President Trump and the Republican Party made very explicit promises about how they will reform health care. To conservatives, the GOP promised complete repeal of the Affordable Care Act (ACA). To individuals and families struggling with medical bills, they promised more people covered, better health care, and less spending on care.
Many analysts noted that these promises were incompatible. But we were told not to worry; the President had a terrific health plan waiting in the wings.
The GOP has finally put forth its health care legislation, the American Health Care Act (AHCA). Alas, the bill breaks promises. Conservatives are upset that it does not fully repeal the ACA. More important for ordinary people, the bill will lead to less insurance coverage, higher costs, and worse quality. More care, better care, cheaper care was officially a lie.
Promises made, promises broken. How did it come to all this?
The Laws of Arithmetic
The Republicans’ conundrum is a simple matter of arithmetic. In a recent JAMA Forum column, I noted that there are 2 views of health care: the investment view that health care is good for society, so we should spend more on it; and the piggy bank view that health spending should be reduced, so we can cut taxes.
To the public, Republicans promoted the investment view. Their care would be better than what they got under the ACA. But the only way to make good on this promise is to spend more. The primary reason why health insurance deductibles are so high is because the ACA subsidies are not generous enough to allow people to buy more comprehensive plans. Similarly, most uninsured people are uninsured because they cannot afford coverage. Only more money will help them buy it.
But spending more to invest in health runs head first into the promise that Republicans made to conservatives, that the ACA’s subsidies and Medicaid expansion would be repealed to make way for tax cuts.
Faced with a choice between investing more in health or cutting the taxes and spending, the Republicans proposed a middle ground that disappoints both sides. In the AHCA, Medicaid is cut by one-quarter at the end of a decade and the ACA’s subsidies are gone. In return, there is a much smaller tax credit for insurance and an enormous tax cut for high-income people. For good measure, money for public health and prevention is slashed and Planned Parenthood is defunded. All told, federal spending on health care is reduced by $1 trillion over the next decade.
There is no way to cut more than $1 trillion from federal health spending without causing pain. The Congressional Budget Office estimates that 24 million people will lose insurance as a result of the bill. In work I did with colleagues, we estimated that the average person who continues to receive coverage through the health insurance exchanges would pay $1500 more for medical care under the AHCA than they do today. People aged 55 to 64 years would pay in excess of $5000 more. And less healthy individuals might pay tens of thousands of dollars more, as insurance removes coverage for pregnancy, mental health care, expensive medications, and the like.
Physicians and hospitals also will suffer financially. The massive cuts in Medicaid will surely be met with reduced payments to physicians and hospitals. Quality of care for the sickest among us is bound to deteriorate.
The only way that cutting this much spending could not harm people is if the health system became sufficiently more efficient that less money was needed for care. The ACA had a theory about how efficiency gains could be realized. It sought to move provision of care from being based on volume to being based on value—through Accountable Care Organizations, bundled payments, and other measures. The efforts here had some success, but progress has been slow.
The difficulty for Republicans is that they haven’t demonstrated any better ideas for achieving efficiency. Republicans push malpractice reform, but studies consistently show very small effects on spending. Allowing insurers to sell across state lines is another favorite, but this too won’t do much. Trump has promised to lower prescription drug costs, which would be valuable, but the AHCA does not address this issue, and the idea is anathema to most Republican members of Congress.
Not surprisingly, reaction to the AHCA from patients and medical professionals has been uniformly negative. The AHCA is opposed by professional organizations, such as the American Medical Association, the American College of Physicians, and the American Nurses Association; hospital associations, such as the American Hospital Association and the Federation of American Hospitals; and patient advocacy groups, such as AARP and Families USA. No major medical care organization has endorsed the legislation.
And in the ultimate irony, even the trillion dollar spending cut was not enough to satisfy the conservative wing of the Republican Party, who don’t see why there has to be any subsidy for health care. As a result, the Republicans have proposed a “manager’s amendment” to the bill. The amendment cuts Medicaid more, reduces taxes faster, and includes a small amount of money that the Senate could use to increase tax credits for older adults. The amendment seems to have satisfied very few people.
The Politics of Broken Promises
The political question now is what the Republicans will do next. One strategy is to ram through Congress a bill that worsens health care, doing whatever is necessary to bring on conservative support. Although this would appease 1 wing of the Republican Party, it would harm patients even more. As President Obama and the Democratic Party can readily attest, the public does not respond well to health care bills that break promises.
Alternatively, the Republicans can simply punt. They can move onto other issues with vague guidance directing the Secretary of Health and Human Services to use his implementation authority to fix the ACA. However, this means admitting failure to the zealous right.
The politics are too unpredictable to say how health care will play out. But one fact is undeniably true: the Republican Party is trapped by conflicting promises that it has no way to keep.
About the author: David M. Cutler, PhD, is the Otto Eckstein Professor of Applied Economics in the Department of Economics and Kennedy School of Government at Harvard University and a member of the Institute of Medicine. He served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and was senior health care advisor to Barack Obama’s presidential campaign. He is a commissioner on Massachusetts’ Health Policy Commission. He is the author of the The Quality Cure (2014) and Your Money or Your Life (2004). He tweets at @cutler_econ.
About The JAMA Forum: JAMA has assembled a team of leading scholars, including health economists, health policy experts, and legal scholars, to provide expert commentary and insight into news that involves the intersection of health policy and politics, economics, and the law. Each JAMA Forum entry expresses the opinions of the author but does not necessarily reflect the views or opinions of JAMA, the editorial staff, or the American Medical Association. More information is available here and here.