Rand Paul: Senate Bill Could Worsen Obamacare Death Spiral

Sen. Rand Paul further elaborated on his opposition to the Senate healthcare bill in an interview on CNN with Ana Cabrera.  He also gave a brief overview of policy solutions he’d like to see included in future healthcare reform legislation.  As a physician, Sen. Paul has unique qualifications to speak on this issue.  Having lived in the healthcare system much of his life, he has a great amount of personal experience and insight into the field.

According to Sen. Paul, the Senate legislation, named the Better Care Reconciliation Act (BCRA), will not improve America’s healthcare system.  Rather it’ll actually exacerbate Obamacare’s problems and could even speed up its “death spiral”.

“The fundamental problem of Obamacare” is that young people are being priced out of the insurance market by the regulations that each insurance policy must abide by.  These regulations raise the cost of policies and make them unaffordable for young, healthy people.  Once that happens, only sick people are left in the market for insurance, which is unsustainable as a business model.  Eventually the whole insurance market collapses.  This is the “death spiral of Obamacare.”  We are seeing this as more and more insurers, such as Aetna, pull out of Obamacare’s individual markets.

Sen. Paul explains,

“When you mandate what you have to cover, you increase the price, you price out the young healthy people, and the only people left in the insurance market get sicker and sicker. It’s what they call adverse selection.  It’s also referred to as the death spiral of Obamacare.”

 

“My problem with the Senate bill as it currently exists is we don’t fix that. We keep 10 of 12 of the Obamacare regulations, we still keep the idea that you can still buy it after you get sick, so I’m concerned that the death spiral of Obamacare may well even get worse with the Republican version.”

In addition to keeping most of Obamacare’s regulations, the Senate bill also retains most of Obamacare’s subsidies.  Even worse, BCRA actually adds a new subsidy for insurance companies, named a “stabilization fund” to the tune of $120 billion.  It is a new reinsurance program over the next four years to help insurance companies handle rising premiums.

Summing up his concerns,

“All of these things together make me very concerned that we’re not going to fix the problem here.”

No wonder he referred to this bill previously as “Obamacare-Plus” in some areas.

When confronted by the CNN host for his solution to replace Obamacare, his answer is “to have confidence in capitalism.”  He would like to ultimately see a “group policy” model.  People in the individual market would be allowed to join a group to negotiate better rates for all the members, including those with pre-existing conditions.  These groups would be created by the market, not government, and they would give policy buyers leverage with the insurance companies.  When a group of several hundred thousand people sought policy rates, insurance companies would be motivated to bid for their business.  This is in contrast to now when individuals buy insurance as a group of 1 or 2 people, so insurers have leverage over them.  Sen. Paul uses AARP as an example with 33 million members.  Any group with so many members would attract the interest of multiple insurance companies and give the group tremendous leverage for better rates.

Sen. Paul acknowledges that some people may slip through the cracks, and Medicaid has a place to deal with those most needy and desperate.

In the near term, Sen. Paul says he would like to repeal as much of Obamacare as possible in the Senate bill, focusing on eliminating taxes, regulations, and patching Medicaid.  Then starting in six months, the Senate could begin finding bipartisan solutions for what remains.

Sen. Rand Paul had previously released a joint statement opposing the BCRA with three colleagues, Sen. Ted Cruz, Sen. Mike Lee, and Sen. Ron Johnson.  All four have said they are willing to work for solutions and find common ground, but they cannot support the Senate bill in its current form.  It does not keep their campaign promises to repeal and replace Obamacare.

Since then, Sen. Dean Heller and  Sen. Susan Collins have also announced their opposition along with Senators Jerry Moran, Shelley Moore Capito, and Rob Portman.  Sens. Heller, Collins, Capito, and Portman are opposing the bill from the left though, complaining it cuts Medicaid too much.

With only 52 GOP Senators, Senate Majority Leader Mitch McConnell can only afford to lose two votes.  Though the Senate bill was only revealed a week ago, McConnell had hoped to vote on it before the July 4 recess. But now that has been delayed until after the recess.  At this point, there isn’t even enough support to begin debating the bill, let alone pass it.  The votes just aren’t there.  So, BCRA’s future remains in doubt.

About the author

Nick Kammer

Devout Christian, Cruz 2016 state co-Chair. Amateur metalsmith and jeweler. I worked on more campaigns than I care to remember. Brown University magna cum laude. Masters of Science in Accountancy. CPA. Yada yada. Everything I needed to know I learned from my father.

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