This column is a collaboration between KHN and
The New Republic.
The Republicans insist they want not just to repeal the Affordable Care Act but also to replace it. But replace it with what, exactly? It’s not an easy question to answer.
Republicans have yet to embrace a specific proposal and, rhetorically, they have made contradictory arguments about what they want. They have, for example, criticized the new law for reducing Medicare spending. But they’ve also applauded proposals, like the one offered by House Budget Chairman Paul Ryan, R- Wis., which would reduce spending far more dramatically.
Still, there are a few key ideas that virtually all Republicans endorse. One in particular tells you everything you need to know about the GOP’s vision of health care reform — for better and, mostly, for worse.
The idea is to allow the purchase of health insurance across state lines. Today, if you buy coverage on your own, you can only buy a policy from within your state. The Republicans would change that rule, so that somebody in Minnesota could buy a policy from, say, Alabama. Republicans like this idea because, they maintain, it would help move health care toward a truly free market. As individuals shopped more aggressively for policies, the argument goes, they’d force insurers and, eventually, the whole health care system, to provide better quality and lower prices.
But cross-state purchasing would do more than merely unleash consumer power, the Republicans claim. It would also prevent regulations from driving up the cost of insurance. Right now, states have rules about what insurance plans must cover and how insurers must behave. And the rules vary by state. States like New Jersey have lots of them — states like Utah or Iowa, not so much. On the whole, regulations, where they exist, tend to make health insurance more expensive. The more insurers must cover, the more it’s going to cost consumers. Cross-state purchasing would allow people to buy coverage from the states with the least regulations. Those who take advantage of it could save a lot of money on their premiums.
It all sounds very sensible, until you start to think through the implications. Many people can’t even get insurance on the individual market, because of pre-existing conditions. And many of those who do get insurance end up with coverage that is, frankly, just plain lousy. The policies may be cheap, but they also have huge gaps in coverage, in the form of services not covered or out-of-pocket payments that all but the very wealthiest families would find unaffordable. The people with these policies are known as the “under-insured.” Many if not most of them believed they were getting insurance when they purchased the policies. They discover the gaps only when they file claims and it is too late.
The main reason this problem isn’t worse right now is that some states have regulations forcing insurers to make insurance available to at least some people with pre-existing conditions and to cover at least some services. (The health overhaul strengthens these standards substantially, making insurance effectively available to all, and imposes them nationally.) But the Republican proposal on cross-state purchases would decimate those regulations, opening the door for young, healthy people — whom insurers covet and who are frequently willing to risk flimsy coverage — to start buying the most minimal policies sold from the states with the least regulations. Eventually the insurers would likely move, as well — congregating in those states in much the same way the credit card industry migrated to low-regulation states like Delaware and South Dakota. Offering more comprehensive insurance or making coverage available to people with serious medical conditions would become financially untenable, since there wouldn’t be enough premiums from healthy people to offset the costs of the sick.
You don’t have to take my word for it. When John McCain embraced this idea as part of his 2008 presidential campaign, the Urban Institute’s Linda Blumberg analyzed it and concluded that it would leave “many more people with health problems unable to purchase private coverage at any price . The typical coverage would become less comprehensive as well, with benefit exclusions and limitations becoming the norm across the country.” Other experts have reached similar conclusions.
To be sure, allowing the purchase of insurance across state lines is just one part of the Republican agenda. But it reflects the same basic impulse as the other ideas Republicans frequently embrace. Ending the tax break that encourages employers to provide insurance, offering inducements for individuals to buy high-deductible coverage, turning Medicare into a voucher scheme that doesn’t guarantee comprehensive benefits — all of these ideas would make health care expenses less of a collective responsibility and more of an individual one. It’s a lousy deal for people who are sick, many of whom would have to forgo medical care or face financial ruin. The only ones who benefit are the relatively young and healthy — well, at least until they get old and unhealthy, as everybody inevitably does.
Earlier this week, Republican aides told Politico that they plan, after the repeal vote, to start hearings on crafting a formal alternative to the health law — but that the work might, um, take some time. “They won’t be rushing to push their own vision of health care through the House anytime soon,” the article explained. Given what that vision looks like, is it any wonder why?
Jonathan Cohn is a senior editor at
The New Republic
.