Why the GOP is forever doomed to try replacing ObamaCare with suckier versions of ObamaCare

The party's priorities inevitably drive it toward more comfort for the already comfortable, and more affliction for the already afflicted. 

Repeal ObamaCare
(Image credit: (Pete Marovich/Corbis))

Republican Sens. Richard Burr of North Carolina and Orrin Hatch of Utah along with GOP Rep. Fred Upton of Michigan have put together a replacement for ObamaCare. And while neither their supporters nor detractors are likely to admit it, the plan bears a striking resemblance to, well, ObamaCare.

Health-care markets present a particular set of problems, with a limited range of possible solutions. So all realistic proposals for reform are going to have some basic structural similarities. The differences arise in what policymakers prioritize within those bounds.

That's what really divides the left from the right on this issue. And that's the reason Republicans seem perpetually doomed to keep offering replacements for ObamaCare that are basically suckier versions of ObamaCare.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

First, you need to get costs under control. You can do that with single-payer, all-payer rate setting, or by creating functional market competition between insurance providers. The first two options mean increasing government involvement, and the GOP won’t go there. And with ObamaCare, the Democrats actually picked option three as well. So the differences between ObamaCare and Burr-Hatch-Upton are limited to how they create that market.

According to Avik Roy, Burr-Hatch-Upton would “remove federal barriers” to selling and buying insurance across state lines. That moves us toward one national market in health insurance rather than 50 state-sized markets, which ostensibly means more competition and lower premiums. The downside is it turns the market into the Wild West; every state would be under pressure to offer the most lenient, skimpy, provider-friendly regulations they could to attract business, and insurers would cluster toward whatever state wins that race to the bottom. Good for insurance providers, bad for consumers.

The obvious win-win solution here — one national market and sound regulation — is to move the regulations from the state to the federal level. The original House version of ObamaCare did that by creating one national exchange, and if Republicans were smart, they'd be trying get us back there.

Next, you have to decide what to do with Americans who are high health risks and who have pre-existing conditions. ObamaCare simply outlaws denying consumers coverage due to pre-existing conditions, and this is what necessitates the infamous individual mandate. Insurers can’t keep sick people out of their risk pools, so their costs go up. Forcing all healthy Americans to enter the risk pools and buy coverage balances out the insurers’ finances.

Burr-Hatch-Upton does away with the mandate, and instead forbids insurers from considering pre-existing conditions as long as consumers keep themselves continuously covered by one plan or another. But if anyone lets their coverage lapse, insurers could again factor in their pre-existing conditions when deciding what to charge them or whether to offer them coverage.

So what if we had another big recession, and lots of people lost their jobs unexpectedly? They might not be able to afford any plan that covered their condition. And they’d be toast.

This is one of those funny instances where ideology completely overwhelms practical sense. The fees ObamaCare's mandate charges for noncompliance are relatively mild. But the consequences of not staying covered under this GOP alternative are potentially ruinous. Burr-Hatch-Upton may not have a “mandate,” per se. But the stick it would threaten Americans with if they don’t buy health care is actually far bigger and scarier than the stick ObamaCare is wielding.

Now, Burr-Hatch-Upton does try to provide a backstop by setting up high-risk pools — separate streams of subsidies that go to Americans with pre-existing conditions or whatnot. The problem is that high-risk pools have been tried before and they’ve always been significantly underfunded.

By quarantining the high-risk population from everyday consumers, you make it much easier to leave the former group in the lurch. If policymakers just don’t feel like adequately funding the high-risk pools, the people in them will be screwed. Everyone else will be held harmless.

In contrast, ObamaCare's subsidies for high-risk Americans are the subsidies for healthy Americans. Everyone’s in the same pool, so healthy consumers do face higher premiums. But policymakers also can’t pick and choose how much money to pump into subsidies for one group versus the other. They can only help all Americans more, or help all Americans less.

Finally, the last piece of health-care reform is providing those subsidies, so people can afford the coverage they have to buy. The decisive factor here is how much the parties are willing to spend. ObamaCare’s subsidies are more generous, extend higher up the income ladder, and go up and down along with premiums. Burr-Hatch-Upton's subsidies are less generous, don't go as high, and aren’t pegged to premiums.

Given that ObamaCare’s subsides are themselves too low, Burr-Hatch-Upton is definitely moving in the wrong direction on that one.

At this point, you’ve probably noticed a pattern. Every time Burr-Hatch-Upton diverges from ObamaCare, it’s trying to keep costs as low as possible for healthy and younger Americans, keep government spending down, and keep the regulatory burden off insurers. The trade-off is it takes considerably greater risks with sicker, older, and poorer Americans.

ObamaCare offers the sicker, older, and poorer considerably greater protection, at the cost of higher premiums for everyone, more government spending, and more regulations.

This is where health-care reform really does become a test of values. Which Americans are you most concerned with protecting, and which are you most willing to pile more burdens on? It’s an inescapably moral question. Choose wisely.

Continue reading for free

We hope you're enjoying The Week's refreshingly open-minded journalism.

Subscribed to The Week? Register your account with the same email as your subscription.

Jeff Spross

Jeff Spross was the economics and business correspondent at TheWeek.com. He was previously a reporter at ThinkProgress.