It’s the Senate’s turn to ponder health care reform

As the Senate takes up the House bill to replace Obamacare, Republican control of Congress likely hangs in the balance. The health insurance market is about to collapse, and Republican senators must agree on a solution or face the wrath of angry voters.

President Barack Obama and then-House Speaker Nancy Pelosi advertised that the Affordable Care Act (ACA) would offer affordable health insurance to virtually all Americans, but, quite simply, it has not delivered.

The law requires Americans to obtain coverage either through employers or directly on government-run exchanges. Families with incomes up to $98,400 may receive subsidies based on their income, family size and insurance costs in their county.

For the 31 states that opted in, the ACA expanded Medicaid coverage to low-income childless adults - even those without jobs and not seeking employment.

The ACA did reduce the number of uninsured, but more than 20 million adults under 65 remain uninsured. More than half of those say insurance is still too expensive.

Sixty-eight percent of all counties have only one or two companies offering plans, and it took considerable jawboning by Obama to ensure every county has at least one insurer. Next year that likely will not be possible.

Absent meaningful competition, premiums are rising 25 percent a year.

The Republicans' American Health Care Act (ACHA) would end mandates to purchase insurance and offer subsidies of $2,000 to $4,000 per person to families with incomes up to $150,000, mostly based on age, not income or geography.

After 2019, it would replace Medicaid funding to the states with block grants that limit federal spending. The states could seek waivers from Health and Human Services to establish risk pools for individuals likely to impose large claims owing to their health history, trim the list of benefits the ACA requires every policy to include, and permit insurers to charge older Americans premiums five times more than young adults - up from 3-to-1 under the ACA.

Among its shortcomings, the ACHA will raise the overall cost of obtaining decent health care - premiums plus out-of-pocket expenses - for low-income, rural and older Americans. While repealing most ACA taxes on the well-off and the health care industry, it would actually create a new entitlement for Americans with family incomes over $98,400. How making working families worse off to finance a new entitlement for more prosperous Americans is consistent with Republican conservative values escapes me.

On the plus side, capping federal transfers to the states for Medicaid will likely result in work requirements and reduction in benefits for childless adults who refuse to work. More Americans would be without health insurance, but many of those would be younger people preferring to self-insure - something everyone should be entitled to do.

Democrats in the Senate are unlikely to offer Republicans much if any help getting to 60 votes for a bill that shifts benefits in favor of more affluent citizens. That leaves it to Majority Leader Mitch McConnell to come up with at least 51 votes from the Republican caucus to pass the measure though reconciliation.

For conservatives like Sens. Ted Cruz of Texas and Mike Lee of Utah, the ACHA expansion of entitlements to upper-income Americans will be difficult to swallow. Sen. John Thune of South Dakota has suggested the bill's insurance subsidies be tied more closely to income than age. This would actually help low-income and elderly Americans if the caucus is willing to junk subsidies for families over $98,400.

Moderate Republican senators like Rob Portman of Ohio, Lisa Murkowski of Alaska and several others have expressed concerns about the fiscal consequences for their states of scaling back federal Medicaid funding, but that is where the rubber meets the road. If rolling back benefits for healthy adults who won't work is an issue, the efficacy of having Republicans in control of the government becomes highly questionable.

Without a workable compromise, the ACA remains in force. Even with arm-twisting from President Donald Trump, many counties will have no insurance company on their government exchange in 2018.

Americans without employer-provided insurance would be left to scramble and many will do without coverage. What they would find would be prohibitively expensive and not qualify for ACA subsidies.

I can think of no better way for the Republican Party to motivate Americans to vote for Democrats in 2018.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.

Credit: By Peter Morici For the Deseret News