Benjamin Studebaker

The Senate has rejected Majority Leader Mitch McConnell (R-KY)’s proposal to repeal Obamacare without a replacement, 55-45. Of the eight potential moderate Republican opponents I highlighted in June, five voted against repeal (Capito, Collins, Heller, Portman, and Murkowski), along with two whose opposition to repeal was not known at the time (McCain and Alexander). But the Republicans have not quite given up–they plan to attempt “skinny repeal,” in which only the individual and employer mandates would be repealed.  But while this may sound appealing (nobody likes mandates), it’s much worse than it appears.

The CBO projects that repealing the individual mandate alone would kick 15 million people off of health insurance.

Now, one might think that’s not such a big deal–after all, if people don’t want to buy health insurance, why make them? The trouble is that if we don’t make people buy health insurance, the entire system is profoundly compromised. Here’s how:

1. It is not profitable to insure sick people. We are only able to pay for the medical expenses of sick people because people who are not sick contribute to the system. So if more healthy people don’t buy insurance, premiums increase for everyone else, and if the patient pool is too unhealthy then we get a “death spiral” in which premiums increase without limit until the system collapses.
2. If we attempt to encourage healthy people to buy insurance by denying them coverage once they have pre-existing conditions, we end up with the old problem we had before Obamacare–people who are sick can’t buy insurance because they are sick, and consequently they’re effectively locked out of the system.
3. If we allow people with pre-existing conditions to buy insurance and we don’t mandate that healthy people buy it, why would anyone buy health insurance when they’re healthy? It would be really stupid to do that. A death spiral would seem almost inevitable.

So skinny repeal either means a return to the bad old days when people with pre-existing conditions couldn’t get coverage, or it means incentivizing the collapse of the  healthcare system.

Health care economists often like to think of Obamacare as a three-legged stool. Barack Obama wanted to help the people with pre-existing conditions, so he mandated that insurers take them. But alone, this policy would have led to the death spiral, so he also required healthy people to buy insurance. But some of those people couldn’t afford insurance, so to help them he expanded Medicaid and created the subsidy system. Take away any one of those three “legs” and the stool collapses.

Nearly everyone who observed the Republican healthcare debate could see that the Republicans did not have the votes to do full repeal. The emergence of skinny repeal in its immediate aftermath indicates that this may have been the plan all along. To this point, skinny repeal has not be talked about and has not received significant media coverage. And on the very same day they announce this effort, President Trump gets on Twitter to start a fight about trans people in the military:

The effect of this, whether intentional or incidental, is that the senate is introducing this new proposal almost under the cover of darkness.  Because it seems rather minimal, it may be more difficult to predict how senators will vote–unlike the full repeal or the repeal and replace plans, “skinny repeal” doesn’t cut Medicaid, a key point of contention for many moderate senators. But for this very reason, more radical Republicans may be less willing to support it–people like Rand Paul (R-KY), Ted Cruz (R-TX), Ben Sasse (R-NE), and Mike Lee (R-UT).

The argument McConnell might make to these conservatives is that if skinny repeal passes, it will act as a sabotage mechanism, undermining the efficacy of Obamacare and potentially aiding Republicans in building support for a more comprehensive repeal down the line. We must hope they don’t buy it, or that the moderates consider 15 million more without insurance 15 million too many.

And if by chance it does pass? The left must ensure that the right takes the blame for skinny repeal, and leverages any future systemic instability into momentum for single payer. After all, that which undermines confidence in Obamacare can, in the right hands, also undermine confidence in the privatized system as a whole.