“Pledge to America” Would Mean More Uninsured, Higher Deficits, and Weaker Medicare

In addition to the sharp funding cuts we noted yesterday, another major component of the legislative blueprint some House Republicans issued yesterday is near-full repeal of the Affordable Care Act (ACA) — i.e., health reform.  In its place, the House Republicans propose the same policies they offered as an alternative to health reform last fall.

• The Republican blueprint would likely cover only 3 million of the uninsured, 29 million fewer than under the ACA, according to the Congressional Budget Office.
• The proposal would likely produce deficits that are tens of billions of dollars higher over the next decade — and hundreds of billions of dollars higher over the following decade — than would occur under the ACA.  This is because the Republican blueprint would repeal the ACA’s revenue increases and Medicare and Medicaid savings (which more than offset the cost of the law’s coverage expansions, reducing the deficit by $143 billion over ten years and $1.3 trillion in the following decade, according to CBO).  The proposal would replace these provisions with only modest savings in the health area.
• The Republican blueprint’s elimination of the Medicare savings and efficiencies in the ACA would likely move up the date when Medicare becomes insolvent by 12 years (to 2017) and drive Medicare premiums higher.

Moreover, at the same time that the blueprint would repeal the ACA’s requirement that individuals have health coverage or face a penalty, it purports to keep several of the law’s popular insurance-market reforms, such as the rules preventing insurance companies from denying coverage to people with pre-existing medical conditions or from placing lifetime caps on covered benefits.

As this Center report explains, implementing the insurance market reforms without an individual mandate would be doomed to failure.  In fact, such an approach would make health coverage less affordable, not more so because:

• The people most likely to enroll in health coverage after enactment of such reforms would be older people and people with pre-existing medical conditions, who could not purchase coverage and needed health care most urgently.  Healthier people, knowing they could wait to buy coverage until they got sick, would be less likely to enroll.  This would drive up premiums significantly, since less healthy people cost more to treat — and thus to insure.
• The resulting increase in premiums could further discourage healthy uninsured people from buying coverage and could lead some healthier people who already have coverage to cancel it.  This, in turn, would raise premiums still higher, triggering a vicious cycle, commonly called a “death spiral.”

It was precisely to prevent this from happening that policymakers included the individual mandate in the ACA.

Our report also notes that criticisms of the individual mandate echo arguments from Social Security’s opponents back in the 1930s:

Opponents of the individual mandate make many of the same arguments that opponents of Social Security made when it was first enacted.  At the time, some argued that requiring people to pay a portion of their wages into Social Security was an infringement on personal liberty and an oppressive burden that the federal government had no right to impose.

Over time, however, the vast majority of people have come to recognize the value of protecting America’s seniors through Social Security.  Mandatory Social Security provides critical help to people who hoped to save enough on their own for their retirement but didn’t succeed in doing so or were wiped out by an unexpected catastrophic cost, disability, or the loss of employment.

Similarly, the individual mandate will protect people who are healthy now and don’t think they need insurance but subsequently develop a serious illness or have a serious accident and otherwise would face exorbitant costs for care and possibly be forced into medical bankruptcy.  It is an essential part of a package of health reforms that will move the nation a long way toward achieving another valued, common goal: quality, affordable health coverage for all Americans.