Senate Republicans will return from recess still struggling to craft a coherent piece of healthcare legislation that actually delivers on their long-standing promise to repeal and replace Obamacare. In reality, most of the problems Republicans are now encountering come back to a fatal concession made to liberals: the decision to take Obamacare's approach to pre-existing conditions.
It's true that Obamacare's ban on denying coverage on the basis of pre-existing conditions is the most popular aspect of the law. At the same time, it's also true that the policy is responsible for many of the most unpopular aspects of the law.
The policy, known as guaranteed issue, is a perfect demonstration of how big government begets even bigger government. Start out with the seemingly simple concept, and suddenly there are new problems created that need to be addressed. Under the government-centered framework, simply banning pre-existing conditions isn't enough, because that would still allow insurers the option of effectively denying insurance to those individuals by charging them a cost-prohibitive amount of money or offering skimpy benefits. So that's how we ended up with community rating, which prevents insurers from charging more based on health status, and the essential health benefits requirement, which mandates that all plans to cover a specific set of benefits.
The flip side of this is that it means younger and healthier individuals have to offset the costs of older and sicker enrollees, paying higher premiums for much more comprehensive insurance than they need on the basis of their medical expenses. Of course, in such a market, many young and healthy individuals would choose to go uninsured, which is how we ended up with Obamacare's individual mandate forcing all individuals to purchase insurance. But once lawmakers require the purchase of insurance, they have to define what constitutes insurance for the purposes of meeting the mandate, and they have to offer subsidies to help lower-income individuals comply with the mandate. So, basically, start with the pre-existing condition provision, and we end up with a system of mandates, spending, taxes, sky-high premiums, and a lack of choice in plans that have driven opposition to Obamacare.
For years, Republican reformers had adopted a relatively consistent approach to those with pre-existing conditions. Instead of simply requiring insurers to cover those with pre-existing conditions, which has many spillover effects, Republicans had long argued for dealing with the issue of pre-existing conditions in a more targeted way so that the market could function more regularly for the broader population. Typically, the solution has been in the form of subsidized high-risk pools that would offer an alternative path to coverage for those with high medical costs. By removing these individuals from the broader market, healthier individuals would be able to choose from a wide array of plans for less money at benefit levels of their choosing.
Republicans, prominently with House Speaker Paul Ryan's "Better Way" proposal last year and with President Trump's boasts, chose to abandon their long-standing approach to pre-existing conditions and embrace Obamacare's approach instead. Once they did that, it effectively became impossible to truly repeal Obamacare. But Republicans are still dedicated to being able to claim that they passed something they can call repeal. So their solution has been a piecemeal approach — picking off parts of Obamacare, many of which were in place to offset the effects of denying bans on pre-existing conditions.
Keeping the pre-existing condition regulation complicated Republican efforts to repeal the individual mandate, which was put in place to coerce young and healthy individuals to purchase insurance. It meant a worse Congressional Budget Office score and the need to figure out alternative ways to prevent healthy individuals from leaving the market in greater numbers. It made it much harder to figure out a way to lower premiums, to offer individuals more choices and flexibility, and to stabilize the rocky Obamacare insurance markets — all of them the stated goals of Republican leaders in taking on the healthcare issue.
Sure, had Republicans stuck to their guns and pursued an alternate approach to those with pre-existing conditions, they would have come under attack from liberals who would have argued that previous experiments with high-risk pools proved inadequate. However, previous state-based experiments didn't have a massive injection of federal funds, which would be available in any sort of healthcare legislation Republicans would pass. Keep in mind that as it is, the Senate bill spends roughly $1 trillion of Obamacare money. Much of that is being used to throw money at insurance markets to address problems that would be exacerbated by the current patchwork GOP approach. Those issues (caused by a market that forces insurers to cover those with pre-existing conditions but doesn't force healthy individuals to purchase insurance) would not be present if the pre-existing condition regulation were dropped. Also, if there were functional markets where healthier individuals could purchase cheaper insurance, any sort of subsidies would insure more people relative to the current GOP approach, which reduces subsidies without sufficient regulatory relief to lower premiums.
Throughout the process, House and Senate conservatives have made clear that they are willing to accept more spending if it means serious regulatory reform to the insurance market that brings down costs for individuals. As to Republicans who are worried about attacks they may be facing back home or about the opinion of a certain late-night comedian, it's hard to see what all of the current concessions to Obamacare have bought them in terms of public support, with the Senate bill polling as low as 12 percent.
If Republicans offered a real alternative, they might still find themselves as the targets of some of the same liberal scare tactics, but they'd have the offsetting benefit of being able to tout a bill that addresses the actual problems of Obamacare and brings down costs for consumers.