April 28, 2017

The Latest Concession to the Freedom Caucus Would Create Economic Inefficiency

One of the societal problems ameliorated by the Affordable Care Act was that people were discouraged from changing jobs if they had acquired a chronic medical condition that was covered by insurance at their current workplace. The ACA lifted pre-existing-condition limitations on insurance and made it easier to afford insurance not provided through an employer. This obviously helped many individuals, but it also helped the economy, as workers could more easily change jobs to one where their contribution to the economy would be greater.

House Republicans laboring to achieve consensus on a bill to repeal and replace the ACA have hit on a scheme to attract more votes from the Freedom Caucus. The latest proposal would give individual states the ability to tinker with insurance rates and coverage. If this idea finds its way into law, it will introduce a similar inefficiency into the U.S. economy. Workers who might want to change jobs to improve their lot (and that of the economy) would, with this provision, have to ask if moving to another state would cause them to lose vital medical benefits. This could deter worker movement. It could also encourage worker movement into more generous states, most probably those whose governments are not controlled by Republicans.

House Republicans continue their race to the bottom in their devising requirements for a new health care bill. It is to be hoped that, as the leadership tries to satisfy the Freedom Caucus, less radical representatives will realize that doing so will create a backlash that will sweep GOP members from the House in 2018.

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