Commentary: Health Care Reform: What to Expect (Jan, 2017)

by John McClaughryJohn McClaughry

Six years ago a Democratic Congress and President enacted ObamaCare. Whatever one may have thought about its merits, after six years it is unmistakably clear that it cannot continue without heroic, disruptive interventions in 2017, costing many billions of dollars.

Congressional Democrats, who have taken serious beatings at the polls for championing the act, argue that its salvation consists of creating the government-run “public option” health insurance company. President Obama rejected that idea in 2009, telling Congress that “My guiding principle is, and always has been, that consumers do better when there is choice and competition.”

The Democrats  also want billions of new tax dollars for larger premium subsidies and more  multibillion dollar insurance industry bailouts. Their too-clever new slogan is that the Republicans will “make America Sick Again”. None of that will fly.

Republicans now have the serious task of laying off their ritual denunciations of Obamacare, and producing their own replacement. The President-elect announced last Tuesday that the replacement plan would be unveiled very soon after his Secretary of Health and Human Services, Dr. Tom Price, is confirmed.

The replacement plan will pass the House but face serious obstacles in the Senate. There, the Republican majority can repeal ObamaCare tax and spending provisions by a majority vote, but changing much of the rest of the act will require enough votes to overcome fierce Democratic opposition.

By the numbers, it will take eight Democratic votes,  plus the 52 Republicans, to overcome a Democratic filibuster. If the Republican plan can’t surmount the filibuster, they will clean up half of the mess and face the other half indefinitely, while the insurance markets collapse. The Congressional Budget Office estimates that 22 million people could be left without affordable insurance. Not good.

The House-passed bill will probably repeal the medical equipment and “Cadillac policy” taxes, the individual and employer penalty taxes for not buying insurance, the Obama Medicare tax, and the cost-sharing tax credits to subsidize premiums. It will also maintain some form of coverage for preexisting conditions and continue the requirement that children can stay on their family plans to age 26.

Without painful tax penalties, younger healthier people will simply stay out of high priced insurance pools top-loaded with older, sicker people. That is already creating the “death spiral” of ever-increasing premiums and deductibles, and eventually carrier exit from the market.

Republicans should attempt to deal with this by cutting back on ObamaCare’s costly benefit requirements, allowing  premium pricing that honestly reflects the insured’s age and medical history, repealing guaranteed issue (whereby the uninsured can sign up when they get sick), financing state high risk pools for the uninsurable (that 35 states had before ObamaCare undermined them), dramatically expanding the use of Health Savings Accounts to allow both individuals and employers to buy health insurance with pre-tax dollars, and continued premium credits, coupled with catastrophic coverage policies.

The Republican bill should also expand opportunities for insurance purchasing associations and cooperatives, encourage faith-based and other health mutual aid societies, foster increasing use of rapidly developing technology for cost-effective primary care, expand cost and outcome transparency to enable informed patient choice among medical providers, stimulate more patient attention to lifestyle, nutrition and preventive care, and offer Federal incentives to states to convert acute-care Medicaid into a Healthy Indiana model, with beneficiary-managed  Power Accounts.

It should also take steps to reduce medical provider tort liability, relax FDA regulation of access to pharmaceutical products and devices (called “Right to Try”), and stiffen antitrust enforcement against cost-inflating regional monopolies (like the Vermont Care Organization  proposed by the Shumlin-Scott All Payer plan).

The result of all this would be a dramatically reformed health system built upon Obama’s principle of “choice and competition”. It would be driven by better informed and more responsible consumers, not government-managed or coerced. It would promise, and likely achieve, high quality health care at lower cost.

- John McClaughry is vice president of the Ethan Allen Institute (ethanallen.org).

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