Analysis: GOP Health Plan May Not Fix The Problems They Want To Fix

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House Speaker Paul Ryan from Wisconsin has been complaining about the Affordable Care Act (aka Obamacare) for so long that his list of grievances sounds like a refrain of some pop song.

"Obamacare is collapsing," he said on Feb. 28. "The Democrats got too far ahead on their ideology and they gave us a system where government runs health care. They gave us a system where costs went up, not down. They gave us a system where choices went away. They gave us a system where people lost the plans they liked, they chose."

And Ryan's not the only one. Republicans in Congress have spent the past several years detailing what is wrong with the ACA. And in every election since it passed, nearly every Republican candidate, including President Trump, has vowed to get rid of the law and put something better in its place.

On Monday evening, House Republicans finally released their own health care proposal. It would replace Obamacare's mandate to buy insurance and his subsidies to bring down the cost with a fixed refundable tax credit that people can use to buy coverage. Nobody's required to have a health plan. But if you don't get covered at the outset, you'll pay a penalty to buy it later.

So does it fix the problems Republicans have laid out? Likely not.

Let's start with the collapsing insurance market.

"It's debatable whether the market is imploding or not," says Cynthia Cox, associate director of the Program for the Study of Health Reform and Private Insurance at the Kaiser Family Foundation.

"On one hand, they're getting rid of the individual mandate [for most people to buy insurance], and that would have the effect of destabilizing the market and raising premiums," Cox says.

And the penalty for allowing a gap in your health insurance coverage could help, or it could make it worse, she says.

The penalty could be "a disincentive for healthy people to sign up," she says.

That's the central challenge both approaches face. A healthy market needs a lot of healthy people so that premiums are spread across a broad population to care for sick people. Without that, the market struggles to keep costs low and choices high.

The Affordable Care Act's markets have been struggling, no doubt. Several insurance companies have dropped out, leaving some states and counties with only one company offering plans. At the same time, premiums have risen in many markets. Last year, premiums rose an average 22 percent — though individual cost increases varied because federal subsidies for many people rose in tandem with premiums.

Ryan says he wants consumers to have more choices and lower costs.

"Instead of fewer choices, we want our health care system to be truly competitive. Insurers should compete for your business and treat you fairly," he said on Feb. 22. "All of this will lower cost and end the annual sticker shock of higher premiums."

Will his plan offer more choices?

Not necessarily, says Paul Howard, a senior fellow at the conservative Manhattan Institute.

"There's not enough flexibility from the insurers' point of view to offer lower cost plans," he says.

That's because Republicans are hamstrung by politics, he says. They can't repeal the Affordable Care Act outright without the help of Democrats, which they won't get. So in order to get a bill through, congressional rules say they have to limit it to matters that deal with taxes or the budget.

Which means all the benefits that the existing health care law says have to be included in a health insurance policy would remain. And that means insurance companies can't offer cheap health plans.

That brings up Ryan's other goal: lowering costs.

"I don't see it being abundantly clear that premiums will be significantly lower under this bill than they are in the Affordable Care Act," says Cox of Kaiser. "And there is evidence the out-of-pocket costs could go up," she says.

That's because the Affordable Care Act offers subsidies to cover the deductibles and copayments for lower-income people. The Ryan plan offers a fixed tax credit — between $2,000 and $4,000 depending on age — that would likely lead many people to buy health plans they have to shell out a lot of money for up front, called high deductible plans.

Cox's analysis shows that wealthier people get more help from the new Republican plan while lower income people benefit more from Obamacare.

Republicans are hamstrung in part by the fact that they can't repeal the Affordable Care Act in one go and fully replace it with their own vision.

Even if the bill did meet Paul Ryan's goals, it certainly doesn't fulfill President Trump's campaign promises.

"Everybody's got to be covered," he said in an interview with 60 Minutes in 2015. "This is an un-Republican thing for me to say, because a lot of times they say, 'No, no, the lower 25 percent, they can't afford private.' But I am going to take care of everybody." He repeated that goal this past January in an interview with The Washington Post.

As it turns out, the Affordable Care Act didn't cover everybody. And early analyses of the Ryan proposal suggest his plan could reach even fewer people.

A report from Avalere Health and McKinsey estimated that 30 percent of those in the individual health insurance market could drop out if the current subsidies were swapped out for the age-based tax credits.

Howard of the Manhattan Institute worries that people who are now heavily subsidized will fall away.

"I would have some concerns about those low-income folks dropping out of the market, and concerns about whether or not that 30 percent surcharge is going to keep the younger population in the market," he said.

Stay tuned. The process of moving the bill through Congress starts Wednesday in the House committees with jurisdiction over health care.