The Washington Outsider

Senate Healthcare Reform Bill: Healthcare Reform Success or Flop?

6/23/2017

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The Better Care Reconciliation Act and the American Health Care Act are the Republican responses to the Affordable Care Act, commonly known as “Obamacare.”  Because both proposals drop the individual and employer mandates, which exist to force people to acquire health insurance, while limiting the ability of insurers to deny coverage based on preconditions, criticism from the healthcare and health insurance industries is guaranteed.  Because both gut Medicaid expansion and reduce government subsidies, criticism is guaranteed from both the healthcare industry and patient advocates as well as the poor.  Criticism alone does not, however, determine the value of these legislative efforts.  Their impact on the healthcare of individuals does.
 
Health insurance is supposed to make healthcare more accessible by making quality healthcare affordable to average income individuals and families.  Unfortunately, the costs of healthcare and health insurance, along with deductibles and co-pays, have grown to the point an escalating number of businesses and individuals cannot even afford health insurance to pay for unaffordable healthcare.  Ensuring Americans have affordable health insurance is not, however, the goal of healthcare reform.  The goal is to ensure Americans have access to affordable and quality healthcare.  In other words, successful healthcare reform does not necessarily hinge on preserving the health insurance industry.  Republican healthcare reforms must, therefore, increase regular access to quality healthcare.
rom doctors to bandages, the costs of treating even a healthy person mount very quickly.  As such, the average American consumer cannot readily afford to directly pay for healthcare, especially high tech-fueled modern medicine, on a regular basis.  The capitalist answer is to make the delivery of healthcare more efficient by organizing how healthcare is funded and distributed.  Healthcare is a limited resource, but increased access, innovation, improvements through efficiency, and greater consumer leverage can eventually expand and “stretch” the supply of healthcare to cover almost any need that arises.  Over time, innovation and proper healthcare management can also drastically improved the quality and affordability of healthcare.
 
Health insurance exists to ease the cost of healthcare by pooling the financial resources of the insured, which enables greater access to healthcare when it is needed.  The pooling of resources and increased number of consumers also helps fund life-saving and cost-cutting innovation, yet insurance company also help reduce the cost of healthcare by giving the insured the power to negotiate prices en mass.  When there are sufficient numbers of health insurance providers and healthcare providers to choose from within a given area, this added leverage, coupled with high standards and proper regulations, give consumers enough choice to generate the competition needed to lower prices and maintain the quality of care.  
 
With that in mind, the US healthcare industry relies on two main sources to fund the health insurance industry, which distributes funding to healthcare providers.  Because healthcare is very expensive, government offers businesses, which tend to have more financial resources than individuals, tax incentives to pay for the health insurance of their employees.  Thanks to the financial might of big business, this approach has had the added benefit of forcing insurance providers to compete for large pools of clients.  It worked fairly well until the cost of health insurance outstripped the benefit and feasibility of these tax incentives.  Obamacare tried to duplicate this approach without employers through the health insurance marketplace, which fell short of expectations and need.  
 
That said, the deep pockets of the taxpayer-funded government have always provided a bulk of the funding for the healthcare industry via Medicare, Medicaid, SCHIP, and TRICARE, as well as billions in other forms of funding.  The fiscal problem is that even government funding has limits, which are fast approaching.  There is also the issue of destructive government interference in the marketplace.  The existence of government means government always plays a role in the economy.  The most constructive role for the government is to regulate markets to ensure the broad interests of the Nation are served and to foster constructive competition that improves the quality of products and services.  The role of government in the healthcare market is, therefore, to ensure the existence of a financially viable healthcare industry that provides affordable and quality healthcare.
 
Obamacare was largely designed to address the issue of access to healthcare for those unable to afford or buy insurance, which was theoretically supposed to help contain costs in the long run by giving people access to far cheaper preventative care, expanding Medicaid, providing income-based tax credits, allowing adults to stay on their parents’ insurance until the age of 26, banning the use of precondition clauses, and mandating “essential health benefits.”  Obamacare failed to address many key aspects of affordability and sustainability by simply subsidizing healthcare insurance.  Both Republicans efforts embrace, this same “subsidy mentality” as well as a “scarcity mentality” by treating healthcare as a non-renewable resource in need of rationing via their Medicaid expansion reversal and the removal of standards.
 
The Better Care Reconciliation Act and the American Health Care Act seek to reintroduce “free market” principles into the health insurance market by removing provisions like the essential health benefits Obamacare mandated insurers provide in every policy.  Although this allows people to buy so-called catastrophic coverage, which only covers emergency care, the removal of standards also opens the market to junk insurance.  Low cost healthcare plans that cover few healthcare services and/or require premiums so high coverage cannot be utilized to access healthcare simply enrich unscrupulous insurers at the expense of those without real choices.  By shifting the regulatory burden to States under the guise of States’ Rights, State lobbyists, who enjoy far less scrutiny than Federal lobbyists, will be empowered to chip away at customer rights.  Both Republican proposals appear to foster lowered prices via lower quality by undermining the role of government in the healthcare market.
 
Furthermore, the Better Care Reconciliation Act and the American Health Care Act seek to replace the low-income subsidies of Obamacare by deploying a tax credit scheme that favors those with higher incomes.  The tax credit scheme used by the American Healthcare Act appears to offer greater benefits to higher income families while cutting benefits to lower income families and the elderly, who generally require greater care, i.g. it revives the traditional rationing of care based on cost.  The Better Care Reconciliation Act utilizes a similar approach that also calculates tax credit subsidies based on income while lowering the income threshold to qualify for subsidies and allowing greater contributions to Health Savings Plans, which benefits the affluent.  
 
For poorer American, more people would quality for tax subsidies, if they can afford to buy insurance, yet lose access to state-sponsored health insurance.  The tax credit subsidies of the Republican tax scheme create the appearance of affordability, yet the upfront costs associated with utilizing these tax credits means poorer individuals cannot utilize them.  Even if the poor can buy affordable health insurance, higher co-pays and fewer benefits will prevent them from receiving regular healthcare.  In short, the near identical tax credit schemes of both bills only offer greater subsidies to those who can afford healthcare the most and need it the least, e.g. younger and healthier people.
 
By allotting money specifically for spending on health insurance to those who can most likely afford health insurance, the tax credit scheme encourages health insurers to simply raise rates and service fewer customers to boost their profits instead of expanding their customer base to those who could not otherwise afford insurance.  Because the Republican approaches also strip away “essential benefits” and allow companies to charge more for high risk policyholders, they make it a competitive necessity for insurers to minimize costs by dumping sick people onto government plans and maximize profit by focusing on insurance for the healthy, thereby exasperating the need for bigger government.  
 
Furthermore, both Republican proposals also directly subsidize the insurance industry for high-cost enrollees through cost sharing subsidies while reducing taxes on the healthcare industry.  Just as subsidies, such as earned income tax credits, suppress the labor market, i.e. discourage employers from providing living wages and employees from seeking living wages, the Republican tax credit schemes also encourage employers to discharge the burden of health insurance, which would be a major loss of income for American workers, yet offer insurers a new source of income in the face of shrinking employer-provided health insurance.  Because subsidizes allow insurers to charge consumers more for subsidized products, instead of expanding coverage to new enrollees, both Republican bills would help insurers use government as an easy and very lucrative source of revenue. 

​
Efficiency in healthcare means efficiently delivering effective healthcare to as many people who need it as possible, not ensuring extra profits for the healthcare and health insurance industries.  Profit can feed innovation and growth when it attracts investments in terms of financial assets, human capital, and the pursuit of novel thinking, yet profit is a cost that is only worth paying when it leads to increased efficiency, not healthcare rationing.  Under both Republican bills, the government encourages the health insurance industry and the healthcare industry to focus on maximizing profits instead of maximizing the quality, affordability, and delivery of healthcare to the American People.  The Republican approach to healthcare reform makes health insurance less attainable while doing nothing to make healthcare affordable.
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      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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