A long time ago, in 1968, Lyndon Johnson remembered a story:
I have been told of how Herbert Hoover, shortly after leaving the Presidency, was walking down a street with his Secretary of the Treasury, the very businesslike and tough-minded Andrew Mellon.
Very few people recognized them as they walked along. Suddenly, Mr. Hoover remembered that he had to make a phone call. He asked Mr. Mellon for a nickel, explaining that he had to call a friend. Andrew Mellon shrugged, dug down in his pocket and held out his hand, saying, “Here’s a dime. Call both of them.”
Johnson was speaking to the Members of the Business Council, and presumably they laughed, uncomfortably. He was reminding them that Hoover and Mellon blew it. Taking care of the business folks, letting them be, and assuming that would be good for everyone, gave America the Great Depression – and neither of them had any friends. FDR was in the White House trying to fix things, after Mellon has been saying things like this:
Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up from less competent people.
Prosperity of the middling and lower orders depends upon the fortunes and light taxes of the rich.
There is no cause to worry. The high tide of prosperity will continue.
That didn’t work out, and thirty-six years later LBJ was saying this:
When I first entered public life, America was torn by two opposing economic theories: the “trickle-down” theory and the “sock-it-to-’em” theory.
The “trickle-down” theory argued that all America needed was prosperity for the business community and the money would eventually find its way down to the people at the bottom of the economic ladder.
It worked just like it sounded. By the time the money got down to the poor people, it was nothing more than a trickle–a drip, and that was when things were prosperous. If we had a recession, the money stopped altogether.
It’s like the farmer said down in my part of the country about the Great Depression: “It wouldn’t have been so bad if it hadn’t come right in the middle of hard times.”
And the repeal and (sort of) replacement of Obamacare wouldn’t have been so bad if it hadn’t come in the middle of hard times, but the same argument continues:
House Speaker Paul Ryan (R-WI) on Tuesday called estimates that millions of people could lose health care coverage under an Obamacare replacement a “bogus” metric, and said lowering costs for everyone was more important.
Ryan also said he could “guarantee” that a finalized proposal would have enough votes to pass the House of Representatives.
“By some estimates, 10 million people could lose coverage. Is that acceptable?” one reporter asked Ryan at a press conference Tuesday afternoon.
He said that was beside the point. Costs would be lower. Things would work out, and there was this:
Rep. Jason Chaffetz (R-UT) on Tuesday morning brushed off concerns about the access low-income Americans will have to health insurance with Republicans’ plan to replace Obamacare, arguing that Americans will just have to choose between a new phone and health insurance.
“Americans have choices. And they’ve got to make a choice. And so maybe rather than getting that new iPhone that they just love and they want to go spend hundreds of dollars on that, maybe they should invest in their own health care. They’ve got to make those decisions themselves,” Chaffetz said on CNN’s “New Day” when pressed on insurance for low-income Americans under the latest draft legislation to replace the Affordable Care Act.
Chaffetz made the comments as CNN’s Alisyn Camerota quizzed the congressman on coverage under Republicans’ plan to replace Obamacare. She noted that the Kaiser Foundation’s Larry Levitt said Monday that the GOP plan would likely leave more people uninsured.
In response, Chaffetz noted that the plan will give states more flexibility and said that the plan will “make sure that people have access to the quality health care that they want.”
That wouldn’t do:
Later, Camerota asked one final time whether the Republican plan would result in more access but less coverage.
“Well, yes. Yes, I think that’s fair,” Chaffetz replied before adding the caveat that there hasn’t yet been a full analysis of the bill.
In short, wait. Things will work out, and then the ghost of Andrew Mellon spoke out:
Later on Tuesday, Chaffetz told Fox News that his comment about choosing between healthcare and a new iPhone did not come out well, but he stressed that Americans should be responsible for their own healthcare.
“What we’re trying to say – and maybe I didn’t say it as smoothly as I possibly could – but people need to make a conscious choice and I believe in self-reliance,” Chaffetz said on Fox News’ “America’s Newsroom.” “And they’re going to have to make those decisions.”
High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted. That seems to have been his point too. Maybe pay-phones on every corner will come back too.
The New York Times covers the cold hard facts of the matter:
Millions of people who get private health coverage through the Affordable Care Act would be at risk of losing it under the replacement legislation proposed by House Republicans, analysts said Tuesday, with Americans in their 50s and 60s especially likely to find coverage unaffordable.
Starting in 2020, the plan would do away with the current system of providing premium subsidies based on people’s income and the cost of insurance where they live. Instead, it would provide tax credits of $2,000 to $4,000 per year based on their age.
But the credits would not cover nearly as much of the cost of premiums as the current subsidies do, at least for the type of comprehensive coverage that the Affordable Care Act requires, analysts said. For many people, that could mean the difference between keeping coverage under the new system and having to give it up.
“The central issue is the tax credits are not going to be sufficient,” said Dr. J. Mario Molina, the chief executive of Molina Healthcare, an insurer that offers coverage through the Affordable Care Act marketplaces in California, Florida and several other states.
Facts are facts:
The Congressional Budget Office has yet to release its official estimates of how many people would lose coverage under the proposal, but a report from Standard & Poor’s estimated that two million to four million people would drop out of the individual insurance market, largely because people in their 50s and early 60s – those too young to qualify for Medicare – would face higher costs. Other analysts, including those at the left-leaning Brookings Institution, have estimated larger coverage losses.
While the tax credits in the Republican proposal are the most generous for older people – $4,000 for a 60-year-old compared with $2,000 for a 25-year-old – they end up covering less of an older person’s costs. As soon as next year, the Republican plan would allow insurers to begin charging older individuals much more than younger individuals. Insurers are prohibited today from charging the older person more than three times as much as the youngest, but the Republican plan would allow them to charge five times as much. A 64-year-old could see annual premiums increase by almost 30 percent to $13,100 on average, according to the S&P analysis.
And there’s more:
The proposal would also eliminate another important element of the subsidies, the financial assistance available for low-income people with their out-of-pocket costs, such as deductibles and co-payments. While many of the plans now sold through the Affordable Care Act marketplaces have large deductibles, the cost-sharing reductions available protect lower-income people from medical bills that could otherwise run into the thousands of dollars. Analysts say the lack of out-of-pocket assistance is likely to make any plan much less attractive to low-income people.
The middling and lower orders will just have to make do – it will be good for them – and there’s this:
Legislation could also fundamentally weaken the insurance market by doing away with the so-called individual mandate, which requires people to have coverage or pay a tax penalty. While it would be replaced by a 30 percent surcharge when someone buys a policy after dropping coverage, the surcharge could be weaker than the current mandate, and younger people might continue to gamble on not having coverage until they get sick.
The result, said Donald H. Taylor Jr., a health policy professor at Duke University, is that people who buy coverage are sicker, causing the cost of premiums to soar. “This looks like to me adverse selection on steroids,” he said. “I don’t see how it doesn’t crater the individual market.”
Dr. Molina, the Molina Healthcare chief executive, said insurers are likely to increase their premiums significantly because they will worry about enrolling more high-cost patients as healthier people opt to go without coverage.
“Insurance companies are going to jack up the rates,” predicted Dr. Molina, who said premiums might increase even more than they did last year when some companies raised the rates by 25 percent or more.
And then everything falls apart – Molina sees “destabilized markets” – and Ezra Klein wonders what all this is about:
The biggest problem this bill has is that it’s not clear why it exists. What does it make better? What is it even trying to achieve? Democrats wanted to cover more people and reduce long-term costs, and they had an argument for how their bill did both. As far as I can tell, Republicans have neither. At best, you can say this bill makes every obvious health care metric a bit worse, but at least it cuts taxes on rich people? Is that really a winning argument in American politics?
Klein sees this:
In reality, what I think we’re seeing here is Republicans trying desperately to come up with something that would allow them to repeal and replace Obamacare. This is a compromise of a compromise of a compromise aimed at fulfilling that promise. But “repeal and replace” is a political slogan, not a policy goal. This is a lot of political pain to endure for a bill that won’t improve many peoples’ lives, but will badly hurt millions.
Kevin Drum disagrees with that:
There’s no way to say this without sounding hopelessly partisan, so I’ll just say it: Republicans knew exactly what problem they were trying to solve. Their preference has always been to repeal Obamacare and do nothing in its place, but they don’t have the votes to overcome a Democratic filibuster, so they can’t do that. They also realize that the optics of baldly ripping away health coverage from 20 million people would be mildly troublesome.
So their goal was simple: do what they could to destroy Obamacare and take away as much health coverage as they could, without making it look like they weren’t offering a replacement. The result is a plan that offers the trappings of health care – subsidies, pre-existing conditions, etc. – but which is all but useless to the people who actually need it. It’s too stingy for poor people, and mostly unnecessary for middle-class folks who already get health insurance from their employers. It will cost very little because virtually nobody will use it.
And there’s this:
The part they apparently didn’t realize is that keeping the pre-existing conditions clause – which is both popular and impossible to repeal – while tearing down the rest of Obamacare is likely to destroy the individual insurance market. At least, I assume they didn’t realize that, since this would be bad news even by Republican standards.
I don’t know what, if anything, they plan to do about that. Maybe nothing. Maybe they’re just counting on their repeal bill failing in the Senate, so nothing bad will happen and they can get back to complaining about Obamacare.
That’s possible, but Karen Tumulty addresses what may be the real issue here:
Redistribution of wealth – one of the most radioactive subjects in American politics – has moved from being a subtext in the national debate over health care to being the core of it.
Politicians prefer to talk about health reform in terms of benefits – extending medical coverage to those who lack it, curbing increases in costs and improving quality.
They offer gauzy, have-it-all promises to make the system better, more efficient and more generous, as though it can all be done without anyone having to sacrifice anything.
Isn’t it pretty to think so? No, it’s not pretty:
What makes the latest health-care battle different from past ones is that it is not about building a new government program. This time, the question is whether to abolish one – and replace it with something else.
That means it is harder to gloss over a bedrock philosophical and ideological question that has always been in the background of any argument about the government’s role in health care: What is the minimum that society should provide for its poorest, most vulnerable citizens, and how much should be taken from the rich and powerful to do it?
“Even though it is a technical discussion, it’s a really big value discussion,” said Robert Blendon, a professor of health policy and political analysis at Harvard University.
And it’s about what LBJ called the “sock-it-to-’em” theory:
Democrats, who had passed the seven-year-old system known as Obamacare without a single Republican vote, say that the GOP proposal to repeal more than 20 taxes enacted under the law amounts to a windfall for the rich and for corporate interests.
The Republican plan also probably would make Medicaid, the program that provides coverage to the poor, less generous.
Overall, it would be “a big transfer. This is a massive tax cut for unpopular industries and wealthy individuals,” said Andy Slavitt, who was acting administrator of the Centers for Medicare and Medicaid Services during the final years of the Obama administration. “It is about cutting care for lower-income people, seniors, people with disabilities and kids to pay for the tax cut.”
The prosperity of the middling and lower orders depends upon the fortunes and light taxes of the rich, doesn’t it? That argument never ends:
“The House Republican proposal released last night not only accepts the flawed progressive premises of Obamacare but expands upon them,” said Michael Needham, the chief executive of Heritage Action for America.
However, economic historian Bruce Bartlett, who served in the administrations of Ronald Reagan and George H. W. Bush, said that argument ignores that health insurance itself is a means of spreading the cost of health-care around.
“Republicans argue that redistribution is inherently immoral without acknowledging that the very nature of insurance is per se redistributive,” Bartlett said. “You’re taking money from people whose houses don’t burn down to give it to the people whose houses do burn down.”
That’s the general idea. That’s how all insurance, a pooled-risk contract, works. But there’s a bit of a disagreement there:
Republican efforts to revise the Affordable Care Act met with widespread resistance Tuesday from conservatives in and out of Congress, moderates in the Senate and key industry stakeholders, casting doubt on the plan’s chances just one day after House GOP leaders released it.
The most imminent and serious threat to the plan crafted by House Speaker Paul D. Ryan (R-Wis.) was the growing backlash from conservative lawmakers and powerful outside groups who argue that the draft is nothing more than “Obamacare Lite,” a disparaging reference to the former president’s signature 2010 domestic achievement.
The lawmakers do not represent a majority of Republicans in either chamber of Congress, but there could be enough of them to scuttle any health-care bill they oppose – and several said Tuesday they intend to use that leverage to force major changes to the measures.
They don’t like the whole pooled-risk concept, but there is the Big Guy:
President Trump said at a meeting with House Republicans on Tuesday afternoon that he would work with them to secure passage of their plan.
According to several attendees, Trump made clear that he wants the House bill to be approved and land on his desk largely intact. He pledged to become personally involved in persuading skeptical lawmakers and warned that failing to pass the legislation would result in trouble at the ballot box for Republicans who pledged to repeal and replace Obamacare.
“The president said very clearly that this is the bill he wants on his desk, and he wants to get this done quickly,” said Rep. Patrick T. McHenry (R-N.C.), the House GOP chief deputy whip, who attended the meeting. “The president is paying attention to what people are saying and doing, where they’re saying it and doing it. He is highly aware and has a highly attuned ear to what is happening in the press and has a real understanding of the challenges in order to get this bill on his desk.”
He then promised to destroy anyone who gets in his way, like Rand Paul, with a series of those career-ending tweetstorms. Others report said he used the word “bloodbath” – they’ll be sorry – but that others can start bloodbaths too:
Lawmakers may also be persuaded by outside groups such as Heritage Action for America, the Club for Growth and FreedomWorks, which came out strongly against the leadership proposal Tuesday, dubbing the plan “Obamacare Lite,” “RyanCare” or “RINOcare,” the latter a reference to “Republican in name only,” a popular conservative epithet for establishment politicians. Those groups are adept at riling up the GOP base against Republican leaders and could cause significant headaches for Ryan.
“The House Republican proposal released last night not only accepts the flawed progressive premises of Obamacare but expands upon them,” Michael Needham, the head of Heritage Action for America, said in a statement Tuesday. “Congressional Republicans should fully repeal the failed law and begin a genuine effort to deliver on longstanding campaign promises that create a free market health care system.”
FreedomWorks and the Club for Growth both decried the plan as a betrayal of Republican campaign promises.
So it will be the Big Guy against the “real” conservatives. That’ll be fun, and there’s this:
At least one of the country’s biggest health-care groups weighed in with caution on the proposal. The American Hospital Association, representing 5,000 hospitals and other health-care groups, argued that the process should not advance until the CBO provides a cost estimate.
Hospitals rely on Medicare reimbursements and Medicaid distributions, and paying customers – those with solid and valid insurance – to keep afloat. They’d rather not go under. They’re worried, but everyone’s worried:
The dilemma Republican congressional leaders face is that if they change the legislation to appease hardline conservatives, they are likely to alienate more-moderate members who are wary of disrupting insurance markets and taking away coverage from those who gained it under the ACA.
Four Senate Republicans have expressed worries about the plan’s possible impact on lower-income people who received Medicaid coverage through the ACA’s expansion of that program. The four senators are split on what proposals would meet their standards, but none is likely to support the course of action favored by many conservatives.
So, four or eight years from now, Donald Trump, shortly after leaving the Presidency, is walking down a street with Paul Ryan, and suddenly remembers that he has to make a phone call, to a friend – but there’s no joke about calling both of them. They both sigh. Neither of them has any friends. They never had any friends. They made that choice long ago. And they didn’t even destroy Obamacare.