Obamacare unravels; Republicans shudder

August 2, 2013

Republicans should have the upper hand with regard to Obamacare. Almost everything they predicted during the debate has proved true.

The Class Act provision was not viable and had to be stricken from the law.  Premiums did not go down as promised, but in fact increased dramatically.  A few major insurers have indicated their intention to withdraw from the medical insurance market, most notably in California. The medical device tax has been a lightning rod, drawing opposition from both sides of the aisle. 

The restriction (and near elimination) of high-deductible major medical plans has encouraged employers to cut employees to part-time status, limit workforces to avoid the mandates that kick in at 50 employees and opt to pay the penalties rather than offer insurance. The 1099 reporting requirement for businesses proved overly burdensome and had to be repealed. Time and time again, the opponents of Obamacare have been proved correct.

Most of this was forseeable. Still, Democrats continued to advocate positions that they knew would ultimately be proved wrong. Even now, with the whole program teetering on the verge of destruction, they remain remarkably stoic. Why? The answer: They never cared that the bill was impractical or unsustainable. They needed a political victory more than a viable reform..

This is perhaps the one and only time that the conspiracy theorists were proved right. The Democrats promoted and passed a predictable catastrophe. It now falls to Congress to fix it. And the only plausible fix for a catastrophe of this scope is single payer.

Republicans have launched a number of purely symbolic efforts to repeal Obamacare. Why doesn’t the repeal effort gain traction? Setting aside the obvious (Democrats control the Senate), my question is “If public sentiment is truly against Obamacare, what does the public want Republicans to do? They are clearly not hungering for the 40th or 44th version of a repeal that can’t pass.

Obamacare is the law now. It has beneficiaries and the Republicans need to replace Obamacare with something. Repeal alone is insufficient, Let me suggest the following: Republicans should propose a suspension of Obamacare, pending the consideration of a more thoughtful, less complex and fiscally responsible alternative. Eighteen months would be a reasonable time frame sufficient to fashion a truly bipartisan reform.  If that proves impossible, Republicans can head into 2016 with an actual Republican proposal on the table.

You can’t repeal or defund Obamacare leaving nothing in its place. We are past that point. The following reform, however, would resolve the issue of who is really in charge of an individual’s healthcare and would provide the market an incentive to provide the widest possible array of products, from long term care to major medical as well as comprehensive care.

The tax code should be immediately amended to allow every taxpayer to deduct all out-of-pocket medical expenditures directly from their gross income*, reducing the individual’s tax burden even for those claiming the standard deduction. This would return tax dollars to him/her that could be applied toward the purchase of insurance, medications, medical devices as well as hospital and physician’s services. This would encourage people to purchase the insurance coverage appropriate to their age, risk profile and financial capability.  Those, who choose to remain uninsured, will be able to reduce their gross income by the amount of their non-insurance related medical expenditures. All medical expenses will be paid for with pre-tax income.

Some provision will be necessary to address shortfalls in Medicaid spending and provide high risk pools. There are several options here as there are funding sources for Obamacare bureaucracies that might be diverted for this purpose.

If the Republicans want to repeal or defund the Affordable Care Act, they need to own the fix. The sign above the bar still reads Obamacare but the Republicans will own it now. So far , there’s precious little evidence that’s what they really want. 




* as adjustments to income rather than itemizable deductions*

Republicans don't know whether to **** or wind their watch

Republicans have cited three reasons for not supporting the strategy outlined in Senator Lee’s letter; 1) the war is already over, Obama won and the ACA is the law of the land, 2) the timing is bad because Obamacare will eventually fall of its own weight, and 3) we’re only going to get one crack at this and this particular strategy is destined to fail.

Point one: Wars typically end when one side surrenders. This capitulation is a little early, even for Republicans. The debt ceiling fight gives Republicans some leverage .While it will not result in a repeal of Obamacare, it will provide Republicans some leverage to extract cuts in ACA appropriations. There are parts of this bill that even Democrats would like to torpedo or defer until after the mid-terms.

Point two: No government entitlement program has ever fallen of its’ own weight. In the real world, the opposite happens; entitlements survive. The rosy fiscal projections are proved wrong and the only remaining fight is over funding the shortfall.

The third argument has a tiny bit of merit. This is the Karl Rove position. Unfortunately, Mr. Rove’s solution is to wait for a better opportunity to happen by. Come January 1, 2014 Obamacare will have beneficiaries. Any chance to overturn or curtail Obamacare spending ends the day that the subsidies go into effect. If Obamacare then implodes, it will saved by single payer. Single payer was the ‘failsafe’ position all along (or perhaps the intended outcome).

The Lee strategy would play better if it was accompanied by a serious proposal to change the tax code. We should make all individual medical expenditures payable with pre-tax income. This would guarantee the continued availability of high deductible, major medical policies.  In addition, the tax benefit would free up dollars that could be used for current healthcare needs

.

A fictional character once observed that “when her mother was faced with a decision, she didn’t know whether to shit or wind her watch.” One way or another, time is running out. Republicans need a better strategy than fold and hope.