Losing the House Is Not a Pre-Existing Condition for GOP

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Losing the House Is Not a Pre-Existing Condition for GOP
Robert Franklin/South Bend Tribune via AP
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Should Republicans be worried that they will lose control of the House in 2018 because they adopted legislation that repeals Obamacare? Don’t bet on it.

We have seen this movie before. The last time, it was called Occupy Wall Street. A little band of dissidents camped out in a park near the New York City’s financial center to protest inequality of income and other wrongs of American society. The media celebrated it as the progressive answer to the Tea Party movement, but it soon disappeared. 

This time the outrage is sparked by the Republicans giving states more control over their health insurance markets. States could let insurers take a person’s health status into account when deciding how much to charge in premiums. According to the media narrative, this would take away coverage from those with pre-existing conditions ranging from acne to heart disease.

The public furor over this allegation is predictable. But that does not make pre-existing conditions an existential threat to Republican political chances in the next election.   

Some believe, or hope, that Republicans will face the same fate experienced by Democrats in 2010. But Obamacare was an affront to many Americans who saw a government penalty for not doing something as a major threat to personal liberty. And Obamacare was financed by billions of dollars in new taxes. At a time when employers were already cutting back on health benefits, Obamacare’s Cadillac tax penalized plans that politicians deemed to be too generous.

Large numbers of Americans who already had what they considered adequate health insurance became concerned that Obamacare would force them to pay more for less, or lose access to their regular doctor. They noisily protested in 2010 town-hall meetings and then turned out to turn over control of Congress to the Republicans, who had made clear their opposition to Obamacare. These lessons shaped the American Health Care Act, which shifts control back to states and individuals, and provides additional resources to protect people with pre-existing conditions. 

The Republican plan protects everyone who remains continually covered by health insurance. They cannot be charged more if they have a pre-existing condition. Only people who avoid purchasing coverage until they need it would be charged more. They would pay a 30 percent late enrollment penalty for one year before the premium drops back to the standard rate paid by everyone else. 

The bill also provides $123 billion over 10 years to offset the higher costs faced by people with serious health conditions.  That money could be used to fund high-risk pools, direct subsidies to high-risk individuals, and other ways to cover extraordinary health costs.

Shifting to high-risk pools—that is, providing special subsidies for high-risk individuals—reduces the cost of health insurance for everyone else, making it more attractive for individuals with average health costs to purchase exchange coverage.  Under Obamacare, the cost of care for those with pre-existing conditions is borne by all who signed up for the Obama plan.  Under AHCA, those extraordinary costs would be covered by taxpayers.  

Is there enough money to make high-risk pools work?  That depends on how many people end up in the pool.  A new study by the Kaiser Family Foundation estimates that there are about 6.3 million people with pre-existing conditions that could lead to a denial of insurance, a number that represents all those, nationwide, who could be adversely affected.

Under the AHCA, only states that apply for a waiver would be allowed to opt out of Obamacare coverage rule rules for pre-existing conditions. A state could specify their own essential health benefits and could allow insurers to take health status into account in setting premiums—but only for those who do not remain continuously covered.

The political system in each state will decide, with intense political pressure surely brought to bear. What exactly is wrong with that?

Clearly, only a fraction of the 6.3 million people who are potentially at risk would need the help of additional funding through a high-risk pool. Many will be covered by employer plans; others will live in states that have not applied for a waiver from Obamacare rules. Although there is no certainty about how well the funding would match up with the need for additional resources, the situation is far less dire than we have been led to think. 

That is not to minimize the personal challenges faced by people with serious health conditions.  But from a political perspective, can a group numbering perhaps 1 or 2 million be the cause for Republicans losing the 23-seat advantage they now hold in the House of Representatives?

That would require more than 5 percent of the voters in at least 23 congressional districts to switch sides and vote for the Democratic candidates 16 months from now. In the 2016 elections, there were only 27 seats where Republicans were elected with less than 55 percent of the vote. In only 11 districts did the Republican candidate have less that a 10 percent margin over the Democratic candidate. It’s not impossible for the Democrats to overcome these margins, of course, but the triumphalism of the Democrats and the media on this is clearly only wishful thinking.

What about all those angry constituents who show up at town-hall meetings to heckle and upbraid the House members who voted for the Republican plan? Many—perhaps most—are part of the angry Democratic base—hostile, to be sure, but likely under no risk of losing coverage because of pre-existing conditions.

The next election is 17 months away. How the AHCA treats pre-existing conditions will be important for some, but the media’s claim that this issue will be decisive has all the credibility of another Occupy Wall Street.   

Peter J. Wallison is a senior fellow and Arthur F. Burns Fellow in Financial Policy Studies at AEI.

Joseph Antos is a resident scholar and Wilson H. Taylor Scholar in Health Care and Retirement Policy at AEI.

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