Paul Ryan
Credit: Tony Alter/Flickr

Speaker Paul Ryan took a lot of heat for this part of his power point presentation on the Republican health care plan last week.

He was proposing to take people with pre-existing conditions out of the group that would purchase insurance on the exchanges and put them into a high-risk pool. Other than the fact that there is not enough money allocated in their bill to cover those costs, states have pretty consistently shown that high-risk pools don’t work. But for the remaining healthy people, Ryan is right that such a move is likely to reduce their premiums. The takeaway is that the Republican plan works as long as you stay healthy. It would be a disaster if you get sick.

There are a couple of other ways this is the case with the Republican plan. One of their latest talking points is that the issue is not coverage (which is sure to be lower under their plan), but care. That is a point made by both Gary Cohn, chief White House economic advisor, and Mick Mulvaney, White House Office of Management & Budget director, yesterday. Here are Mulaveny’s comments:

Mulvaney said he opposes the tendancy to measure health care quality by insurance coverage. He called health insurance a “piece of paper,” and said that people who were still insured might not be able to afford to go to the doctor because of high deductibles.

“They can afford to have a little plastic piece of paper that says they have an insurance policy, but they can’t afford to go to the doctor,” he said about healthy people for whom having no coverage would be less expensive.

Aside from the fact that not having coverage is a pretty substantial barrier to getting care, Mulvaney is right that high deductibles can inhibit the ability to get care. But rather than increase subsidies to cover those deductibles, the Republican plan will decrease them for those who are older and more likely to get sick. As a result, they are more likely to lose their coverage, meaning that they won’t drive up costs. The takeaway is that if you’re young and healthy, this plan will work. If you’re older, it is a disaster.

Finally, Republicans have been clear that the current bill is merely phase one in their efforts to repeal and replace Obamacare. Phase two involves the Trump administration (i.e., HHS Sec. Tom Price) getting rid of regulatory reforms contained in Obamacare. That is when we will witness a loosening of the 10 essential benefits that all insurance plans are currently required to provide and the return of “junk insurance.” Prior to the ACA, that meant things like “mini-med health plans” that covered the first $2000-$7000 dollars of health expenses, with the remainder coming out of the pocket of those insured. Once again, that works well for those that are relatively healthy, but would be a disaster if you got sick.

It is important to keep all this in mind because the Republicans will be staking their claim on the fact that the number of people who are mostly healthy is many times greater than the number who are sick. For the majority, the American Health Care Act is likely to look pretty good.

But no one buys insurance for when they’re healthy. We buy health insurance for the same reason we buy other kinds of insurance: to provide some financial security when bad stuff happens, like when we get sick. Under those circumstances, the Republican plan would mean either no coverage, junk plans, or an underfunded high-risk pool that doesn’t work.

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