(Bloomberg View) — Since the Republican House approved H.R. 1628, its replacement for Obamacare, critics of the bill have told us how it will take health insurance away from millions of people, while doing little to control medical costs or bring fiscal rectitude. Those arguments are mostly true, but the same commentators have neglected to acknowledge a crucial point. The House plan won't work for the same reasons Obamacare has had trouble — namely there is no social consensus on who should pay the bills.
Consider the part of the plan that would take away many federal-level protections embedded in Obamacare for those with pre-existing conditions. Instead, state governments are to cover those individuals through high-risk pools, with the federal government paying modest subsidies to the states to help. Most likely, millions of Americans will be left at loose ends.
But keep in mind that H.R. 1628, the American Health Care Act of 2017 bill, does not prevent states from spending whatever is needed to cover pre-existing conditions, if they so choose. The underlying truth is that voters at the state level just aren't that interested in paying for these benefits, preferring instead to lower taxes, or to spend the money on roads, schools and prisons.
In other words, when American voters are given a direct bill for health care expenditures, they recoil, even when the beneficiaries are in needy or desperate situations. The Democrats are good at tarring the Republicans for indifference to the plight of these people, but less keen to admit that the larger popular indifference plagues their own health care visions as well.
A meme I've seen going around on Twitter put it this way: Health care expenditures are about 1/6 of GDP, but no American wants to spend 1/6 of income on health care.
Unfortunately, we cannot avoid these costs, so we have taken refuge in the traditional American pastime of trying to hide them as much as possible.
Under Obamacare, there are expansions of Medicaid and employer-based coverage, but the signature product is the mandate and the health care exchanges. In essence, the people who are forced to buy individual insurance on the exchanges are paying for those beneficiaries who have pre-existing conditions.
