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Monday, July 10, 2017

Paul Krugman: Three Legs Good, No Legs Bad

There are three good reasons why Republicans, in their quest to fund tax cuts for the wealthy, can't find an alternative to Obamacare that avoids "a huge rise in the number of uninsured":

Three Legs Good, No Legs Bad, by Paul Krugman, NY Times: Will 50 Republican senators be willing to inflict grievous harm on their constituents in the name of party loyalty? I have no idea.
But this seems like a good moment to review why Republicans can’t come up with a non-disastrous alternative to Obamacare...
Suppose you want to make health coverage available to everyone..., the Affordable Care Act went for ... the so-called three-legged stool.
It starts by requiring that insurers offer the same plans, at the same prices, to everyone... This deals with the problem of pre-existing conditions. On its own, however, this would lead to a “death spiral”: healthy people would wait until they got sick to sign up, so those who did sign up would be relatively unhealthy, driving up premiums, which would in turn drive out more healthy people, and so on.
So insurance regulation has to be accompanied by the individual mandate, a requirement that people sign up for insurance, even if they’re currently healthy. And the insurance must meet minimum standards: Buying a cheap policy that barely covers anything is functionally the same as not buying insurance at all.
But what if people can’t afford insurance? The third leg of the stool is subsidies ... for those with lower incomes. For those with the lowest incomes, the subsidy is 100 percent, and takes the form of an expansion of Medicaid.
The key point is that all three legs of this stool are necessary...
 Republicans ... ideas involve sawing off one or more legs of that three-legged stool.
First, they’re dead set on repealing the individual mandate...
Second, they’re determined to slash subsidies — including making savage cuts to Medicaid — in order to free up money ... to cut taxes on the wealthy. The result would be a drastic rise in net premiums for most families.
Finally, we’re now hearing a lot about the Cruz amendment, which would let insurers offer bare-bones plans with minimal coverage and high deductibles. These would be useless to people with pre-existing conditions, who would find themselves segregated into a high-cost market — effectively sawing off the third leg of the stool.
So which parts of their plan would Republicans have to abandon to avoid a huge rise in the number of uninsured? The answer is, all of them.
After all these years of denouncing Obamacare, then, Republicans have no idea how to do better. Or, actually, they have no ideas at all.

    Posted by on Monday, July 10, 2017 at 02:17 AM in Economics, Health Care | Permalink  Comments (94)


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