

As the GOP weighs elements of a repeal-replace plan, one of lawmakers' biggest headaches is finding another way to persuade insurers to cover people with pre-existing health care problems. And all of the options under discussion would either raise the uninsured population or run afoul of GOP principles.

Barring insurers from discriminating against people with medical problems as long as they remain enrolled is harder than it looks and likely to leave a large pool of people uncovered — an increasingly unpalatable prospect after top Republicans from President Donald Trump on down have vowed not to push people off their coverage. Levying penalties on those who enroll late looks suspiciously like Obamacare’s existing tax penalty. And automatically enrolling people, which is part of one GOP replacement plan, strikes some conservatives as an unacceptable big government intrusion on individual freedom.

The discussions could yet descend into the kind of drawn-out fight that eroded support for Obamacare if options that at first seem appealing wind up prompting long-term political backlash. That could ultimately doom a GOP replacement plan and deny Republicans' long-sought goal of moving the nation toward a more market-based, less regulated heath system. Republicans have already given up on a quick dismantlement of Obamacare and are preparing for a potentially long slog toward repeal and replace.

The way internal strife could upend the party's ideological goals is an all-too-familiar dilemma to Democrats with battle scars from the epic fight to pass the 2010 health care law.

The Democrats publicly groused about the individual mandate and fretted about public discontent. But they concluded it was a necessary cudgel to convince Americans — particularly younger and healthier individuals — to purchase coverage. Having a representative cross section of the population is essential in any system where insurers are barred from discriminating against people with expensive medical conditions.

That truth makes the individual mandate the symbolic heart of Obamacare. Opponents of the law waged an unsuccessful legal battle all the way to the Supreme Court seeking to strike it down.

But if Republicans kill it, most health care economists believe they’ll be hard-pressed to come up with an effective and politically tolerable replacement.

Paul Van de Water, a senior fellow at the left-leaning Center on Budget and Policy Priorities, said the choice is simple. “Carrots are expensive,” Van de Water said. “Sticks are unpopular.”

Here are the pros and cons behind some of the most talked-about GOP proposals:

Continuous coverage
: The most common idea floated by Republicans, including Speaker Paul Ryan, is to require that Americans be continuously enrolled in coverage. It’s part of the “Better Way” plan floated by House Republicans, as well as a replacement package put forth by Rep. Tom Price, President Donald Trump’s pick for secretary of HHS. While details vary, the basic idea is anyone who stays continuously enrolled won’t pay more or get dropped because of his or her health status.

However, even that limited enforcement is too invasive for some conservatives.

“It’s a mandate by another name,” said Dean Clancy, a former GOP health policy staffer in the House and the George W. Bush administration and an ex-vice president of the conservative advocacy group FreedomWorks. “It’s better than the individual mandate, but it still drives up premiums.”

Insurance experts also point out that there’s an inherent shortcoming with the concept: people who drop coverage because they lose their job and can’t afford to make premium payments, for example, would not be protected from discrimination in the market. Indeed, anyone with significant medical problems whose coverage lapses would potentially face sky-high premiums and coverage limitations. Anecdotes of poor, sick people who can no longer access coverage would surely dog Republicans on the campaign trail after their promises they would preserve some popular Obamacare protections.

“It’s more punitive than the individual mandate, certainly more punitive on lower-income families,” said Sabrina Corlette, an insurance expert at Georgetown University and former congressional Democratic staffer.

Premium surcharge:
Another option to keep people enrolled is levying a surcharge on those who fail to sign up during the initial open enrollment window. It’s an idea already used in Medicare, where beneficiaries face higher premiums for the rest of their lives if they don’t enroll in a timely manner. And it was discussed, though discarded, back when Democrats were debating health care in the early months of the Obama presidency.

Though many details would have to be fleshed out, America’s Health Insurance Plans has endorsed a version of this idea. It’s also part of a recent plan backed by researchers at the Urban Institute for fixing problems with the Affordable Care Act.

John Holahan, one of the researchers who wrote the report, said the Medicare surcharge model would likely need to be tweaked in order to work in the individual market. It might not be fair, for example, for individuals to face higher premiums throughout their working lives because they didn’t initially get coverage in the prescribed window.

But Van de Water questions whether premium surcharges would prove a strong enough enticement to get coverage in the individual market. He points out that subsidies are much more generous for Medicare, and that seniors are highly motivated to have health care coverage.

“There is a stick, but there is a huge carrot.” Van de Water said.

Automatic enrollment:
The health care plan floated by Sens. Bill Cassidy (R-La.) and Susan Collins (R-Maine) last month contains another possible approach for expanding the number of covered individuals: automatically enroll them in plans.

Under this scenario, individuals who are eligible for subsidized coverage but fail to sign up would be enrolled in a plan selected by the government. The twist is the default plan would be a bare-bones policy that would be paid for entirely through the available federal subsidy. Selecting which plan would get all of these individuals could also be a political tempest.

In introducing the plan earlier this month, Cassidy compared the concept to seniors becoming eligible for Medicare. “There’s no mandate,” he said. “I’m on Medicare. I may call up and say I don’t wish to be, but as a rule folks remain on Medicare.”

But automatic enrollment doesn't sit well with conservatives. Jeffrey Anderson, a senior fellow at the Hudson Institute, a right-of-center think tank, pilloried the idea in a recent piece for The Weekly Standard.

“In having the government sign people up for insurance, ‘auto-enrollment’ goes beyond even Obamacare's individual mandate — and hence is arguably even more of an affront to self-reliance, liberty and limited government,” Anderson wrote.

Corlette raises a more practical concern: implementing it in the turbulent individual market could prove an administrative nightmare. “You have people in and out of the system constantly,” she said.

Bigger subsidies:
The easiest way to eliminate the need for the individual mandate is also the least likely to happen under a Republican Congress: increase subsidies to the point that coverage would prove too attractive for individuals to pass up. That’s essentially how Medicare functions.

No Republican is proposing this approach. Conservatives believe it would prove unsustainable in the long run.

“The downside is running out of money,” said Miller of the American Enterprise Institute. “Every time you spend money, which people forget about, it comes from somewhere.”


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