GOP Must Change America’s View of Health Insurance

Michael Hamilton
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Posted: Mar 22, 2017 9:41 AM
GOP Must Change America’s View of Health Insurance

The House of Representatives is poised to decide the fate of the American Health Care Act (AHCA), the Obamacare replacement plan backed by House GOP leadership and President Donald Trump. Speaker Paul Ryan (R-WI) has called the moment a “rendezvous with destiny.” Trump has said Republicans could lose seats in 2018 if they reject the bill. And conservative Republicans think they’ll lose seats if they pass the bill.

“I think if we do vote for this we will lose the majority,” Rep. Mo Brooks (R-AL) told Bloomberg Politics after a closed-door meeting between Trump and House Republicans on March 20. Brooks is a member of the House Freedom Caucus, whose members could stop AHCA from obtaining the 218 votes needed to pass the chamber. The bill will fail if 21 Republicans join House Democrats to reject it.

If AHCA does end up on Trump’s desk, Republicans can guarantee Democrat wins in 2018 and 2020 by continuing to fail to change the American people’s understanding of what health insurance is for.

Congress and most patients assume it is financially prudent to submit health insurance claims every time one receives medical care. The same assumption drives health care costs and insurance premiums higher each year and renders every health care reform bill passed by Democrats and Republicans in Washington, DC a health insurance reform bill.

Republican reformers have a challenge before them Democrats didn’t. Obamacare capitalized on the conventional wisdom, which says the sensible and financially sound way to pay for health care is first to pay health insurance premiums. Second, if you do get sick or injured, file an insurance claim by handing your provider your insurance card the moment you walk in the door. Third, pay an obscenely high price for care. Fourth, exhale relief: You are that much closer to meeting your annual deductible, after which you’ll enjoy the illusion of free health care, if you get sick or injured again between now and January 1.

The Affordable Care Act is the shrine to this mentality, where Democrats and Republicans alike splice hands in the unholy worship of health insurance. Obamacare’s individual mandate and tax penalty served as temple guards, coercing people to buy insurance covering almost every condition under the sun.

Now Republicans hover on the precipice of legalizing the sale of inexpensive, or at least less expensive, health insurance. Technically, no one would have to buy it. Out with Obamacare’s temple guard, in with the GOP’s rent-a-cop: The GOP would replace the individual mandate and tax penalty with a 30 percent insurance premium surcharge for people buying insurance after experiencing a lapse in coverage.

But insurance is still god under AHCA. Insurance is so important, the Republican plan would give a mostly age-based tax credit worth $2,000 to $4,000 per buyer, and up to $14,000 per family, for individuals with an adjusted gross income (AGI) of up to $75,000 and married couples with an AGI of up to $150,000. Smaller credits await households with greater incomes.

Even if the GOP plan is politically expedient following seven years of Obamacare entitlement brainwashing, Republicans will have a bigger political challenge if AHCA passes. Many of the low-premium insurance plans Republican reformers want will probably have much higher deductibles than even an Obamacare bronze-level plan, roughly $6,000 per person or $13,000 per family.

To weather these high deductibles politically, Republicans must un-deify health insurance. They must refute the conventional wisdom that chasing a deductible every time a medical need arises is rational or frugal.

Republicans must persuade Americans to view health insurance as nothing more than insurance—a thing rarely used to pay for anything but catastrophes. Like an auto, homeowners, or life insurance policy, health insurance will become affordable when people stop filing claims except in the medical equivalent of car wrecks, house fires, or death of a spouse.

The more individuals view health insurance as mere insurance instead of a holy health care payment plan, the more individuals will shop for health care the way they shop for every other service. People will Google for nearby providers, call two or more, ask for the lowest possible price for someone not paying with insurance, and decide based on value which provider to see. Providers charge such self-pay patients 25 to 90 percent less than what they charge insured patients—a fact I personally verified by tallying my family’s 2016 medical bills the other night.

The brave new world Republican reformers should be, and may be, steering us toward is one where patients negotiate cheap health care prices with doctors, while paying cheap premiums and putting insurance out of their minds until catastrophe strikes. That’s a lot better than the Obamacare norm—having expensive insurance you’re always trying to use but which never benefits you, because you’re always paying the prices doctors charge insured patients and still never reach your deductible.

It’s just not enough for Republicans to sell AHCA, or any bill resulting in the sale of inexpensive insurance policies. To survive politically, Republicans must also persuade relatively healthy Americans health insurance is mere insurance, not a spiritual rite.

Michael T. Hamilton (mhamilton@heartland.org, @MikeFreeMarket)is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.