Secretary Tom Price   Leave a comment

I am not a Trump supporter, but he’s done some really good things as president, namely putting reformers into some key cabinet positions … though he is screwing up with his replacement for Labor Secretary.

Tom Price, a Georga orthopedic surgeon and Congressman, actually managed to survive the confirmation process to become Health and Human Services secretary. It signals that President Trump is serious about undertaking major efforts to repeal and replace Obamacare, along with other entitlement reforms. But we also need to look at Price’s Empowering Patients First Act to see whether Price really understands what are we doing. While I’m at it, I want to look at the other Republican offerings for repealing/replacing Obamacare.

We don’t have cable TV, so lately I’ve been listening to a variety of cable news programs while I work out at the gym. The other day was CNN day. After three different pundits said the “Republicans have no serious replacement for the ACA” I decided it was time to get serious about looking at the proposed alternatives. I’m running my analysis by my cousin who is a world-class research doctor who has opposed Obamacare since it was Hillarycare. Because opposing Obamacare is career-risky for doctors who aren’t private practitioners, he’s allowing me to make his observations under my blog, which protects his career a bit.

Price’s nomination also illustrates why those efforts face a difficult road to passage and enactment.

As news of the Price appointment leaked out late on Monday evening, reporters spent much of their time breathlessly analyzing Dr. Price’s health-care legislation—H.R. 2300, the Empowering Patients First Act—for clues as to what it might mean for the replace effort. However, Price’s bill may be more noteworthy for what it does not include than what it does:

  • There is no premium support plan for Medicare reform;
  • It doesn’t reform Medicaid—whether by block grants or per capita caps; and
  • It doesn’t offer any spending reductions to fund the refundable portion of tax credits Price proposes as an alternative to Obamacare’s insurance subsidies.

In other words, despite releasing a 243-page health-care bill, Price, along with his Republican colleagues in Congress, hasn’t translated into legislative specifics his policy positions on many, if not most, of the important health-care issues the Republican Congress will face next year. For instance:

  • How should a premium support system under Medicare be structured? Should payments to seniors be based upon the average plan bid, the lowest plan bid, or another formula? How quickly should those payments rise in future years?
  • How quickly should Medicaid block grants, or per capita caps, rise in future years?
  • Should an Obamacare repeal-and-replace plan rely on pre-Obamacare levels of taxes and spending, or should it redirect existing Obamacare spending in a different direction?

Price’s legislation does not shed much light on these and other critically important questions that Congress will need to undertake next year.

Budget Gimmicks and Magic Asterisks

As chairman of the House Budget Committee, Price earlier this year released a budget blueprint that did include some ideas for entitlement reform. However, that document included only about four pages of proposals on Medicare, Medicaid, and Obamacare—some of which focused more on making the case against Obamacare than outlining the specifics of a Republican alternative. Even though the Republican budget document said it repeals Obamacare, that’s not exactly true. The budget, like those issued by House Speaker Paul Ryan when he was Budget Committee chairman, assumes Obamacare’s higher levels of taxes and lower levels of Medicare spending to achieve balance within the decade. Either the budget doesn’t repeal all of Obamacare, or it assumes that Congress, after repealing Obamacare, would go back and re-enact equivalent levels of tax increases and Medicare spending reductions.

 Price’s Empowering Patients First Act, which proposes a new refundable tax credit, includes only one idea to pay for that credit—a cap on the tax deductibility of employer-sponsored health coverage. Although administered through the tax code, refundable credits are considered government spending. Washington basically writes “refund” checks to individuals and families with no income tax liability.

Basically, the chairman of the House Budget Committee proposed raising taxes (the cap on deducting employer-sponsored health coverage) to pay for new spending (the refundable portion of the tax credit/insurance subsidy).

I don’t think Price is an evil guy who is pretending to reform federal health insurance policy. He’s trying to avoid many of the political minefields omnipresent in health policy. That deliberate soft-shoe allowed his Senate confirmation to go through.

 

Price will now have enormous power over the regulatory process, but we have to recognize that Congress has a truly heavy lift to repeal Obamacare in reality. Yes, it is vitally important to get rid of Obamacare — not just economically, because of the future deficits or taxes it will require, but also for liberty, because this represents the chains of economic slavery that will limit our individual choices going forward.

 

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Posted March 2, 2017 by aurorawatcherak in economics

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