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Obamacare Is Bad, but What Is the GOP for?

Polls suggest that President Barack Obama’s health care plan is becoming somewhat more popular — even as evidence mounts that it will be astronomically expensive and may cause millions of workers to lose their employer-provided health insurance.

[IMGCAP(1)]Meanwhile, Congressional Republicans are calling for repeal of the plan — without any realistic hope of doing so and without offering an alternative that would cover anywhere near the 30 million who will get insurance under Obamacare.

Two conservative experts writing in the quarterly journal National Affairs do propose an interesting alternative plan, which they say will not add to federal deficits, but it would cover only about 18 million of the nation’s 50 million uninsured.

The basic design of the plan, by Paul Howard of the Manhattan Institute and Stephen Parente of the University of Minnesota, is to offer vouchers or tax credits to low-income workers to buy basic private insurance in regulated exchanges across state lines.

Over time, they’d eliminate the tax preference for employer-provided insurance and offer vouchers to all workers. They’d also add vouchers to (and eliminate) Medicaid, the federal-state program for poor people.

Howard and Parente anticipate that competition among insurance carriers would lower costs and that the plan could be paid for with a “Buick tax” on midlevel insurance policies.

Their plan was originally developed for a group of Republican Senators led by Bob Corker (Tenn.), but it was never introduced because GOP leaders preferred simply to say “no” to Obamacare.

Corker confirmed the he worked on the plan and tried to entice Democrats, but he distanced himself from the Howard-
Parente proposal to “voucherize” Medicare.

The Howard-Parente article also contains a devastating critique of Obamacare, which the authors say fails to address surging health care costs, the underlying cause of rising insurance premiums.

“The new law,” they write, “is likely to inflate premium costs, increase government spending, displace millions of insured Americans and lead to price controls that will hinder innovation and politicize health care.”

The two also criticize Republicans for failing to address health care when George W. Bush was president and the GOP controlled Congress.

Obamacare passed Congress in March on the strength of an estimate by the Congressional Budget Office that it would reduce the federal deficit by $143 billion over its first 10 years and nearly $1 trillion in its second. But in May, the CBO changed its estimate, reporting that the law would cost $115 billion more to implement than it previously calculated.

That’s peanuts compared to calculations of former CBO Director Douglas Holtz-Eakin — also top domestic policy adviser in Sen. John McCain’s (R-Ariz.) presidential campaign — who estimates that Obamacare may increase the federal deficit by $500 billion in the first 10 years and by nearly $1.5 trillion in the following decade.

Holtz-Eakin, in an article in Health Affairs last month written with Michael Ramlet of the Advisory Board Co., a health research firm, noted that Congress purposely left out of its reform bill a $276 billion “doc fix” protecting physicians from scheduled Medicare cuts.

The two forecast, among other things, that Congress similarly will bow to political pressures — from seniors or providers — to forgo other Medicare cuts that are contained in the legislation.

Even the chief actuary of the Medicare system has written that “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).”

Besides failing to curtail the federal deficit, Obamacare is virtually certain not to “bend the curve” of national health care outlays. That’s the main reason insurance premiums will continue to rise.

Another cause is the minuscule penalty young workers can pay to opt out of Obamacare’s supposed coverage mandate — until they get sick or injured and need insurance, which the plan will guarantee them.

Howard, in an interview, says he suspects that the Obama administration plans to respond to premium increases by imposing price controls — driving private insurance companies out of business and creating a demand for government-run “public insurance.”

Perhaps the most damaging new discovery about Obamacare is the extent to which it will encourage employers to drop coverage of their workers and push them into heavily subsidized government “exchanges” — causing an additional explosion of federal costs.

Firms with 50 employees or more need pay only a $2,000 per employee fine for failing to offer insurance.

As Holtz-Eakin demonstrates in a paper on his American Action Forum website, employers could give their employees a pay raise to make up the difference between the federal subsidy and the value of their existing employer plan, pay the fine — and still save thousands of dollars per employee.

Indeed, companies such as AT&T and Caterpillar have already studied dropping coverage, and Fortune magazine estimated that 50 percent of workers may get dumped — adding $160 billion to federal costs by 2016.

Centers for Medicare and Medicaid Services actuary Richard Foster estimated that 14 million workers would lose coverage — even though Obama repeatedly promised that “no one would lose the insurance they have.”

Holtz-Eakin estimates that the number could be as high as 38 million. If they went into the government-subsidized pool, the cost would be $1.4 trillion.

So why, in view of all this bad news, has opposition to Obamacare dropped from 49 percent — where it was more or less consistent from last December to this May — to 44 percent in June, and support grown from 41 percent to 45 percent?

And why, according to the Rasmussen poll, has support for repeal dropped to 53 percent from a high of 63 percent in May?

It may be that the public’s attention has shifted to jobs and the Gulf spill. Or that Obama’s touting of immediate benefits of his plan — such as guaranteed coverage of young people up to age 26 by their parents’ insurance — has taken hold.

It may also be that the public understands there is no way that Republicans can repeal Obamacare even if they capture control of Congress in November. They’d have to control the White House, too.

So, while they’re waiting — instead of just talking about repeal — Republicans ought to figure out how they can cover the uninsured. There has to be a better way.

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