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Revised Senate healthcare bill: Not good, but good enough

Written By | Jul 13, 2017

WASHINGTON, July 13, 2017 — Republican Senators just released a revised health care replacement bill that is not really that good. But it may be good enough. The alternative is to do nothing, and nothing is a disaster for millions of Americans.

Some senators argue that the bill does not go far enough, others will argue that it goes too far. In that environment, there is no middle ground left. The GOP has little room for error.

There are currently 52 GOP Senators and 50 are needed for passage, so only two can vote no, leaving it to Vice-president Mike Pence to break the tie. At least two senators have already said no to the current bill: Senators Rand Paul of Kentucky and Susan Collins of Maine said they could not support the latest proposal.

Paul objects because the bill does not go far enough in repealing the current law and reducing the taxes imposed by the Affordable Care Act (ACA), otherwise known as Obamacare. These taxes discourage investment and therefore slow economic growth. Practically everyone who studies the U.S. economy agrees that economic growth should currently be the number one priority of government policy.

Senator Paul makes a valid point. The ACA raised the capital gain tax rates from 20 percent to 23.8. Evidence indicates that raising the capital gains tax rate often leads to less tax revenue.

That’s because there is a reduction in after-tax income available to the investor, reducing the effective rate of return on investment. That means less investment, which tends to slow economic growth. In fact, since the passage of the ACA, economic growth has averaged just above 2 percent annually, compared to a 3.5 percent historical average.

Collins objects that the current bill shifts Medicaid spending to the states and eventually cuts federal funds paid to the states. She says that this will cost millions of Americans their health care coverage.

Collins also makes a valid point. Shifting the Medicaid burden onto the states and reducing federal payments will leave insufficient funds to cover all those in need. People will lose their health care coverage. That doesn’t seem fair.

No Democrat has voiced any support for any bill that the GOP has produced in the current term. They falsely claim that’s because Republican Senators have not approached them for input. GOP Senators say that discussing their proposal with Democrats is pointless since they have said they will not vote to repeal the ACA and have vowed to resist every action that the GOP takes.

The GOP and the Democrats probably won’t find a compromise. Their priorities are too different. The Democrats’ primary goal is to provide coverage to the 15 percent of Americans who were uninsured prior to the ACA. Their next priority is to reduce the cost for the 85 percent of Americans who previously had health insurance.

The GOP’s primary goal is to reduce the cost for the 85 percent who buy their own health insurance, then find a way to provide health insurance to everyone else who wants it.

If the Senate is going to pass this bill, it will have to be done with at least 50 GOP Senators. So far, the odds continue to look grim, even after adding language like the Cruz amendment, which allows insurance plans to be sold with any combination of services included or not included, loosening the ACA’s “one size fits all” approach and providing some competition among health insurance carriers.

Replacing the ACA, seen as a longstanding Republican campaign pledge, creates a dilemma for some GOP Senators. Voting against this bill will mean they will enter the August recess without accomplishing what they promised the voters they would. Worse yet, the ACA is failing, and that will clearly cause harm to many Americans. In an ironic twist of political fate, the GOP is likely to be blamed for the ACA’s collapse even though they had no hand in its creation.

The GOP should pass this current bill and then make necessary amendments in the future. If the bill is successful and is accepted by the public, making corrective amendments in the future should be eminently doable, helping the the Republicans to retain their majorities in both Houses.

Even though the high capital gains tax rates in the current bill will continue to stifle growth, and even though some of the poor may lose coverage, this bill is a reasonable compromise under current circumstances.

Pass it.

*Cartoon by Branco. Reproduced with permission and by arrangement with LegalInsurrection.


Michael Busler

Michael Busler, Ph.D. is a public policy analyst and a Professor of Finance at Stockton University where he teaches undergraduate and graduate courses in Finance and Economics. He has written Op-ed columns in major newspapers for more than 35 years.