So Obamacare was expensive and will be dismantled. But it’s a good bet that healthcare costs will continue to rise. Have we ever seen them fall? No, we’ve only seen increases slow down temporarily. What’s going on?

Back in the day doctors were just one of a number of tradesmen that hawked their wares like haberdashers, plumbers, dentists, barbers, lawyers, palm readers, etc. They all got paid in a fee-for-service fashion. The haberdasher sold you a shirt, the plumber cleaned out a clog, the dentist yanked a molar, the barber gave you a cut and a shave, the lawyer filed a deed, the palm reader said you were a loser, and the doctor stitched up your head after you stumbled out of a bar on a festive Saturday night.

Then they handed you a bill and you paid up, or if they knew you they took the money first. It was a simple transaction. If you couldn’t afford their services you either did it yourself or did without. Life was a lot less complicated, and a lot shorter by the way.

Goldman Sachs takes its best shot at outlining a possible future for US healthcare reform:

Our best guess is a continuation of the tax credits and Medicaid grants, but in a different form. At this early stage, our expectation is that Congress will enact a new system that continues to provide for an expanded Medicaid program and tax credits to pay for insurance premiums, but with significant changes in the way those resources are allocated. In our view, the best guide to how Congress and the Trump Administration might reform the current system is in House Speaker Paul Ryan’s plan released in June 2016. It would provide for:

• Tax credits for individual market health insurance. The plan would provide refundable, advanceable tax credits (essentially the same concept as a monthly payment from the government) to purchase health insurance on the private market. Unlike the current program, which is based on the average premium and adjusted based on income, the proposed credit would be adjusted only based on age.
• Repeal of the coverage mandates and partial repeal of insurance market reforms. The proposal would eliminate the mandates on employers to provide coverage and individuals to obtain it. It would loosen the rules regarding pre-existing conditions and premium variation, most importantly by specifying that premiums for the oldest enrollees can be no more than 5 times the premium for the youngest members (the current ratio is 3:1). This would encourage younger (i.e., healthier) enrollees to join. For older enrollees, House Republicans propose to use federal funds to subsidize “high risk pools” to cap premiums once they reach a certain level.
• Partial reversal of the Medicaid expansion. The House plan would offer states a choice between a “block grant” – a lump sum provided to states roughly equal to what they currently receive excluding the cost of the Medicaid expansion—or a per-capita payment that would roughly equal current spending per-enrollee spending but would grow more slowly than health costs.

Not a bad guess. Also don’t expect any changes until 2019 at the earliest. And who knows how the prospect of big changes will affect insurer participation. I would also note that this might reduce spending vs. the current baseline, but certainly means higher spending than in the pre-Obamacare era. Interesting to see how Republicans handle that, assuming budget deficits and “small government” are still relevant issue within the party.