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If at First You Don't Succeed, Get Back on the 'Repeal and Replace' Horse

Medicaid is a terrible way to deliver health care to low-income Americans.

After last week's Obamacare repeal-and-replace bill debacle, President Donald Trump and the House Republican leadership seemed ready to throw in the towel and give up on health care reform. Thankfully, a few days later, House Speaker Paul Ryan announced that Republicans are "not going to just all of a sudden abandon health care." The feeling is shared by Trump, who, shortly thereafter, told a group of senators, "I know that we're all going to make a deal on health care."

That's the least they could do for the American people. Who gives up after one try? Under the best of circumstances, fundamental reforms are hard. Fundamental reform of the health care system is among the most difficult legislative and political tasks, and this effort wasn't the best of circumstances. Indeed, the bill didn't fail because of the Freedom Caucus as many claim. It didn't fail because the president didn't offer to compromise on a few aspects of the bill to increase the "yes" vote count. It didn't fail because the National Economic Council chief didn't defend the bill properly on Sunday talk shows. And it certainly didn't fail for lack of bullying from the administration.

It failed because it was a bad bill. It wouldn't have reformed many of the Affordable Care Act's regulations, and it would have done little to control rising health care insurance premiums. It also doubled down on the misguided idea that the government and insurers, rather than consumers, should pay for a large number of Americans' non-catastrophic health care needs. This, among other things, contributes to the rise of health care costs. Adding insult to injury, it was a political bill that failed the long-term stated policy goal of repealing Obamacare.

It's difficult to overstate how utterly tragic and depressing this is. After all, Republicans stand for nothing if they don't stand for repealing Obamacare. As the Washington Examiner's Philip Klein writes, "Republicans ran on repealing and replacing Obamacare for seven years, over the course of four election cycles. They won the House majority in 2010 in large part because of the backlash against the passage of Obamacare—and the vow to 'repeal and replace' Obamacare was part of their 'Pledge to America' campaign document that year." And, Klein adds, Trump also "consistently campaigned on repealing and replacing Obamacare, and exploited news of spiking premiums in the weeks leading up to the presidential election." In other words, breaking the promise to repeal and replace Obamacare should and would very likely carry a heavy political price tag.

However, there are more pressing reasons to continue efforts to reform the health care law. Key among these is that Obamacare itself hasn't been fixed. Skyrocketing insurance premiums are hurting the American people and lowering their standard of living.

Caving on Obamacare repeal also would mean risking a deluge of states looking to expand Medicaid. With the country almost $20 trillion in debt, mostly because of the cost of government spending on health care, this would be bad news down the road. But that's only the beginning. In 2016, the Medicaid expansion was $230 billion, or 53 percent, more expensive than originally projected in 2014. It will get worse. As such, rolling back the Medicaid expansion is a first step to start controlling our debt. It's important for many states, as well, because Medicaid is now the biggest item in their budget and further spending expansion would squeeze out other items, such as education and transportation.

But at the end of the day, the reason reform is a priority is that Medicaid is a terrible way to deliver health care to low-income Americans. As economists at Harvard, MIT, and Dartmouth have shown, Medicaid returns only 20 to 40 cents for each dollar spent on new enrollees and fails to demonstrate that it provides real health benefits to those enrolled. Numerous studies also have found that contrary to the promise made before the implementation of Obamacare, Medicaid expansion has resulted in a surge in emergency room use.

Republicans must go back to the drawing board as soon as possible to figure out how to deliver what they have been promising for years: better-quality care that doesn't bankrupt the country. Once that's done, they can turn to Medicare, another unsustainable government account.

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  • Fist of Etiquette||

    So what you're saying is that when the president says it's his final offer, it's not his final offer. Terrible precedent for future negotiations, Mr. President.

  • Cynical Asshole||

    Terrible precedent for future negotiations, Mr. President.

    You would think he's know better. You know, given what a master negotiator he is...

  • Jerryskids||

    Drives me insane (a short trip, to be sure) that these people still don't seem to grasp that Trump's a deal-maker and that's his whole shtick, his whole persona. You treat him just like you would any other shady used car salesman. Never show any interest in what you want, never accept the first offer, never trust a word he says, double down on any terms and conditions he dismisses as ridiculous, never hand over the check until the title's in your hands and it's been verified free and clear. He's talking shit about how great the vehicle is and the little old lady who only used it to drive to church on Sunday and what's the lowest price he'll take for it and there is no other customer who just called 5 minutes ago to say he'll pay the asking price on that old junker. There's a good chance the car has been reported stolen, the transmission's packed full of sawdust and that new paintjob's gonna come right off the first time it rains. Tell him you only walked onto the car lot by accident, you've already got 5 cars, you just lost your job, you hate Fords, you wouldn't take that piece of junk if he paid you.

  • Jerryskids||

    That Massie tweet about the swamp draining Trump is exactly the right tactic - you just won a battle and now you attack. Retreating after winning a battle is revealing to your enemy how weak you are. Attack Trump, attack the fat-cat lobbyists and insurance companies and bought-and-paid-for legislators that support this crap. Ask the American people - are they happy with how much more complicated and expensive their insurance has gotten under Obamacare? Do they think adding even more government involvement is going to make things less complicated and expensive? Do they know how much the healthcare industry has lined the pockets of greedy politicians looking out for their own best interests rather than doing what's right for the American people? Do not under any circumstances get defensive or apologetic or try to make excuses or give explanations for shooting this bill down; you did the right thing, the American people support you, your opponents are all shit-eating lying dogs.

  • buybuydandavis||

    you just won a battle and now you attack.

    Victory! Obamacare now and forever!

  • Calidissident||

    At this point, if we're going to have some sort of national health care system as it appears inevitable, why not put forth a bill that at least offers something enticing to both sides? Just as an example, give the Democrats their public option, but in exchange roll back some regulations, allow interstate competition, equalize tax treatment, expand HSAs, and get rid of Medicaid. I just made that up right now and it sounds better as policy and as an option for both sides than the shithead Ryan came up with.

  • NotAnotherSkippy||

    Gosh, I don't see how that could possibly go wrong. Just like Medicare was only supposed to cost 12bb in 1990 and ended up costing 107bb, both inflation adjusted numbers.

    There is no compromise. Single payer will result in canadian style rationing and a two tiered system where the rich, read liberals, can afford their concierge care and the serfs can't.

  • Calidissident||

    I didn't say I was optimistic about it, but it seems better than Ryan's proposal. I also wasn't proposing single payer.

  • NotAnotherSkippy||

    But a public option is totally different than single payer or medicaid. Because there will be absolutely no hidden subsidies for the public option vs. private options.

    Your proposal would turn the entire health care system into an entitlement, so, no, it's not better.

  • NotAnotherSkippy||

    Public option IS medicaid (or medicare). The distinction between the two at that point is purely in the spelling and level of reimbursememt. Calling for a public option in health care is no different than calling for municipal broadband. The implicit or ultimately explicit subsidy will drive out any private option unless the funding spigot is turned off. But who's going to kill grandma, monster?

    Your plan turns all health care into an entitlement. That may not be what you want but foreseeable consequences aren't unexpected. So your plan is actually the worst of the bunch so far.

  • Myk||

    How is killing grandma or having healthcare reserved for the rich elitists any different than what you propose?

    Odd how all the doom and gloom predictions don't happen in other countries. You say it does because you pick out anecdotes to prove your claim but overall it doesn't. We also have anecdotes that says it is already happening here.

  • Robert||

    And I have anecdotes from people who've experienced socialized medicine about how great it was too. My friend Nadine from the USA had a much better experience going to France to get her needed procedure done on her French husband's health plan than she'd been getting in the USA.

    The only meaningful comparisons are statistical, such as the NCPA's studies decades ago bringing out, for instance, that the British are satisfied with the NHS because they estimate it costs about 10% of what it actually does. They think they're getting a great deal on their tax investment because they think the great majority of their tax that goes into NHS is going into other things they like less. It's easy to hide shitty health service in big gov't.

  • Myk||

    I know people in NHS that go both ways. At least before Tories recently trying to (allegedly) break the bank most I know where very happy with it, but most I know have IBD and NHS seems to be a top country for those diseases. About that time someone else in NHS says you don't want to get cancer in the UK unless you have private insurance, similar timing my cousin was talking about someone from the UK at a US cancer center with her. I also know there is plenty of waste going on in NHS like I would expect in any govt organization that's been around a long time. One blatant waste is why does NHS need to advertise?

    NYT has an article from the 29th people who think it's a simple hands off fix for the US titled "Those Indecipherable Medical Bills? They're One Reason Health Care Costs So Much."
    There is no one reason, there is no simple fix to bring about anything resembling a free market and lower prices. We definitely have a problem.

  • Calidissident||

    I made a reply to your other comment that I can't currently see after refreshing a few times, I don't know if you can see it or if it will show up later given the awful system here.

    But long story short - If you want to poke holes in the proposal, that's fine, I'll never argue it's my ideal system and it's not supposed to be. The issues you bring up will be present. But let's not pretend our current system isn't already shot through with entitlements and subsidies. Well over 100 million people get insurance directly from the government today, millions more get private insurance through direct subsidies and indirect subsidies (community rating, guaranteed issue, etc.), and the 2/3rds of health care spending is paid for by the government. We are already there.

  • Calidissident||

    Additionally, I would prefer (again, given the constraints of a national health plan of some sort) tax credits for private insurance or HSA contributions to the public option, but I think there's even less of a chance of the Democrats (and some Republicans) going for that.

  • JFree||

    We already have a two-tier system.

  • Jeremy's Iron||

    Less government involvement, not more. Make more drugs OTC (I'd prefer all, but that'll never happen); allow more medical schools to open; give pharmacists authority to write certain routine prescriptions; give nurse practitioners more treatment authority; remove the ban on interstate competition.

    These are all easy things that increase freedom and access/availability of health care

  • Calidissident||

    I agree with all that, and that could be incorporated into the bill. The point of my post is that it seems at this point that a health care system with some sort of national plan is here to stay, and I was trying to come up with something that could actually have some positives for both sides.

  • NotAnotherSkippy||

    Enrollment isn't the real problem. Schools can flex higher any time they want. Residency slots are the issue. You could also add state licensing as well. Any accredited med school grad can go be a resident anywhere in the country, but once you're a practicing physician you get to pay the permission fee to practice in each individual state. Seems like that might be a potentially prudent use of the commerce clause...

  • Tony||

  • Philadelphia Collins||

    At least it isn't Hawaii.

  • Rhywun||

    I tried getting back on horse once - I wouldn't recommend it.

  • NotAnotherSkippy||

    More of this please. You might even get me back as a donor.

  • Jeremy's Iron||

    Agreed, except that they aren't getting any more of my money so long as they employ Dalmia.

  • Myk||

    Only Marketplace premiums are "skyrocketing". And even then it's only in some places. That is because the people who have been denied coverage happily jumped, those who don't need coverage would rather pay the "tax". Other insurance has gone up, gone down, stayed the same as it was doing before ACA (I actually think overall the chart has the increases level off some post ACA). This is a fact you writers need to look into and stop believing fear news stories that conflated some Marketplace policies increasing 100% to be all policies in the state going up 100%.
    (Cue someone with their anecdotal story about how their non-marketplace premiums took a huge jump. Yes and my anecdote is mine had a minor increase way under the rate of inflation.)

    What Congress needs to do is get together and come up with a bipartisan plan so it doesn't change every 4-8 years. This would take years to hash out like ACA did. Or they could come up with bipartisan fixes to ACA and do that piece meal.
    This compromise means nobody gets their way so everyone can be unhappy. Trying to avoid a real vote and do it by reconciliation is the real cop out that never can be "repeal and replace".
    At best the reconciliation plan was a destroy and force a bipartisan fix tactic.

  • Alan Vanneman||

    "It's difficult to overstate how utterly tragic and depressing this is."

    I find it difficult to overstate how utterly predictable and abso-f*cking-lutely hilarious it was to watch Lyin' Paulie Ryan fall on his chiseled, marathon-man ass and then watch Donald "Mountain Man" Trump fall on top of him. Now, of course, the Republicans are all pissing on one another. Way to keep it classy, guys!

  • JMatt||

    Nice piece.
    I'm looking for some articles on how best to provide health-care to low-income families. Hit me up with your favorites.
    Thanks,
    --Matt

  • JFree||

    I don't have any articles but I do know where to look for the easiest low-hanging fruit to solve some big problems. A lot of counties don't even have a hospital and they have fewer family doctors/capita than third-world countries like Thailand/Burma - and fewer than we had in the US 100 years ago. 80 of them in Texas alone - http://bit.ly/2mTnACL . And no surprise those counties have poor health and poor habits and prob low incomes - and since they have fewer doctors than the third world they aren't going to attract any employers who expect that sort of infrastructure in place.

    The solution is easy - get generalist physicians to move there and help them figure out how to build a practice on say a 2000 patient-base instead of a fee-for-service insurance system that doesn't do squat for them anyway cuz of deductibles and copays.

  • John Galt II||

    The solution is easy - get generalist physicians to move there and help them figure out how to build a practice on say a 2000 patient-base instead of a fee-for-service insurance system that doesn't do squat for them anyway cuz of deductibles and copays

    (yawn) Washington State has been doing that since the 1940s. It wa

  • John Galt II||

    The solution is easy -

    It's been done since the 1940s, and still is.

    get generalist physicians to move there and help them figure out how to build a practice on say a 2000 patient-base instead of a fee-for-service insurance system that doesn't do squat for them anyway cuz of deductibles and copays.

    What you describe is both barbaric for the future and inaccurate for today.

    A thriving provider with about 630,000 members has been treating Washington State and Northern Idaho since the 1940s -- with a 21st century version of the nonprofits that provided universal treatment before FDR ... and universal charitable treatment for low incomes before LBJ. It was proposed as an ALTERNATIVE to a public option, to gain GOP support for Obamacare, but Republicans REFUSED an option that would have killed public health care forever ... because Obama would have got credit, I suspect,

    So Republicans (and libertarians) fucked us then. And are still fucking us. What are the chances of a solution that would replace BOTH Big Government and Big Insurance?

  • John Galt II||

    I'm looking for some articles on how best to provide health-care to low-income families. Hit me up with your favorites

    You won't find anything in the libertarian establishment, now a flock of goobers chanting "git gummint out"

    But until Medicare/Medicaid, low-incomes and the elderly had universal treatment financed by a complex web of humanitarian aid that had been evolving since the late 1400s. As the need and complexity expanded though the centuries, human support kept pace (in the free societies which sufficient disposable income) By FDR, we had 100% treatment for all who sought it, entirely through charities and other nonprofits (mostly fraternal and ethnic lodges, who expanded their original humanitarian aid to provide coverage for members, when that became desired). There was almost no health care from insurance companies until FDR made it employer-based.

    The charitable components remained until replaced by Medicare and Medicaid in the mid-60s.

  • Diane Merriam||

    In all fairness, while FDR approved it, it was actually proposed by the big manufacturers looking for a benefit they could use to get the better workers when they were unable to use more money, thanks to wartime wage and price freezes. Those big manufacturers were, almost all of them, heavily unionized, the unions latched on to it and spread the idea to other unionized companies and eventually made it into a universal benefit to all but the smallest of employers.

  • JFree||

    The tax deduction for employer and tax exclusion for employee was put into place before the war started (Revenue Act of 1939 - Feb) - when there was no 'wage freeze', wages were still going down, unemployment was 18% and 'tax exclusion' was irrelevant for employees because most employees income tax rate was 4% or less. It was about company owners looking to get a corporate tax deduction for the corporation (tax rate rose in that bill from 19% to 24% on its way to 40%) and their own income (tax rates 30%+). And where charitable (non-profit hospital construction/utilization) and public (muni hospital construction/utilization) were then. A lot of tax games with that.

    Rewriting the story to start in 1943 - with a wage freeze, unemployment of 1%, and the threat of nationwide strike by unions - averted by not subjecting those benefits to the wage freeze - is done in order to create a different 'origin' story.

  • trudybeauty||

    "As economists at Harvard, MIT, and Dartmouth have shown, Medicaid returns only 20 to 40 cents for each dollar spent on new enrollees and fails to demonstrate that it provides real health benefits to those enrolled. Numerous studies also have found that contrary to the promise made before the implementation of Obamacare, Medicaid expansion has resulted in a surge in emergency room use."

    I love the NewSpeak of these statements. What exactly does "Medicaid returns only 20 to 40 cents for each dollar spent on new enrollees" mean? You mean that there's no profit? Oh, shocking.
    And then the rest of them are plain nonsense, such as "Medicaid ... fails to demonstrate that it provides real health benefits to those enrolled". What on earth does this mean? Is this just some brain burp or infection?
    Please cite the "numerous studies" the show a "surge in emergency room use" as a result of Medicaid expansion.

    I mean, Reason, you've got to find credibility some other way or with some other writer. Either that or this is just Trumpism.

  • Redcard||

    reason.com is Republicans posing as libertarians and desperately sucking Drumpf's dick every chance they get, but with sophistication. They want to appear libertarian

  • John Galt II||

    They suck up to the Paulista Cult, which also claims to be libertarian.

  • Redcard||

    Just repeal like you assholes did in December 2015. Imagine that Drumpf is a black guy, and do it

  • jerbigge||

    I suspect that a true free market health care system would be cheaper than anything proposed. Once you "break" the professional monopolies, use task specific training for providers, costs drop to actually "affordable" levels. In 1980 the US spent 9% of its GDP on health care. Today we spend 18%. Or about $10,000 per capita. $3.4 trillion dollars a year.

  • Myk||

    A free market requires competition. Medical is full of protectionism. Medical owns politicians to keep the status quo.
    A free market requires the ability to say no. Medicine is the opposite unless people are willing to die. Realistically when you're in pain you won't care what the price is. "How much is your life worth" is not how a free market works.

  • JFree||

    I agree that this article is mostly nonsense. Medicaid is four different groups:

    Elderly in nursing homes (should be Medicare) - $13,250 annual spending per enrollee (ranges from $6400 in VT to $23,800 in ND)

    Disabled - $16,600 annual spending per enrollee (ranges from $8000 in AL to $30,000 in NY)

    Poor Adults - $3250 annual spending per enrollee (ranges from $1500 in CA to $6500 in AK)

    Children - $2450 annual spending per enrollee (ranges from $1600 in WI to $5200 in VT)

    Medicare - $10,400 spending per enrollee (ranges from $7600 in MT/HI to $11,900 in NJ/FL)

    Overall (2009) - $6800 per capita (ranges from $5000 in UT to $10,000 in DC)

    Looks to me like there are states that do some things right and ways to incentivize Medicaid towards what works

    Course its probably easier to just blame the poor and pretend they are really the ones bankrupting the system so we can ignore the big expensive elephants in the room. Maybe we can ignore the problem for another 10 years.

  • John Galt II||

    Looks to me like there are states that do some things right and ways to incentivize Medicaid towards what works

    If you're a shill for the statist right.
    REPLACE IT. RESTORE THE PRIVATE CHARITIES THAT PROVIDED ALL OF THAT. For less than 6% of GDP.

    When over 20% of the Medicaid/CHIP eligibles are uninsured, shifting it to the states is like rearranging deck chairs on the Titanic.

    We spend more per capital on public healthcare alone, for less than 40% of our population ... than TOTAL per capita health spending in Sweden, the U.K., Australia, New Zealand, and Japan. So shift it to the states?????

  • JFree||

    You seem like a gutless shill for Medicare. That's what is preventing any change in the system. And amazingly you never mention it.

    Employer system is easy to break up. Just eliminate their tax deduction.
    Medicaid is ultimately easy to break up - as long as general practitioners still exist by then.

    Charities are NOT going to replace Medicare because charities require that they act as gatekeeper for their own services and Medicare beneficiaries are too entitled to allow anyone to do anything but pay their bills.

  • Michael Hihn||

    You seem like a gutless shill for Medicare. That's what is preventing any change in the system. And amazingly you never mention it.

    Employer system is easy to break up. Just eliminate their tax deduction.
    Medicaid is ultimately easy to break up - as long as general practitioners still exist by then.

    Charities are NOT going to replace Medicare because charities require that they act as gatekeeper for their own services and Medicare beneficiaries are too entitled to allow anyone to do anything but pay their bills.

  • Michael Hihn||

    You seem like a gutless shill for Medicare. JFREE
    (followed by)
    Charities are NOT going to replace Medicare because charities require that they act as gatekeeper for their own services and Medicare beneficiaries are too entitled to allow anyone to do anything but pay their bills JFREE

    (LOL) So who's the shill?

    Apparently
    1) He's pissed because I ridiculed his Medicaid wackiness.
    2) So he adds an equally wacky comment on Medicaid.
    3) Like libertarian goobers, if it takes a transition policy and timeframe -- instead of all in one step -- they cannot grasp such a thing.

    So blame retirees for your own ignorance. Claim it's IMPOSSIBLE to restore the OUTCOMES of a free market ...to justify a statist "solution."

  • JFree||

    And as usual you avoid talking about Medicare. Wave magic wands and hey presto - charity OUTCOMES likeitwas goobers

  • Michael Hihn||

    Watch the aggressor (sigh) (emphasis added)

    MH
    3) Like libertarian goobers, if it takes a transition policy and timeframe -- instead of all in one step -- they cannot grasp such a thing. So blame retirees for your own ignorance. Claim it's IMPOSSIBLE to restore the OUTCOMES of a free market ...to justify a statist "solution."

    JFree
    Wave magic wands and hey presto - charity OUTCOMES likeitwas goobers

    (laughing) Anyone else so hoplelessly confused on the difference
    1) a transition policy and time frame
    2) Wave magic wands and hey presto...

    (Posted in response to aggression AGAIN)

  • John Galt II||

    When will Reason defend a free market in healthcare ... or even know the outcomes of a free market?

    As late as the mid-1960s, we still had universal treatment for low-incomes and/or the elderly, paid voluntarily through a complex network of charities and humanitarian aid that had been evolving since the late 1400s, delivered through charity hospitals,

    Medicare/Medicaid replaced and destroyed the entire private infrastructure. "Git gummint out" does not create what a free people want and were willing to pay for. That means the libertarian establishment stands OPPOSED to the OUTCOMES of a free market. Why? By what right?

    It's not just progressives who confuse coverage with treatment ... the entire libertarian establishment is just an opposing tribe in identical denial, and equal threat to individual liberty. The authoritarian mind.

    In the 1970s and early 80, pro-liberty libertarians debated how to best transfer the funds from government back to private aid, seamlessly, to restore and rebuild the infrastructure destroyed by government. We knew that "git gummint out: FAILS to restore the damage caused by gummint. And none us had a a PhD like the writer of this.

  • John Galt II||

    When will Reason defend a free market in healthcare ... or even know the outcomes of a free market?

    As late as the mid-1960s, we still had universal treatment for low-incomes and/or the elderly, paid voluntarily through a complex network of charities and humanitarian aid that had been evolving since the late 1400s, delivered through charity hospitals,

    Medicare/Medicaid replaced and destroyed the entire private infrastructure. "Git gummint out" does not create what a free people want and were willing to pay for. That means the libertarian establishment stands OPPOSED to the OUTCOMES of a free market. Why? By what right?

    It's not just progressives who confuse coverage with treatment ... the entire libertarian establishment is just an opposing tribe in identical denial, and equal threat to individual liberty. The authoritarian mind.

    In the 1970s and early 80, pro-liberty libertarians debated how to best transfer the funds from government back to private aid, seamlessly, to restore and rebuild the infrastructure destroyed by government. We knew that "git gummint out: FAILS to restore the damage caused by gummint. And none us had a a PhD like the writer of this.

  • gentlelad||

    Trump and Congress cannot come up with a plan because they have never used it and do not know how it works.

    People on Medicare pay a little over $100 a month with a $150.00 dollar a year deductible. The supplementary policies requires income based doctor and medicine co-pays. If businesses paid higher wages, poor people could pay taxes and more of their insurance premiums. There are doctor organizations that have suggested healthcare programs. Have they been consulted?

  • Johnimo||

    Well, how was that for a definitive tome on reforming Obamacare! Nothing in, nothing out! Another Reason writer without a single prescription for anything, other than screaming, "FIX IT!" So called policy editorials here are a big joke.

  • Free Markets & Unicorns||

    one must make sure that Ryan and friends put the cart before the horse. Any plan put forward demands that those who seek healthcare services from providers must receive them at an affordable price that the seeker can pay

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