On Tuesday, Sen. Bill Cassidy (R-LA) released a policy white paper with ideas he claimed would “make health care affordable again.” By and large, however, the plan would do no such thing.
Some of the plan’s ideas—promoting consumer transparency in health care, for instance, promoting primary care, and cracking down on monopolistic practices that impede competition—have merit, although people can quibble with the extent to which Washington can, or should, solve those problems.
However, those specific solutions have at their core a deeply flawed framework. That framework not only contradicts itself, but it leaves Obamacare’s fundamental architecture in place—indeed, would expand upon it in at least one respect. While Cassidy’s paper decries that Obamacare premiums more than doubled from 2013 to 2017, his plan would do very little to control the skyrocketing price of coverage on the individual market.
Cassidy bases his plan on a state-based block-grant funding model, similar to the legislation he and Sen. Lindsey Graham (R-SC) developed last fall. Cassidy cites various state experimental programs to argue that a block-grant approach would allow more room for innovation.
However, the last sentence of the proposal undermines the rest of the discussion: “Flexibility to states would not jeopardize protections for individuals with pre-existing conditions.” That phrase implies that Cassidy believes, as the Graham-Cassidy bill indicated, that Obamacare’s federal insurance requirements regarding pre-existing conditions should remain in place.
That sentence belies the idea that states would get true flexibility to construct their insurance markets however they like. Instead, the Cassidy plan would represent a variation on Obamacare, whose state waiver program essentially lets them add more requirements and more government to their insurance markets, but not take requirements away. Put another way, the Cassidy plan would give states the “flexibility” to do what Bill Cassidy wants them to do, and only what Bill Cassidy wants them to do. That isn’t flexibility at all.
Costly Requirements Remain in Place
Second, the new federal pre-existing condition requirements are the costliest of all those Obamacare put into place, and the most important. Even if Cassidy’s plan allows states to waive some other, more minor, requirements included in Obamacare, keeping the status quo on pre-existing conditions will only encourage insurers to discriminate against the sick.
For instance, loosening Obamacare’s essential health benefits while keeping the pre-existing condition requirements will encourage insurers to stop covering treatments like chemotherapy. Because they must continue to accept all sick patients, and charge them the same rates as healthy ones, insurers will try to limit their losses by not covering cancer drugs, thereby discouraging cancer patients from applying for coverage.
The combination of these two policy dilemmas could result in the worst of all possible worlds, from both a political and policy standpoint: A plan that does not reduce premiums appreciably—because it keeps the most costly federal insurance requirements intact—yet still encourages insurers to discriminate against the sick.
Throwing Money at the Problem
Rather than trying to solve the problems Obamacare’s federal insurance requirements have caused, as I previously suggested, Cassidy’s plan goes to great lengths to avoid them. He endorses the health insurance “stability” (read: bailout) measure proposed by Sens. Susan Collins (R-ME) and Lamar Alexander (R-TN) earlier this year. Rather than lowering premiums by removing the federal insurance requirements, that plan would lower premiums—albeit only temporarily—by throwing more taxpayer funds at insurers.
In the same vein, Cassidy says “Congress should provide funding to states to encourage younger Americans to enroll in the individual [insurance] market.” He does not provide many specifics, but in many respects does not need to. If Cassidy supports giving states flexibility to make reforms to their insurance markets as they see fit, as he claimed earlier in the paper, then why does he turn around and propose giving states funding for a very specific solution?
Moreover, the need for more federal funding belies Cassidy’s claim that his plan would “make health care affordable again.” States should not need any more funding to encourage insurance enrollment, particularly if they receive sufficient flexibility from federal requirements to bring down premiums. Cassidy knows that any flexibility will prove illusory. As with a “stability” package, he proposes making coverage more “affordable” by throwing other people’s money at the problem.
Neither Repeal Nor Reform
I wrote last April, well before lawmakers ever contemplated the Graham-Cassidy measure, that “Republicans have a choice: They can either retain the ban on pre-existing condition discrimination—and the regulations and subsidies that go with it—or they can fulfill their promise to repeal Obamacare.” Judging from the ideas in his policy paper, Cassidy has made his choice: He supports Obamacare.
But more of the same—more spending to finance the same costly insurance because of the same costly federal insurance requirements—doesn’t constitute a repeal of Obamacare. It doesn’t even come close. Would that Cassidy, and his colleagues in Congress, actually thought about keeping their word and enacting the repeal they promised.