House Republicans produce a bizarre patchwork of a health care bill.
CONSERVATIVES ought to be happy. The right, in spite of an administration plagued by its own affinity for sensation, has gone back to dreaming up new ideas.
In the Reagan years, Republicans, led by their avatar Representative Jack Kemp, were prolific, taking ambitious strides to further their vision for America. The Economic Recovery Tax Act of 1981, better known as the Kemp-Roth tax cut, was—and still is—the largest tax cut in American history. Though there are a litany of academic and philosophical critiques to have of the Kemp-Roth cut, suffice it to say that Republicans felt themselves empowered.
Now, with their party holding all three levers of federal power, Republicans are once again feeling inspired. Recent proposals for a “destination-based cash flow tax” (A.K.A. “border adjustment”), a dividend-paying carbon tax, high-risk pools, and long-overdue reductions to the “employer-sponsored insurance tax exclusion” demonstrate the G.O.P.’s renewed willingness to meaningfully examine policy. A preliminary glance might suggest Republicans are ready to shed the rigid husk of the Obama-era obstructionism and return to their Reagan-era ways.
The American Health Care Act, their latest scheme to supplant Obamacare, represents neither Reaganesque idealism nor the pugilism of the Obama years. Instead, the G.O.P. has found a perplexing midpoint between Donald Trump’s inoperable promises and Republican orthodoxy.
On whether health care is an inherent right, conservatives are no monolith. Indeed, Paul Ryan’s “A Better Way” plan states that its long-term objective is to “[ensure] access to coverage for all Americans,” whereas other conservatives argue it is fundamentally not the government’s role to provide health care to the public. Despite this intra-party schism, it is fair to say that Republicans place a far lower priority on achieving universal coverage than they do on creating more laissez faire health care markets.
Mr. Trump, on the other hand, spews contradictory promises regularly. He has promised to establish a simpler system which will cover more people at a lower cost. Time to rip any pages mentioning “opportunity cost” out of your economics textbook.
House Republicans’ health care proposal seems to both capitulate to Mr. Trump’s quixotic guarantees and depart from conservative orthodoxy. It seeks to maintain coverage for those with pre-existing conditions (A.K.A. “community rating”), while simultaneously removing the individual mandate and slashing subsidies for the insurance market. These are incompatible: three-legged stools cannot stand on one-and-a-half legs. The individual mandate is the mechanism for nudging lower-risk young people into the exchanges, while subsidies are meant to keep them interested. Without healthy, young people there to offset, companies are less able to absorb the cost of insuring older, sicker people.
Its flaws aside, one part of the House Republicans’ proposal is particularly promising: changing age variation bands from a ratio of 3:1 to 5:1. This would allow insurers to charge the old, who receive larger compensatory subsidies, higher prices, which drives down costs for the young. To use some jargon, this will “bend the cost curve,” slowing the overall growth of health care costs. It is worth keeping in mind that too few young people has been the principal cause of rising Obamacare premiums in recent years.
House Republicans should remember that the Affordable Care Act is not socialized medicine, nor is it in the midst of a slow-motion death spiral. If Mr. Ryan truly believes the end goal for which he strives is universal coverage, he should shy away from a reckless repeal strategy and don his reformist hat—wherever that may be.
