Wednesday, March 15, 2017

The Health-Care Bind

One of the more interesting pieces published today was this one by Christopher Ruddy, the head of Newsmax and a friend of President Trump.  Ruddy argues that the president should reject the calls of Republicans who want to limit Medicaid and other subsidies in the American Health Care Act; instead, President Trump should call for an expanded Medicaid program (albeit one that has more power delegated to the states).  Ruddy worries about the political effects of trying to push entitlement reform in replacing the Affordable Care Act:
Today, I am amazed that House Republicans haven't given up on their political death wish.
Interestingly, Ryan Plan II accepts key parts of the Obamacare law that benefit the insurance industry. But it ends the Medicaid expansion program that benefits the poor and keeps costs down.
Instead, Ryan II forces poor individuals back into the private health insurance market with the help of tax credits. I wonder who that benefits?
According to the AARP, Ryan Plan II also cuts Medicare, a program Trump voters clearly want protected.
The CBO is estimating 14 million Americans will lose coverage compared to Obamacare.
This number may be inflated, but limiting Medicaid coverage for the poorest will most certainly leave millions without coverage.
The most significant problem is that Ryan Plan II doesn't fulfill Trump's own vision of universal healthcare while removing the onerous requirements of Obamacare.
When even the CEO of Newsmax calls for an expanded Medicaid program, it's clear that the political dynamic is quickly evolving.  Ruddy's sentiments echo those of others in the Trumposphere who fear that there could be a significant political price to be paid if the Republicans try to push through health-care reform that causes some Americans to feel as though they're losing access to health-care (the CBO numbers from yesterday surely have added fuel to that burning worry).

Whether or not an expanded Medicaid program is the right answer, it seems clear that the GOP is torn between those who fear that the AHCA does not cut subsidies enough (such as the Freedom Caucus) and those who fear that the already existing reduction of subsidies in the AHCA could ignite a political backlash among working-class voters.  It remains unclear whether the GOP can thread the needle and appease enough of both sets of Republicans in order to get 218 votes in the House and 51 votes in the Senate.

The battle over health-care subsidies divides the GOP and risks alienating the blue-collar voters who are a central component of Trump's coalition.  One way around these risks is to defer fighting this battle and instead focus more immediately on market-oriented reforms to the health-care market itself.  Expanding and diversifying health-care markets, reforming licensing laws, pushing for more transparency in medical pricing, and other efforts are far less divisive for GOP voters and could also win some support from Democrats and independents.  As David Frum has noted, the American health-care system stands in need of more market efficiency, and Republicans could be well positioned to champion that cause of efficiency in a way that will ease government budgets and the concerns of health-care consumers (i.e., voters).

If policymakers can lower health-care costs or at least reduce the rate of growth for health-care costs, more room opens up for negotiations over government mechanisms to pay for health-care.  A more market-oriented health-care system might facilitate more market-oriented ways of financing this system.

Of course, these market-oriented reforms can't for the most part be passed via reconciliation.  As a result, right now some in Republican leadership are fighting on the ground of health-care reform where the party might be most vulnerable and leaving more favorable territory for a later day.

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