3 gallingly wrong assumptions at the heart of the GOP's 'Better Care' act

A sharp crew of conservative policy wonks (the "reformocons") has long tried to put together a coherent critique of and alternative to Barack Obama's Affordable Care Act. The GOP House's American Health Care Act largely ignored these proposals. But the Better Care Reconciliation Act, released by the Senate last week, migrates back in the reformocons' direction.

Avik Roy, the premiere conservative health wonk, declared that if the Senate bill passes, "it'll be the greatest policy achievement by a GOP Congress in my lifetime." The New York Times' Ross Douthat, another reformocon scribe, was less enthusiastic. But he allowed that the Senate bill improves on the House version in many ways.

Here's the problem: The Senate bill is awful largely because it partially embraces conservative wonks' ideas.

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And it really is awful. On Monday afternoon, the Congressional Budget Office came out with its score of "Better Care." It was brutal. If it passes, the nonpartisan government number crunchers found that 22 million more Americans would be uninsured in 2026 compared to sticking with current law. Fifteen million would lose coverage next year alone.

One of the wonks' bedrock beliefs is that health insurers are destructive middlemen who drive up health-care prices. In most markets, individual consumers shop for the best deal on a good or service. That puts market pressure on providers to keep prices down. But in health care, insurers largely do the shopping on behalf of consumers. And the more generous the coverage, the more completely the insurer insulates the consumer. Conservative wonks argue that this muddles market pressure and allows health-care prices to spiral out of control.

Conservative wonks thus push for more out-of-pocket spending. The want skimpier plans and higher deductibles to re-establish the direct market relationship between consumers and providers. And in that respect, the Senate plan delivers.

Of course, that's the polar opposite of what most Americans — including most Republican voters — want from their health insurance. Nevertheless, the Senate bill undermines rules requiring insurers to provide generous coverage, and it deliberately refashions premium subsidies to push people into high-deductible plans. The bill's long-term strategy is clearly to reduce Medicaid — a relatively generous government insurance plan with few deductibles or cost-sharing — to irrelevance, while moving most of its beneficiaries onto skimpy private coverage.

This brings us to the first of three massive problems.

1. Asking consumers to control health-care prices is nuts.

If you take the wonks' middleman thesis seriously, even the Senate bill isn't nearly extreme enough. Roughly two-thirds of all U.S. health spending is done on behalf of people who rack up at least $26,000 in health costs in a year. So even with the deductibles of $7,000 or more that we'd get from the Senate bill, the vast majority of costs in the system will still be paid by the insurance middlemen. To really get most costs back under the umbrella of direct out-of-pocket spending, you'd need deductibles of $26,000 or so to be the norm.

That's obviously insane. The vast majority of Americans could not afford those deductibles, not even close.

What conservative wonks miss is that insurers also shop for health care, and are already just as capable of putting market pressure on providers as consumers would be. What we need to reform is the market relationships between insurers and providers, and then between consumers and insurers, to ensure everyone is properly incentivized to contain costs.

It's highly debatable how well ObamaCare handled these tasks. But pushing higher out-of-pocket costs as a better solution is daft.

2. There's no way GOP lawmakers would actually pay for these deductibles.

Let's set aside point number one and assume for a moment that $7,000 deductibles actually would ratchet down health-care prices. That would still take decades. Until then, we'd be stuck with today's sky-high prices. And with those prices, few can afford a $7,000 deductible.

Conservative wonks have a solution: Give people enough cash each year to cover the deductible. They could use that money to buy health care, or they could use it for something else. That way, individuals would still shop among health providers, but they'd be held financially harmless.

That could work! But it would require more spending than ObamaCare or even single-payer.

Think about it this way: Premiums pay for the health care that insurance customers actually consume. But giving people enough cash to afford their deductible covers health care they might consume. Most people don't max out their deductible in a given year. But everyone would need the cash just in case they did.

As such, the conservative wonk system would actually require way more government spending than just encouraging generous no-deductible coverage and then subsidizing premiums. It would redistribute just as much money as the most crazed leftist program. But there's only one party in American politics that does big government spending, and it ain't the Republicans.

So what does the Senate bill do? Well, it just leaves people to deal with high deductibles on their own.

3. Conservative wonks think you go to the doctor too much.

Another bedrock belief of the conservative wonks, not often expressed publicly, is that at least some of the care Americans consume is unnecessary. This circles back around to the other proposals: Americans think they need that care, but they really don't. And a good way to get them to be more disciplined is to make them pay more themselves. People are far more financially cautious when they're spending their own money, after all.

There's obviously something to this basic idea. But when it comes to health care, it's a remarkably bloodless and technocratic argument — reminiscent, even, of Sarah Palin's infamous "death panels."

Consider a very mild example. As Vox's Matt Yglesias noted in a podcast, when your child is sick, being told by the doctor the illness will pass in a few days has real value. It removes fear and stress, even if the money spent on the doctor didn't change anything about your kid's physical health. Who's to decide that such medical spending is excessive?

Think of the Senate bill as a massive social experiment: Just how little care we can give someone before it starts really screwing up their lives? Who should be our guinea pigs? The GOP's answer is clear: the poor and the working class. Douthat, to his credit, suggests performing the experiment on the well-off: Cover deductibles for low-income Americans with cash, then force high-deductible plans on the upper class by scrapping the tax break for employer-provided coverage.

That might work. But that proposal boils down to a huge transfer of resources from the rich to the poor. How confident are you that the Republican Party would champion that reformocon idea?