OPINION:
Republicans in Congress face a daunting September — tough choices on health care, overall spending and the debt ceiling will reveal once and for all their fitness to govern.
By the end of the month, health insurers must file premiums for 2018 and indicate in which counties they will offer policies on government exchanges. The Trump administration must provide firm indication about whether it will continue so-called cost-sharing reduction payments to lower premiums and copays for families with incomes between 100 and 250 percent of the poverty line.
Those critical elements of the Affordable Care Act were struck down in federal court, but the Obama administration and now the Trump administration have continued paying pending an appeal. Conservative Republican members could block those in court if broader issues regarding the ACA are not soon resolved — namely, if a replacement for Obamacare does not win approval by both the House and Senate.
Even with those subsidies firmly continued, most counties will have two or fewer insurers offering policies and premiums on most individual policies will increase by double digits for 2018.
Simply, Obamacare has not delivered on promises to control costs by boosting competition among insurers, hospitals and other service providers, or by effectively regulating prices through federal programs like Medicaid and Medicare.
Republicans can’t make meaningful progress toward replacing or repairing Obamacare without implementing price controls that bite or at least deny Medicaid to able-bodied adults who refuse to work.
Conservative Republicans are in denial about the former and moderates like Sens. Shelley Capito, Lisa Murkowski, Susan Collins and Rob Portman demonstrated this summer they can and will block any Republican reform package that denies free health care to prime working-age men who prefer to spend their days playing computer games and watching ESPN.
Germany and Holland have mandatory private insurance programs similar to Obamacare but also recognize the monopoly power of drug and medical device manufacturers, hospitals and other health care businesses in local markets. Their governments rigorously regulate prices on the basis of the real value drugs and services deliver, and spend about 12 percent of gross domestic product (GDP) on health care. The United States spends half again more.
No amount of interstate competition or tort reforms advocated by conservative Republicans absent genuine price regulations will get the United States into the same time zone on health care costs as those competitors and others like Japan. And higher costs for employee benefits — whether paid directly through premiums or indirectly through taxes — are as much a competitive millstone around the neck of American corporations and small businesses as our burdensome corporate and personal tax codes.
This unwillingness to curb entitlements and forthrightly address monopoly pricing define why congressional Republicans are unfit to govern, and it all comes together with September decisions about the 2018 fiscal year budget.
Washington must invest more in infrastructure and defense — in particular the Navy — but it can finance neither with higher taxes or more borrowing. It must carve out what is needed from existing programs — namely entitlements.
Specifically, high corporate and personal taxes on small business are driving investment offshore, and large federal deficits require the U.S. government to borrow from foreign investors.
Although U.S. private citizens save, they don’t save enough to finance both private investments in new homes and businesses and federal deficits. Consequently, the net foreign indebtedness of the United States has reached about 45 percent of GDP and is on track to exceed levels that triggered financial crises or wrenching austerity for governments in other advanced, industrialized countries.
Entitlements and interest payments now consume more than 60 percent of the federal budget, and according to the Congressional Budget Office, those will consume all federal tax revenue by 2027.
By the end of the month, Congress must pass both spending legislation and raise the debt ceiling or the federal government will not be able to pay all its bills in October. Decisions surrounding those will define whether Republicans are willing to curb entitlements to finance needed spending on infrastructure and defense or simply run the government into bankruptcy over the next decade.
A Republican Party that won power on big promises to repeal Obamacare and cut taxes can no longer kick the can down the proverbial road without taking the nation’s finances over a real cliff.
• Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.
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