GOP Leadership’s Health Bill Is Not What Republicans Promised. We Can Do Better.

President Ronald Reagan once said, “We should carry a banner of no pale pastels—but one of bold colors, which make it unmistakably clear where we stand on the issues.”

The 2010 mid-term elections were historic. Running opposite of President Barack Obama’s agenda—primarily the Patient Protection and Affordable Care Act, otherwise known as Obamacare—the Republican efforts resulted in 63 seats changing hands, the highest loss of a party in a House mid-term election since 1938 and the largest House swing from one party to the other since 1948.

Americans were angry with the Democrats’ efforts on health care reform, feeling hoodwinked by a 1,400-page bill crafted in such a fashion that members of Congress were urged to “pass [it] so we can find out what is in it,” as then-House Speaker Nancy Pelosi is remembered for saying.

After four years of further Democratic control of the Senate, Republicans were able to wrest control in the 2014 mid-term elections from Majority Leader Harry Reid, keeping it for the remaining two years of Obama’s term.

Republicans would finally be able to send some legislation to the president’s desk. The big target? Obamacare.

The Full Repeal Bill

In order to send an Obamacare repeal bill to the president’s desk with only a 54-46 Senate majority, congressional Republicans had to use a budgetary tactic known as budget reconciliation, which requires only a simple majority of votes in the Senate (51) in order to pass. (This is the same method Democrats had to use to pass the bulk of Obamacare in 2010.)

The Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (H.R. 3762) was the reconciliation legislation for fiscal year 2016, and the vehicle used to repeal Obamacare. Predictably, Obama vetoed the bill on Jan. 8, 2016.

During the presidential election cycle in 2016, Republicans were once again given the nod by the nation by retaining the majority in the House of Representatives, keeping a 52-48 majority in the Senate, and winning the White House with the election of Donald Trump as the 45th president of the United States.

Obamacare was once again in the crosshairs of the Republican majority.

The New Plan

Now, House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell hope to use the budget reconciliation tactic to once again overcome the Democrats’ ability to filibuster general legislation in the Senate.

On the evening of March 6, House leadership rolled out the American Health Care Act, a reconciliation bill aimed at making changes to Obamacare. Many have dubbed the bill “Obamacare Lite” since it does not repeal the Affordable Care Act, but instead nibbles around the edges in an attempt to make Obamacare less harmful.

House leadership promises a multipronged legislative process involving three phases: Phase I, the reconciliation bill; Phase II, the top-down repeal of regulations by Secretary Tom Price at the Department of Health and Human Services; and Phase III, additional bills that will make the necessary reforms to how insurance is sold across America.

The problem with Phase III, as many conservatives like Sen. Tom Cotton, R-Ark., have pointed out, is that it will be a general bill that requires 60 votes to pass in the Senate.

This is a heavy lift for Senate Republicans and a deal-making president, who will need to win over eight Democratic senators to pass such legislation.

What the House Bill Does (And Doesn’t Do)

First and foremost, the American Health Care Act does not repeal Obamacare.

The bill does repeal some facets of Obamacare, and there are some things to like about the bill. These include:

• Defunding of Planned Parenthood, something Republicans should have already been able to do.
• Repeal of the individual mandate, which requires everyone to purchase health insurance or pay a gradually increasing fine.
• Repeal of the employer mandate, which subsequently changes the definition of full-time employment.
• Repeal of the medical device tax and other taxes on health insurance premiums and pharmaceuticals, while increasing the expense threshold for medical expense deductions.
• Ending the Medicaid expansion after three years.
• Repeal of the government subsidy for health insurance premiums.

These are good things that were all included in the 2015 budget reconciliation bill, which passed both houses of Congress.

The American Health Care Act also repeals the individual mandate that requires everyone to have health insurance or pay a gradually increasing tax. But the House GOP plan replaces the individual mandate with its own penalty—a 30 percent penalty to the insurer if there is a lapse in coverage.

In essence, this is requiring people to have health insurance or risk paying more when they do obtain it. The penalty will just be retained by the insurance companies instead of being collected by the government in the Obamacare tax.

We Can Do Better

The biggest question to ask ourselves is: Is this the best that we can do? And, is this bill what Americans expected Republicans to do with their control of government? Is this the bold effort so many across America have expected?

Is this the bill on which, while campaigning on the repeal of Obamacare in 2010, Republicans pinned their hopes of winning the majority in the House? Is this what “draining the swamp” looks like?

As written, is this the bill that enabled candidates like former Rep. Steve Southerland, R-Fla., to capture that Panama City House seat for Republicans for the first time since 1882? As written, is this the bill that compelled the people in South Carolina’s 5th Congressional District to elect Rep. Mick Mulvaney (now a key Trump Cabinet official) over incumbent Democrat and Budget Committee Chairman John Spratt?

Is the bill put forth by Ryan the bill that 400,000-plus patriotic Americans flooded Capitol Hill to push for at the tea party rally in 2009? Is the language in this bill what Republicans had in mind when they embraced the 2010 Pledge to America, which promised the repeal of Obamacare?

And lastly, is the current language in the bill what Republicans were fighting for in 2013 when the government shut down for 16 days during the continuing resolution fight over Obamacare?

I ran for Congress on repealing Obamacare. Not nibbling around the edges. Not exchanging one mandate for another.

I ran to unwind government, limit the size and scope of government, and unleash the things that make America great. One of the most powerful institutions that has built this country is the free market. Capitalism.

Government has no business being in health care or the health insurance business. We have allowed safety net programs like Medicaid and Medicare to become big bureaucratic nightmares that restrict choice, dictate terms, and mandate coverage—enforced with a carrot-and-stick mentality and funded by the tax dollars of hardworking Americans.

Medicaid and Medicare are no longer safety net programs. They have become the health insurance for many Americans.

These programs entangle the federal government (with its money), the states (who run Medicaid programs), and hospitals and doctors who must comply with bureaucratic mandates, which are often crafted by people with little to no understanding of the doctor-patient relationship, medical diagnoses, or treatments.

Betraying Our Voters

Is this the set of policies the American people expected when Trump ran in 2016 on the repeal of Obamacare? How do you think they will react when these are the only parts of repeal that pass because some members of Congress cannot sell free markets and less government back in their districts?

I believe they will feel betrayed. That is why the bill that House Leadership has introduced, in its current form, is not one that I can support.

That doesn’t mean that I will vote no on the final package. We don’t know what that is going to look like yet. There are enough conservative members like me who have the same problems with the current language of the bill to push for substantial changes.

Negotiations remain ongoing, including those between House and Senate conservatives, House and Senate leadership, as well as with the White House.

I believe that the House Rules Committee may present us with a “Manager’s Amendment”—one that seeks to address our concerns—to the final bill. My hope is that we, along with the American public, get a good chance to study that text before we vote on it, thus avoiding a Pelosiesque moment and fulfilling our promise of transparency to the American people.

This is a defining moment in our own rendezvous with destiny, and we owe it to the American people to get it right.

Commentary by Rep. Jeff Duncan (R-TN). Originally published at The Daily Signal.

Voter ID’s Suppression of Minority Turnout Not Proven, Study Says

A new study by professors from Yale, Stanford, and the University of Pennsylvania challenges the notion that voter ID laws disproportionately affect minorities.

The study comes as a response to another one, published and widely reported in January, that asserted states with voter ID laws drive down turnout on Election Day, particularly among Hispanics. That earlier study, conducted by professors from the University of San Diego and Bucknell University, often is cited by liberal opponents of voter ID laws.The new study finds “no definitive relationship” between tough laws requiring voters to present identification and a dropoff in Hispanic, black, and other minority turnout.

The study released March 10 questions the numbers of the January report, which were based on the Cooperative Congressional Election Study, or CCES, a multi-university resource associated with Harvard University. Citing inaccuracies and errors in the previous study, it says:

Here, we show that the results of this paper are a product of large data inaccuracies, that the evidence does not support the stated conclusion, and that model specifications produce highly variable results. When errors in the analysis are corrected, one can recover positive, negative, or null estimates of the effect of voter ID laws on turnout. Our findings underscore that no definitive relationship between strict voter ID laws and turnout can be established from the validated CCES data.

The new study was conducted by political science professors Eitan Hersh of Yale University, Marc Meredith of the University of Pennsylvania, and Justin Grimmer and Clayton Nall of Stanford University, along with Jonathan Mummolo, a doctoral candidate at Stanford. The new report suggests the previous study was biased:

These measurement errors in turnout raise the potential of both inefficiency and bias. Even if these laws affect turnout, measurement error may add so much noise to the data that we fail to detect any effects (inefficiency). And once the data are aggregated by state, if measurement errors are correlated with the adoption of voter ID laws, we will recover the wrong treatment effect estimates (bias).

The authors of the previous study, political science professor Zoltan Hajnal and doctoral candidate Nazita Lajevardi of the University of San Diego and political science professor Lindsay Nielson of Bucknell University, promoted their research in The Washington Post, the Los Angeles Times, and other major media outlets

In an op-ed last month in The Washington Post, the professors wrote:

But when we dig deeper and look specifically at racial and ethnic minority turnout, we see a significant drop in minority participation when and where these laws are implemented.

Hispanics are affected the most: Turnout is 7.1 percentage points lower in general elections and 5.3 points lower in primaries in strict ID states than it is in other states. Strict ID laws mean lower African American, Asian American and multiracial American turnout as well. White turnout is largely unaffected.

Some media outlets too quickly embraced the report from the University of San Diego and Bucknell University, said Logan Churchwell, spokesman for the Public Interest Legal Foundation, which advocates voter ID laws and investigates voter fraud.

“For a perfect example of the term ‘alternate facts,’ look no further,” Churchwell told The Daily Signal, referring to the first study. “For years, activists and academics have been searching for the silver bullet to prove voter ID is harmful to minorities, despite broad support for the laws across every demographic.”

“Many federal courts have been asked to do the same: Find a causal link between voter ID and intentional decreases in minority turnout,” he said. “All eventually failed. Despite this, too many in the media are willing to report an initial study as gospel before peer reviewers can weigh in. It should have struck many news editors weeks ago that it took until 2017 to provide proof to a belief that could have been confirmed a decade ago, if true.”

Report by The Daily Signal's Fred Lucas. Originally published at The Daily Signal.

Are You Really Pro-Liberty? Here Are a Few Tests.

Most Americans, whether liberal or conservative, Democratic or Republican, do not show much understanding or respect for the principles of personal liberty.

We criticize our political leaders, but we must recognize that their behavior simply reflects the values of people who elected them to office. That means we are all to blame for greater governmental control over our lives and a decline in personal liberty.

Let me outline some fundamental principles of liberty.

My initial premise is that each of us owns himself. I am my private property, and you are yours.

If we accept the notion of self-ownership, then certain acts can be deemed moral or immoral. Murder, rape, and theft are immoral because those acts violate private property.

Most Americans accept that murder and rape are immoral, but we are ambivalent about theft.

Theft can be defined as taking the rightful property of one American and giving it to another, to whom it does not belong. It is also theft to forcibly use one person to serve the purposes of another.

At least two-thirds of federal spending can be described as Congress’ taking the rightful property of one American and giving it to another American, to whom it does not belong.

So-called mandatory spending totaled $2.45 trillion in 2015. Thus, two-thirds of the federal budget goes toward Medicaid, Medicare, Social Security, food assistance, unemployment, and other programs and benefits that fall into the category of taking from some and giving to others.

To condemn legalized theft is not an argument against taxes to finance the constitutionally mandated functions of the federal government. We are all obligated to pay our share of those.

Many say that government spending guarantees one right or another. That’s nonsense. True rights exist simultaneously among people.

That means the exercise of a right by one person does not impose an obligation on another. In other words, my rights to speech and travel impose no obligations on another except those of noninterference.

For Congress to guarantee a right to health care, food assistance, or any other good or service whether a person can afford it or not does diminish someone else’s rights—namely, their right to their earnings.

Congress has no resources of its very own. If Congress gives one person something that he did not earn, it necessarily requires that Congress deprive somebody else of something that he did earn.

Another area in which there is contempt for liberty, most notably on many college campuses, is free speech.

The true test of one’s commitment to free speech does not come when he permits others to say things with which he agrees. Instead, the true test comes when one permits others to say things with which he disagrees.

Colleges lead the nation in attacks on free speech. Some surveys report that over 50 percent of college students want restrictions on speech they find offensive. Many colleges have complied with their wishes through campus speech codes.

A very difficult liberty pill for many Americans to swallow is freedom of association.

As with free speech, the true test for one’s commitment to freedom of association does not come when one permits people to voluntarily associate in ways that he deems acceptable. The true test is when he permits people to associate in ways he deems offensive.

If a golf club, fraternity, or restaurant were not to admit me because I’m a black person, I would find it offensive, but it’s every organization’s right to associate freely. On the other hand, a public library, public utility, or public university does not have a right to refuse me service, because I am a taxpayer.

The bottom line is that it takes a bold person to be for personal liberty, because you have to be able to cope with people saying things and engaging in voluntary acts that you deem offensive. Liberty is not for wimps.

Commentary by Walter E. Williams. Originally published at The Daily Signal.

Clarence Thomas Questions Congress’ Power to Regulate Business Abroad

Is the United States the world commerce police?

In a recent opinion, in which he dissented from the Supreme Court’s refusal to hear a case, Justice Clarence Thomas suggested that Congress’ power to regulate international commerce may be broad, but not as broad as some lawmakers and judges would have it.

In his dissenting opinion in Damion St. Patrick Baston v. United States, Thomas stated that he is interested in having the court address the limits of Congress’ power to regulate the world economy, and provided new language with which to scrutinize statutes that purport to do just that, such as the Lacey Act.

How Far Is Congress’ Reach?

This question emerged after the successful federal criminal prosecution of Damion St. Patrick Baston, a Jamaican citizen who ran an international prostitution ring for sex trafficking.

Following Baston’s conviction, the trial judge ordered him to pay one of his victims $78,000 in restitution, which is the amount she earned working for him as a prostitute while in the United States, and an additional $400,000 in restitution, which is the amount she earned working for him as a prostitute while in Australia.

The question presented was whether the second restitution order, which covered economic activity that occurred completely outside the United States, was constitutional.

“The facts are not sympathetic, but the principle involved is fundamental,” Thomas wrote, concluding that the court should have granted review in the case to “reaffirm that our federal government is one of limited and enumerated powers, not the world’s lawgiver.”

Ultimately, the other justices did not agree with Thomas, leaving unanswered the question of whether or not the Foreign Commerce Clause permits restitution to Baston’s victims based on extraterritorial conduct.

The Foreign Commerce Clause found in Article 1, Section 8 of the Constitution states, “Congress shall have power to … regulate commerce with foreign nations.” The drafters of the Constitution included this provision as a limitation on the states’ ability to raise tariffs on goods from other countries, among other economic concerns, including those reflected in Article 1, Section 9.

Under the Articles of Confederation, states set tariffs on goods from other states as well as foreign nations. The Constitution, instead, placed that responsibility with the federal government.

In Board of Trustees of University of Illinois v. United States (1933), the court explained, “In international relations and with respect to foreign intercourse and trade the people of the United States act through a single government with unified and adequate national power.”

The Foreign Commerce Clause, however, was not written as an invitation for the federal government to get involved in or import the laws of foreign nations.

Several courts of appeals, including the court of appeals in this case, have written far-reaching opinions that interpret Congress’ power to regulate international commerce quite broadly. The government argued that these cases hold that “Congress’ power under the Foreign Commerce Clause includes at least the power to regulate … activities that have a ‘substantial effect’ on commerce between the United States and other countries.”

Thomas writes:

Taken to the limits of its logic, the consequences of the Court of Appeals’ reasoning are startling. The Foreign Commerce Clause would permit Congress to regulate any economic activity anywhere in the world, so long as Congress had a rational basis to conclude that the activity has a substantial effect on commerce between this nation and any other …

That power might sound fair when used to increase the amount of money damages to the victim in Baston v. United States, but in other contexts, it seems less so.

“Congress would be able not only to criminalize prostitution in Australia,” Thomas continues, “but also to regulate working conditions in factories in China, pollution from power plants in India, or agricultural methods on farms in France.”

The Founders, Thomas argues, did not intend for Congress’ power to extend so far. Instead, “whatever the correct interpretation of the foreign commerce power may be,” he writes, “it does not confer upon Congress a virtually plenary power over global economic activity.”

Although Thomas presents a hypothetical, the scenario is a real one. In fact, it may be worse than Thomas lets on.

The Lacey Act

Under the Lacey Act (1900), which regulates commercial trade in plants and animals, commerce abroad is not only regulated by U.S. and foreign law. It can also be a crime in this country for Americans to violate the laws of foreign countries, or even to contract with other parties who violate foreign law.

For example, the U.S. Department of Justice sent Lumber Liquidators, an American flooring retailer, a $13 million tab in criminal fines and penalties because, unbeknownst to them, a Russian timber company harvested more wood in remote regions of Russia than Russian law allowed.

The Russians sold that wood to a Chinese flooring manufacturer, who sold it to Lumber Liquidators, who imported it into the United States.

The Justice Department argued that Lumber Liquidators should have exercised greater “due care” to uncover the illegal harvesting in “the Russian Far East,” which the Sierra Club names as “the last refuge of the Siberian tiger.”An international organization known as the Environmental Investigation Agency helped “to bring Lumber Liquidators’ deception to light,” according to the Sierra Club. And Assistant Attorney General John C. Cruden, at the Department of Justice’s Environment and Natural Resources Division, said, “Now they will pay a price for this callous and careless pursuit of profit … [a] trail of corrupt transactions and habitat destruction.”

That scenario may be worse than the one that Thomas describes, as criminal sanctions are far more severe than civil fines or administrative penalties for regulatory violations.

As our colleague John Malcolm explains, criminal laws and penalties are “meant to enforce a commonly accepted moral code that is set forth in language the average person can readily understand and that clearly identifies the prohibited conduct.”

Holding a company criminally liable for the acts of a third-party supplier operating under foreign law at the beginning of a multi-national supply chain oversteps those bounds.

Instead, regulatory schemes, Malcolm writes, should “establish rules of the road (with penalties attached for violations of those rules) to curb excesses and address consequences in a complex, rapidly evolving, highly industrialized society.”

Clearly, Russian logging limits and foreign Siberian tiger populations belong in the latter category—if at all—in U.S. law.

Moreover, in United States v. Molt, the 3rd U.S. Circuit Court of Appeals wrote that the Lacey Act “simply limits the exclusion from the stream of foreign commerce to wildlife unlawfully taken abroad,” but the word “unlawfully” there means that a violation of foreign law is an element of a crime under the Lacey Act.

Thomas’ dissent could provide the impetus for the court to examine the scope of Congress’ power to regulate international commerce in a future case. None of the Supreme Court’s opinions, Thomas notes, “involve[d] legislation of extraterritorial operation which purports to regulate conduct inside foreign nations.”

It is unclear whether Thomas would find it permissible for Congress to take the additional step of reaching “conduct inside foreign nations” through the laws of foreign nations.

Pushing Back on Regulatory Overreach

Thomas’ dissenting opinion provides at least two insights into federal law on foreign commerce.

First, he is interested in scrutinizing Congress’ power to regulate activity under the Foreign Commerce Clause if and when an appropriate case arises.

Building on the Supreme Court’s past opinions on the scope of the Interstate Commerce Clause, lower federal courts have charted an expansive vision of Congress’ power to regulate foreign conduct—perhaps, according to Thomas, straying a bit too far from the Founders’ understanding of the reach of that clause.

Second, Thomas’ dissenting opinion provides new perspective into constitutional questions surrounding statutes that regulate conduct abroad.

One of those statutes is the Lacey Act, which our colleague Paul Larkin has argued is unconstitutional insofar as it makes otherwise law-abiding businessmen—from lumber merchants to lobstermen to guitar manufacturers—liable for violating the criminal laws of foreign nations without knowledge of their wrongdoing.

Americans who run afoul of the Lacey Act and other U.S. laws that regulate foreign commerce may find a useful guidepost in Thomas’ dissenting opinion in Baston.

COMMENTARY BY John-Michael Seibler and Elizabeth Slattery. Originally published at The Daily Signal.

Conservative Lawmakers Join Rally Against GOP Health Care Plan

A group of conservative lawmakers gathered Wednesday to criticize the Obamacare replacement plan offered by House Republican leadership, a bill one of them, Sen. Rand Paul, dubbed “Obamacare lite.”

“Stand firm,” Paul said. “Bring down the Paul Ryan plan.”

Paul was referring to House Speaker Paul Ryan’s championship of the American Health Care Act as the way to repeal and replace Obamacare.

At the FreedomWorks “Day of Action” rally, held in Washington to oppose the legislation, the Kentucky Republican said, “We don’t want anything to do with Obamacare subsidies, taxes, [or] mandates.”

Sens. Ted Cruz, R-Texas; and Mike Lee, R-Utah; and Reps. Mark Meadows, R-N.C.; David Brat, R-Va.; and Jim Jordan, R-Ohio, also spoke at the rally.

Paul went after health insurance companies and the idea of them getting a “bailout” from taxpayers.

“We don’t want to bail out the insurance companies, we want freedom to get lower prices and to get the insurance we want for our families,” he said.

Paul also claimed that insurance companies, under the proposed GOP health care law, tell small business owners to “kiss my boots, take it or leave it.”

“When the premiums continue to rise, the government will continue to pay you money to pay the insurance compan[ies] … this is not about you, this is about reimbursing a billion-dollar insurance industry,” he said.

In a reversal, Ryan told reporters late Wednesday that he realizes changes need to be made to the legislation to clear the House, not to mention the Senate.

“Now that we have our score … we can make some necessary improvements and refinements to the bill,” Ryan said, according to The Washington Post, referring to the Congressional Budget Office’s report Monday on the costs and effects of the House GOP’s plan.

Cruz said that if Republicans don’t repeal Obamacare completely while they are in power, they will be “rightly considered a laughingstock.” He said the American Health Care Act has “a lot of problems.”

Cruz noted recent meetings with President Donald Trump, Vice President Mike Pence, senators, and House members, and said: “The test for a Republican repeal of Obamacare is to bring down premiums and make health care more affordable. … We can do that, but only if we repeal the Obamacare mandates.”

Brat, who represents Virginia’s 7th Congressional District, said, “When you say you’re going to repeal Obamacare, does that mean the federal government is still in charge of your health care?”

“No,” he said. “That’s what we’re fighting for.”

“First we make government bigger, then we promise you free markets later,” Brat said of the House leadership’s plan.

“The Freedom Caucus is here to make sure that those forgotten men and women … know that we are here to stand with them, to make sure to take back this country, for the Constitution, for our God, and for our freedom,” said Meadows, chairman of the caucus of conservative House members.

Because of outspoken opposition to the Obamacare replacement plan from conservative activists and organizations, Meadows said, lawmakers were starting to work on legislation that “really repeals and really replaces Obamacare.”

“When we were campaigning, we didn’t say that we were going to keep part of it, we said we were going to repeal it all,” he added.

Paul and Jordan introduced bills in their respective chambers that are identical to the Obamacare repeal legislation that Congress passed in 2015 but President Barack Obama vetoed in January 2016.

Jordan, a former Freedom Caucus chairman, continued on the theme of keeping promises, saying, “Our job isn’t not to offend.”

“Our job is real simple: Do what we told the voters we were going to do,” the Ohio Republican said.

“It’s a revolution … we’re gonna have to offend somebody,” he said.

Report by The Daily Signal's Caleb Ecarma. Originally published at The Daily Signal.

CBO Takeaway: Full Repeal Would Insure More People than ObamaCare-Lite

A new Congressional Budget Office report projecting the effects of the House Republican leadership’s American Health Care Act weakens the case for the bill’s ObamaCare-lite approach, and strengthens the case for full repeal.

The CBO projects that over the next two years, the AHCA would cause average premiums to rise 15 percent to 20 percent above ObamaCare’s already high premium levels. The report raises the prospect that insurance markets may collapse under the AHCA, just as they are collapsing under ObamaCare.

It makes unreasonable assumptions about Medicaid spending; more reasonable assumptions could completely eliminate the bill’s projected deficit reduction. Finally, the CBO projects more people will lose coverage under the AHCA than under full repeal.

ObamaCare-Forever

The AHCA purports to repeal and replace ObamaCare. In reality, it would do no such thing.
In a previous post, I wrote:

This bill is a train wreck waiting to happen.
The House leadership bill isn’t even a repeal bill. Not by a long shot. It would repeal far less of ObamaCare than the bill Republicans sent to President Obama one year ago…
[It] merely applies a new coat of paint to a building that Republicans themselves have already condemned… If this is the choice, it would be better if Congress simply did nothing.”

The ACHA retains all the powers ObamaCare gives the federal government over private insurance, gives those powers a bipartisan imprimatur, and therefore gives them immortality. Its repeal of ObamaCare’s Medicaid expansion would likely never take effect. It fails to create real block grants in Medicaid, and preserves perverse incentives from both the “old” Medicaid program and the expansion. It would create an ongoing series of crises in the individual market, for which Republicans would take the blame and suffer at the polls, at the same time it would create pressure for more taxes and government spending. It’s hard to imagine what House Republicans were thinking.

Premiums and Market Stability

Full repeal, in particular repeal of ObamaCare’s health-insurance regulations, would cause premiums to fall for the vast majority of consumers in the individual market.

In contrast, the AHCA would increase premiums from their already high ObamaCare levels. “In 2018 and 2019…average premiums for single policyholders in the nongroup market would be 15 percent to 20 percent higher than under current law,” the CBO reported.

Premium increases of that magnitude could further destabilize ObamaCare’s health-insurance Exchanges. Adverse selection has already led to an exodus of insurers from the individual market. ObamaCare has driven every last insurer from the Exchange in 16 counties in Tennessee, leaving 43,000 residents with no health insurance options for 2018. In a thousand other counties around the country, the law has driven all but one insurer from the Exchange. Nearly 3 million people in those counties are just one carrier exit from being in the same position as those 43,000 Tennesseans.
The CBO posits that, nonetheless, “the nongroup market would probably be stable in most areas under either current law or the legislation.”
In most areas. Probably.

Supporters of the legislation note that the CBO projects the average premiums would then begin to fall after 2019. One reason is that the AHCA would end one of ObamaCare’s health-insurance regulations (actuarial-value requirements). Another is that the CBO predicts states would use the AHCA’s new Patient and State Stability Fund to subsidize high-cost enrollees.

There are reasons to doubt this prediction. First, it assumes the Exchanges survive the ensuing adverse selection and make it to 2020. Second, the Patient and State Stability Fund would not reduce premiums. Like ObamaCare’s reinsurance program, it would hide a portion of the full premium by shifting it to taxpayers. So even though the CBO reports that the portion of the premium that consumers see would fall 10 percent by 2026, it is not accurate to say premiums would fall. We don’t know if the full premium would fall or rise after 2019, because the CBO isn’t telling us.

Spending

On paper the AHCA cuts taxes and government spending. But it also sets forces in motion that could undo those gains.

The CBO projects the AHCA would reduce federal spending by $1.2 trillion over ten years and reduce tax revenues by $883 billion, for a total reduction in the deficit of $337 billion. That certainly makes the bill appear attractive. Until you look at the details.

Take the bill’s Medicaid provisions. The CBO projects the bill would reduce Medicaid spending by $880 billion. The reduction would come both from phasing out ObamaCare’s Medicaid expansion, and from changing how the federal government pays for each state’s Medicaid program.
I doubt these savings will materialize. In my previous post, I wrote:

When eventually we see a Congressional Budget Office score of the bill (House leadership has numbers, but they’re not sharing them), it may show a reduction in federal spending on the Medicaid expansion after 2020. I would not bet on that happening.”

True enough, the CBO bases those projected spending reductions on assumptions I do not find reasonable.

For instance, the CBO assumes that under current law, some number of the 19 states that have refused to implement ObamaCare’s Medicaid expansion would do so. The AHCA reduces the cost to states of implementing the expansion. But rather than assume even more states would implement the expansion under the AHCA, however, the CBO assumes no states would. That makes no sense.

The AHCA would reduce the risks to states of implementing the expansion. Prior to or absent the AHCA, states face the risk that Congress might reduce the enhanced federal funding ObamaCare provides states for Medicaid-expansion enrollees. Such a change would mean states would go from paying 10 percent of the cost of the expansion to paying 50 percent of the cost. A five-fold increase.

The AHCA eliminates that risk by holding expansion states completely harmless with respect to Medicaid-expansion enrollees who enroll prior to 2020. It would guarantee states would continue to pay only 10 percent of the cost for every Medicaid expansion enrollee, even after the bill would “repeal” the expansion by barring new enrollments starting in 2020.

The cost of expanding Medicaid would go down, yet fewer states would do it. And here I thought demand curves slope downward.

If I’m correct that more states would expand Medicaid and go on an enrollment binge prior to 2020— and especially if those decisions pressured Congress to scrap “repeal” of the expansion—the CBO’s projected savings from the AHCA would prove too optimistic. If just half of the projected Medicaid savings fail to materialize, that would wipe out all of the AHCA’s presumed deficit reduction.
If states game the new per-enrollee matching grant system of federal Medicaid funding, even more of those presumed spending reductions would evaporate.

Likewise, if the AHCA were to create even more instability in the individual market, it would create even more pressure for additional taxes and government spending to stabilize the market. Even more of the AHCA’s projected savings would disappear.

Coverage Levels

In January, the CBO projected that completely repealing ObamaCare, without a replacement, would increase the uninsured by 23 million people by 2026. The agency projects the AHCA’s non-repeal approach would increase the uninsured by even more—24 million people. As my colleague Josh Blackman notes, there is ample reason to believe the CBO models overstate the coverage gains achieved by ObamaCare’s individual mandate, and the coverage losses the agency projects would follow its repeal.

Even so, the CBO score confirms the folly of the House Republicans’ approach, and that there is no reason not to repeal ObamaCare in full. Like it or not, the CBO’s estimates of coverage impacts are the ones ObamaCare’s defenders and the media will cite. If Republicans are going to take the same amount of heat either way, they might as well do the right thing and do a full repeal.

Republicans could then repurpose the $361 billion they planned to spend on tax credits on expanding tax-free health savings accounts—a reform that would drive down health care prices for the poor, that Congress can enact via reconciliation, and that does not divide ObamaCare opponents like tax credits do, not least because HSAs do not subsidize abortion like tax credits do. They could convert Medicaid into an actual system of block grants, giving states the flexibility to target Medicaid funds to those who still could not afford the care they need.

Reprinted from Cato.

Michael F. Cannon

Michael F. Cannon is the Cato Institute’s director of health policy studies.

This article was originally published on FEE.org. Read the original article.

Medical Entitlements Make Care Expensive

Senator Rand Paul has introduced an alternative bill to what he calls, “Obamacare Lite,” a.k.a. the American Health Care Act, introduced by House Speaker Paul Ryan. Paul’s criticism of Ryan’s bill was mild compared to Rep. Thomas Massie’s. Massie called Ryan’s bill a “stinking pile of garbage.”

While Paul’s plan is more free-market oriented than Ryan’s, no plan is addressing the one elephant in the room that must be slain before anything resembling a free market in health care can emerge: entitlements.

Distorting Supply and Demand

While Medicare and Medicaid’s effect on the federal budget is generally acknowledged, seldom mentioned is the percentage of overall healthcare spending that is tax-subsidized and the effect that has on prices. A study by the Georgia Institute of Technology found that of over $2.5 trillion in total U.S. health care spending in 2014, Medicare, Medicaid and “Other Public Insurance” accounted for 44% of it. By comparison, spending by private insurance companies accounted for only 33%, with out-of-pocket spending a mere 13%. Most of the remaining 10% was attributed to “other payers.”

In other words, almost half of all health care purchases in the United States occur free from the two strongest price-limiting market forces: the freedom not to purchase and finite demand.

Yes, the patients have a choice of which medical services they utilize. But they don’t buy them; taxpayers do. And the taxpayers don’t have a choice.

Also, “demand” means not only the desire but the ability to purchase a product at a given price. I may want to purchase a Rolls Royce. But if I don’t have enough money, I don’t represent demand for a Rolls Royce.

Price is determined by the intersection of supply and demand. By adding over $1 trillion to total funds available for health care spending, government healthcare programs significantly increase demand. When demand significantly increases, supply and other factors being equal, prices go up. It’s Economics 101.

If half of all automobiles were purchased by government programs, the price of automobiles would behave just as health care prices do now. And politicians and other “experts” would be wringing their hands over how to solve the automobile crisis and ensure everyone has the opportunity to exercise their fundamental right to drive to work.

Entitled Providers

Anyone who points out these rather uncontroversial economic realities can expect to be answered with, “What? You want to let my grandmother just die because she can’t afford health care? Do you believe only rich people should be treated for sickness and injuries and everyone else should just be left to suffer?”

Invariably, opponents of these programs take the bait and respond as if government healthcare programs were solely entitlements for consumers. They’re not. They’re much more entitlements for providers, who believe they are entitled to fees their markets won’t bear.

Having worked in a past life with physicians, hospitals, and other providers for over a decade, I had a unique opportunity to understand their thinking (Disclosure: much of this time was spent in management positions at two of those “evil” HMOs). And while there are many exceptions to what I’m about to say, there are two things I found to be true about most physicians: One, they are among the most generous and compassionate people in society. Two, they share academia’s absolute contempt for the free market.

This results in a kind of Jekyll-Hyde approach to reimbursement. On one hand, a physician who encounters a patient with no verifiable ability to pay will nevertheless care for that patient, if the need is serious, without hesitation. Physicians and hospitals provide a considerable amount of care every year for which they are not paid, without complaint.

Yet the moment there is a payment avenue, that same physician suddenly loses not only his compassion but all connection with reality. Many were the times when a physician would say to me words to the effect of, “I’m entitled to higher compensation in return for the years of training I completed and the money I spent acquiring it.”

No, doc, you’re not. It is true that your skills are scarce and will fetch a higher price on the market than skills that are less scarce. But you’re only entitled to what others have agreed to pay you, like everybody else.

Free from Market Influence

This culture of entitlement extends throughout the healthcare industry. How many times have you spoken with the billing manager for a hospital or medical practice who makes some form of this passive-aggressive complaint: “Our billed charges for this procedure are $835.00, but your insurance only pays $520.”

I’ve taken to responding, “Yes, I know how you feel. My billed charges to my employer are $1,000.00 per hour, but my paycheck is only for what he agreed to pay me.”

I’m not suggesting physicians’ salaries necessarily must be cut to restore price reality to medicine. A free market may give them a haircut; it may not. But there are many costs other than the physician’s salary in delivering health care and there is no real pressure to improve efficiency in any of them.
As just one example, think about how many times you provide your health insurance information to your doctor’s office. They get it from you on the phone before even agreeing to make an appointment. Then, you have to write it on a paper form when you get to the office, sometimes more than once, on more than one form. Why? They’ve already captured that info on the phone. It’s in their billing system. Who’s reading, filing and otherwise processing the paper form(s) and why?

Many medical practices run the way they did in the 1950s for one reason: they don’t have to change. Half their revenues are guaranteed, at any price, by a customer base that can’t say no. Grocery stores, which provide products even more vital to human survival than medical care, operate on razor-thin margins. Their prices behave normally when adjusted for inflation. No one seems curious about why that is.

Deflating Healthcare Prices

From time to time, proposals are made to phase out Medicare and Medicaid, the assumption being that there can be no major market disruption. That’s just another manifestation of the strange notion that medical care is in some sacred and holy category that more important goods and services don’t occupy.

While there are plenty of government interventions on the supply side that artificially inflate health care prices, the most effective way to normalize pricing would be to abolish Medicare and Medicaid tomorrow. That would cut demand for those services immediately by over $1 trillion per year. With a significant decrease in demand comes a significant decrease in prices.

And guess what? There would still be doctors, hospitals, pharmaceutical companies and other providers who want and need to deliver care and make profits. Only they’d have to adjust their business models to deliver their products at prices their customers could afford. This may sound scary, but industries have demonstrated their resilience to disruption over and over throughout history. And we’re talking about one composed of people at the far right of the bell curve. All experience says the turmoil would be far briefer and less harmful than the hysterical predictions we can expect from those benefiting from the current system.

Abolishing these programs won’t cut off granny. It will cut off McKesson, Merck and a lot of very wealthy physicians (who’d still be wealthy afterward) from the government till. We’d all be treated much more like customers by the people whose medical services we purchase and health insurance premiums would plummet.

Proposals like Senator Paul’s will produce positive results on the margin, but until the entitlements are abolished, they won’t succeed in restoring normalcy to the health care market.

Tom Mullen

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? and A Return to Common  Sense: Reawakening Liberty in the Inhabitants of America. For more information and more of Tom's writing, visit www.tommullen.net.

This article was originally published on FEE.org. Read the original article.