Wednesday, March 8, 2017

Why The Republican Plan To Replace ACA Is In Trouble

Replacing the ACA has been a big problem for Republicans as they attempt to make good on their promise to repeal the ACA.  They have inherited a very difficult problem for which there is no easy answer that they are willing to consider.  There are a lot of issues that they face, but two issues dominate any attempt to deal with healthcare.  The first issue is that any solution involves a redistribution of income.  The second issue is that we have the most inefficient and costly healthcare system in the Western world.  Changing the system is bound to be opposed by parties that benefit from the inefficiencies and high prices.

There are two redistribution problems.  The government must use funds raised by our tax system to provide subsidies to citizens who cannot afford to purchase insurance.  That requires decisions about whose taxes will be used to fund the bill and to whom the subsidies will be provided.  Much of the debate within the GOP is about the redistribution decisions.  The other redistribution issue is that insurance is essentially a system of redistribution.  Healthy people who do not need healthcare pay premiums to fund healthcare for individuals who have health problems.  There is no way to have an insurance system that does otherwise.

The healthcare system has adapted to our current system.  For example, hospitals have reorganized their management systems in response to rules that are part of the ACA.  They have also made investments that were based upon the volume of healthcare that they expect to provide.  Any changes to ACA that affect the rules that hospitals have developed to conform to ACA, or any changes that reduce the demand for hospital services will create havoc in our hospital system.

The Republican Party taught its base to hate ACA and it has promised its base to repeal ACA. Trump has promised that it will be replaced by a system that will provide healthcare to everyone and be less expensive.  They are living to regret their promises.  They have inherited a huge problem that they can only worsen at great political cost.

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