House Republicans only managed to pass their Obamacare repeal bill last week after negotiating a compromise that would allow party moderates to pretend that they weren’t stripping popular consumer protections from their own constituents. The deal, known as the MacArthur amendment, lets states decide whether to drop many of the Affordable Care Act’s key insurance market regulations—including rules that require carriers to cover certain essential medical benefits or prevent them from charging customers higher premiums because of their bad health.
This was meant to bridge the positions of hard-line conservatives, who wanted to scrap virtually all of Obamacare’s major market rules, and members from blue states who worried about the backlash they’d get for killing off safeguards that voters broadly like. Mississippi and Arizona could apply for waivers to opt out. Illinois and New York could leave well enough alone.
Or, to put it another way, Republicans have promised that if you like your consumer protections, you can keep them.
But while technically true, this is pretty much an empty promise. As Kaiser Health News points out in a useful piece this week, there are plenty of reasons to think that if the American Health Care Act (or something similar) ever becomes law, legislators in liberal redoubts like New York and California will eventually have to weaken or abandon the consumer protections at the heart of Obamacare in order to keep insurance premiums from becoming unaffordable, especially for lower-income families.
The problem is that Obamacare’s market rules likely won’t work well without its coverage subsidies, which Republicans would slash for many families. Requiring insurers to cover a wide array of basic services makes insurance more expensive, and forcing them to charge sick customers the same rates as everybody else drives up the cost for healthier men and women. The ACA makes up for all of this (or tries to, anyway) by offering tax credits that are more generous for people with lower incomes or who live in places where coverage tends to be more expensive. But the GOP’s bill offers much skimpier financial support to the young and relatively poor, likely pricing them out of Obamacare-style plans.
Making matters worse, the House plan would kill off the individual mandate’s requirement that all Americans buy health insurance, which could lead more young and healthy men and women to go without. That would likely drive up prices for remaining customers, also making it hard for states to justify keeping Obamacare’s regulations in place.
Some large states like New York or California could theoretically offer their own subsidies or pass a state-level individual mandate, just as Massachusetts did under Romneycare. But state budgets are already tight, and legislators will already have to grapple with the cuts to Medicaid that the GOP is planning. Will pols in Albany or Sacramento be willing to raise taxes to preserve the Obamacare status quo? I wouldn’t necessarily count on it. And if not, their only other choice may be to apply for a waiver.
The American Health Care Act passed the House with the help of New York, New Jersey, and California legislators who will claim they protected their own voters’ interests. It is a completely dishonest premise.