I guess Speaker of the US House of Representatives Paul Ryan (aka the Zombie-Eyed Granny Starver) must be an avid reader of this humble blog, for within days of me posting a heart-felt plea for someone in the Republican camp to reveal their health policy principles, the GOP’s Granny-Starver-in-Chief gave a presentation on national TV to explain them. This presentation, intended to explain the Republicans’ Obamacare repeal-and-replace strategy (the American Health Care Act, or as Townhall.com call it, “Swampcare”), involves Ryan with his jacket off, a sure sign that he’s very serious, and it even has powerpoint! A fragment of it can be viewed here, and it’s clear from this monstrosity that Paul Ryan, the great and serious policy wonk of the Republican majority, doesn’t understand how health insurance works. Or worse still, he does understand, and he thinks that insurance is A Very Bad Thing.
From this presentation we can see two health policy principles that the Republicans appear to cleave to: That health insurance is bad and health savings accounts (HSAs) are good; and that the government should be the insurance provider of last resort for society’s sickest. Let’s look at these two principles and their implications.
Do Republicans really think health insurance is bad?
It appears from this keynote presentation of Ryan’s that they do. He makes clear that the healthy are subsidizing the sick and that this is a bad thing, and suggests that this is a bad thing and is the reason that Obamacare prices are rising. The tone of Ryan’s voice, the expression of exasperation, and the follow-up comment that “this is not working” and that the Republican plan will “fix this” are all keys to his belief that health insurance is a bad thing. The healthy, under his formulation, should not subsidize the sick. This is backed up by comments by Rep. Shimkus in the house energy and commerce committee, who when asked about requirements on insurance plans asked “What about men paying for prenatal care”, following up with the rhetorical “Should they?” (That Washington Post article also mentions similar comments from a 2013 committee, where a Republican asked why men should have to pay for maternity care). This isn’t just a glib and nasty comment, it’s a policy position. Note that Shimkus didn’t say anything along the lines of “Pregnancy is a lifestyle choice and our plan will not require insurance companies to cover lifestyle choices.” Rather, he gave an example of someone having to pay for coverage of a problem they will never themselves suffer.
But this is the entire point of insurance: Generally you buy insurance on the assumption that you will never have to use it, knowing that your insurance company will use your premiums to pay for someone who does have to use it. In the case of health insurance, since we all get sick everyone knows that their insurance is contributing to coverage for people who will suffer conditions that most of us will never suffer. Men pay for breast cancer treatment, women pay for prostate cancer treatment, people who are fated to die in a bus crash at 43 pay for alzheimers care that they themselves are doomed never to receive. That’s how insurance works. Once you start saying that people shouldn’t have to pay for things they won’t themselves experience then you are changing the entire nature of insurance. Or, you don’t understand how insurance works.
It’s clear to me from these comments that the Republicans are actually seeing insurance as a Health Savings Account. An HSA is designed so that no one can take out of it more than they have put in, and they use the money in the HSA only on care for the conditions they themselves face. With a well-run HSA the healthy don’t subsidize the sick – rather your current self subsidizes your future self. In this formulation, no one ever has to worry that their money will be used to pay for a treatment they themselves would not face, and no one can get angry about the healthy subsidizing the sick, since it’s only their own future sickness they’re subsidizing. HSAs never suffer from justice issues either – you won’t find a healthy supposed marathon-running non-smoker like Ryan being forced to use their premium payments to cover lung cancer for a sedentary smoker, because they won’t be subsidizing anyone.
So here we have Republican principle number one: Health insurance bad, Health Savings Accounts good.
Government as insurer of last resort
Paul Ryan also touted an alternative method for handling people who are rejected from health insurance plans due to pre-existing conditions, which he described as state-based insurance plans that would cover high risk people. Under this scheme the states get about $10 billion a year to run high risk insurance pools for those very sick individuals. This would enable the health insurers to reject these people, and/or would make a special form of insurance that was better able to handle these high cost cases, enabling health insurance funds to offer lower premiums to everyone else and thus to widen their risk pool. This insurer of last resort model is consistent with the idea of health insurers as a type of health savings account management company: They set a premium for people with pre-existing conditions that is prohibitively high, and then those people “choose” not to pay for the premium and instead run to the government’s high risk pool for coverage. Ryan touted the Wisconsin Health Insurance Risk Sharing Plan (HISRP) as an example of a “good high risk pool” that was shut down by Obamacare, presumably suggesting this as a model for the AHCA.
This is unfortunate for several reasons. The first is that HISRP was cross-subsidized by a tax on all insurance premiums charged in the state, meaning that in fact the healthy were subsidizing this program for the sick; the second is that doctors and hospitals charged lower prices to HSIRP recipients, i.e. they allowed the state to regulate what they were able to charge, which is anathema to Republicans. This is also not an idea that is absent in Obamacare, which offers states funds to set up high risk pools, so it’s not clear how this policy is an innovation compared to the current policy.
The other big problem with this high risk insurance pool idea is that it doesn’t work precisely because the people in the pool are too sick. Recent assessments of Obamacare’s state-based pools found that they were running out of money far faster than expected, and many state pools have had to go back to the government for more money. Elsewhere I have read estimates that the AHCA’s proposed funds will only cover about 400,000 high risk individuals, when America has about 2 million people who need them.
Still, this is a policy principle, and it’s not necessarily bad in and of itself – but it does require that the government be willing to offer a potentially open-ended assurance to states that these risk pools will be funded. This might be a good policy idea, but it doesn’t seem like it’s going to be compatible with either a) the Republicans’ historical antipathy for welfare programs and b) the reconciliation process’s restrictions on what funds are available for the plan. It’s the sort of thing that is easily sold as a sop to people concerned about the impact of reform on high-risk individuals, and then easily defunded in practice. If you doubt that, remember this: Paul Ryan’s nickname among his critics is “Zombie-eyed Granny Starver.” Also remember that Ryan is a confirmed liar, who lied about his marathon times to make himself sound like a champion when in fact his marathon times are really average, and you can’t trust liars when they promise to pay you back in future.
What’s wrong with confusing health insurance and health savings accounts?
Now it’s true that in and of itself favoring HSAs over health insurance as a policy tool isn’t necessarily bad. Singapore uses them as part of its health financing system, and China tried them (though I think they moved away from them to a more standard social insurance system), and they could probably theoretically be made to work. They come with obvious equity issues for people born without money, and also they have their own free-rider issues when dealing with people who don’t pay into them but then become sick, but they can probably be made to work. But to make an HSA system work will almost certainly require that they be mandatory (as I think they are in Singapore) and government-subsidized for the young poor. They suffer from many the same problems as private superannuation plans, in that the people who should be paying the most into them – young people – are simultaneously the people with least need of them and the least money to do so, so typically the best way to implement them is mandatorily and by stealth. Of course the Republicans hate mandating anything (except unwanted pregnancies), so they won’t be fond of forcing people onto HSAs; but it is true that HSAs are consistent with general Republican ideas about personal responsibility, no free lunches, etc.
The problem though is that to make HSAs a centerpiece of American health policy requires a root-and-branch reform of how the private markets work. The new Republican bill doesn’t do this, and continues to leave the private markets in the hands of traditional health insurance companies. But it’s clear that the Republican policy-makers are thinking of health insurers as administrators of a kind of HSA program, while the health insurers think of themselves as (and actually are) traditional health insurance companies. This is a big problem, because the policy requirements of HSAs and health insurers are completely different, and confusing one for the other is a disaster. This means that health insurance companies are setting premiums on the basis of an assumption that the government will work to expand the risk pool, or at least not to impede its expansion, while republican policy makers are thinking that insurance companies are setting premiums on the basis of the future underwriting risk each enrollee’s individual future health risk profile presents. So the Republicans have no interest in setting policies that will encourage the healthy (i.e., poor young people) into the market, and may even be trying to find ways to encourage sick people to enrol and pay more (such as through the first-year penalty on insurance for people who let coverage lapse). For example, if they could set policy legislatively rather than through reconciliation, Republicans might pass a law that allows health insurers to set premiums based on each person’s individual future risk profile (so e.g. young women pay more than young men because they will get pregnant), but the insurance companies would prefer to set premiums on the basis of actuarial risk and the size of the risk pool, which is a more instantaneous calculation. This could create policy conflicts that prevent insurers from properly setting prices while simultaneously discouraging young people from entering the risk pool.
Health policy in America for the past 100 years has been built around health insurance markets, not HSA markets. The republicans, by thinking of health insurance as a type of HSA, risk making policies to encourage a market that doesn’t really exist, while the health insurance market struggles to function without proper government subsidies. A good example of this is the way the subsidy design in the Republican plan does not vary by state. Republicans seem to be completely ignorant of the fact that premium prices vary by state, since they depend on the size of the risk pool in each state and the relative balance of healthy and unhealthy, old and young, and also the cost of health services in each state. So Alaska is much more expensive than California. Lawmakers who understood health insurance as a risk pool mechanism would get this, but policy makers who think that health insurance premiums are set as if they were HSA fees will not – HSA fees depend on the future health risks faced by an individual, so may not vary much by state, while health insurance premiums depend on the instantaneous balance of healthy and high-risk individuals in a geographic area, so vary a lot by state.
This confusion is a recipe for trouble, and a sign that despite having six years to sharpen their understanding of these issues, supposedly intelligent and committed Republicans haven’t bothered.
What does this say about the media’s love of Paul Ryan?
The media love to treat Paul Ryan as a serious Republican policy thinker, when in fact he is nothing better than a fraud and a shonkster, a hired salesperson for the policy preferences of his rich patrons. He doesn’t have any deep policy ideas, and he doesn’t care to or need to – his only legislative goal is to dismantle welfare programs and spend the money saved on tax cuts for the rich. He is also a confirmed liar and a fantasist, with no personal integrity – hardly surprising since he comes from a party that has long suffered from “family values” politicians who cheat on their wives and anti-gay politicians who solicit in bathrooms. But the media is labouring under the impression that America has two serious parties, rather than one serious party and one gang of frauds and criminals who occasionally get hold of the machinery of the state long enough to loot it for the benefit of their rich patrons. We now know that these pirates in the GOP aren’t even patriotic – they’re tools of the Russians and the Turks, and have moved from selling their domestic policy to the highest bidder, to selling their foreign policy to whatever foreign agent will help them win power. But so long as the media needs to keep pretending that the Republicans are a serious party and not a gang of wreckers and criminals, they also need to find people within that party they can treat as serious even when they’re not. Paul Ryan, with his fake sincerity and his ability to act like an idiot’s idea of a smart person, and his sleazy aura of seriousness, offers them someone to elevate to the level of “thinker”, even though he has repeatedly shown himself to be incapable of the task. Charles Pierce, who invented the term Zombie-eyed Granny Starver, summarizes Ryan:
Every time he produces a “budget,” actual economists collapse in helpless laughter and other Republicans hide behind the drapes. As a vice-presidential candidate, Joe Biden made him look like a child, and Ryan was unable even to carry his own precinct for the Republican ticket.
Since Obamacare reared its ugly head Ryan has consistently and repeatedly squibbed on the basic responsibility to produce an alternative policy, and now he has unveiled this one – and claimed it’s the best chance Republicans will get to repeal Obamacare – he has confirmed what anyone with any sense already knew: he hasn’t got a clue, and doesn’t care to make the basic effort required to have a clue. So will the media finally recognize this and give up on him – and hopefully by extension all the frauds and liars on his side of the chamber – or will they continue their love affair with him, and continue to sell the American people short? My money’s on the latter, because even though the past three months have made clearer than ever before that the Republican party is just a gang of crooks, the media will never admit their role in enabling these frauds and scoundrels over the past 30 years. They have to hit rock bottom before they can admit their problem and make amends, and I’ve no doubt that discovering their favourite policy wonk knows nothing about anything is nowhere near rock bottom for the US media.
We have a long way to go yet before the Republican party and its enablers are properly shamed for the damage they have done. Let’s hope that Obamacare repeal fails before we get there.
fn1: Maybe that’s why his health policy knowledge is so bad! But at least he won’t use OLS regression on count data like good ‘ole Barry …
fn2: Funnily enough Ryan, a confirmed liar, didn’t mention that Obamacare set up a state-based high risk pool in Wisconsin when it closed the existing high risk pool. The new one has about 1100 enrollees – because most of the 21,000 enrollees in the previous one became eligible for Medicaid or individual insurance plans under Obamacare. This is an interesting bait-and-switch that Republican shonksters like Ryan use: at the same time as they are proposing to do away with a government entitlement and kick the poor over to the mercies of the free market, they attempt to gee up some outrage about how the Democrats unwound a government entitlement that people really liked. I guess I shouldn’t be surprised that a shameless liar like Ryan has no shame, but it still disappoints me every time I see it.