A Republican Vision for Health Reform

Posted: Apr 12, 2014 12:01 AM
A Republican Vision for Health Reform

What is most missing from the Republicans is not so much the lack of an alternative to ObamaCare. It is the lack of a clear vision. Even if you can understand what their various proposals (and friends and close allies often cannot), it is almost never clear why they want to implement them.

Here is the sad truth: Even though the Affordable Care Act (ObamaCare) is a Rube Goldberg contraption that no one can explain and even though its rollout has been a complete disaster and even though the delay of one provision after another makes it seem as though the entire enterprise is coming apart…

Even with all that, Barack Obama in his sleep can articulate a clearer vision for health reform than Republicans and all their think tanks combined — after spending four years thinking about it!!!

Granted, the president's vision is often deceitful. When he says insurance companies will no longer be able to cancel your insurance after you get sick, he neglects to say that this has been federal law since the time of the Bill Clinton presidency. But even if they insist on being honest, can't Republicans come up with a convincing message of their own?

Let's see if we can help them out.

From Priceless, let's take four simple reforms:

• A universal tax credit

• Roth Health Savings Accounts

• Medicaid as an option for everyone

• Change of health status insurance

With these elements we will insure more people and spend less money than ObamaCare. But (and this will come as a surprise to many in the GOP) that is not a vote-inspiring vision. A real vision follows. And, come to think about it, it's not just a vision for Republicans. Democrats may discover they like it as well.

Choice: There will be no employer or individual mandate. People will be free to choose insur¬ance tailored to individual and family needs. Men will not be forced to buy coverage for maternity care. Women will not have to buy coverage for prostate cancer tests.

Fairness: To purchase private health insurance, every individual and every family will get the same help from government regardless of where they obtain the insurance — at work, in an exchange or in the marketplace. The subsidy for private health insurance will be the same:

• Whether they work on the assembly line or whether they are the CEO;

• Whether they work less than 30 hours a week or more;

• Whether their workplace has fewer than 50 employees or more;

• Whether they are in a union or not; and

• Whether their employer provides the insurance or whether they obtain it on their own.

Simplicity: When people purchase insurance online, the exchange will not have to verify their income with the IRS, determine how many employers they work for with the Social Security Administration, check with the Labor Department to see if they have been offered affordable insurance from an employer, or check with their state Medicaid program to see if they quality. The reason: these things will no longer matter. To enroll, people can make use of EHealth and other private exchanges that have been in existence for over a decade.

Also, under the ACA almost every income number entered online will turn out to be wrong. Therefore almost every subsidy will be wrong. That means almost everyone will face a tax increase or a refund next April 15th. Under ideal reform, there will be no need for tax increases or refunds the following year.

Jobs: Unlike the Affordable Care Act, we:

• Will not encourage employers to avoid hiring new workers;

• Will not encourage employers to drop health coverage for their current employees or for their retirees;

• Will not penalize employees and their employers if they work full time rather than part time;

• Will not favor small business over large business or vice versa;

• Will not favor non-union firms over union firms or vice versa;

• Will not encourage outsourcing or labor saving technologies, or in other ways discourage eco¬nomic recovery.

Universal Coverage: Unlike the Affordable Care Act, which will leave most of the uninsured still uninsured and which will drain safety net institutions of their funds in the process, we will commit a certain amount of money on behalf of every American.

• Unclaimed tax credits (by people who elect to remain uninsured) will be sent to local safety net institutions to cover medical expenses the uninsured cannot pay on their own.

• Also, everyone — regardless of income — will be able to use her tax credit to buy into Medic¬aid.

Portability: Unlike the current system, we will encourage employers to buy for their employees insurance that is personal and portable, and that travels with them from job to job and in and out of the labor market.

Patient Power: People will have new opportunities to manage their own health care dollars, if they choose:

• With a Roth Health Savings Account people will be able to manage their own small dollar expenses, including most primary care.

• Special accounts will allow the chronically ill to manage their funds, similar to the highly popular Cash and Counseling program for the homebound disabled in many state Medicaid programs.

Real Insurance: Under the Affordable Care Act, health plans have an incentive to avoid the sick and to under-treat them if they happen to enroll — in part by omitting the best specialists and best hospitals from their networks. This is because the premium high-cost patients pay is well below the cost of their care. As an alternative:

• Insurance should give people genuine protection against the financial consequences of devel¬oping a pre-existing condition.

• If an individual's health deteriorates and he must subsequently switch health plans, the origi¬nal plan must pay the new plan a higher premium to reflect the higher expected cost.

• Patients with health problems, therefore, will be just as desirable to new plans as people who are healthy.

• A vibrant market will develop, in which entrepreneurs compete to find new and better ways of treating the chronically ill.

In this new market, no insurance pool will be able to dump its most costly enrollees on another pool, with impunity — as they are currently doing with alarming frequency. Similarly, no individual will be able to game the system by remaining uninsured and then buying insurance without penalty after he gets sick.

Efficiency: No longer will the government subsidize the last dollar of health insurance, no matter how wasteful. Instead, government will subsidize the first dollars, paying for the core insurance that we want everyone to have. Additional insurance and deposits to Roth HSAs will be made with after-tax dollars and these dollars will compete on a level playing field with all other consumer spending.

• Unlike the current system, no one will have an incentive to over-insure or under-insure.

• Since HSA dollars will be available for other consumption without taxes or penalties, consumers who eliminate wasteful health care spending will get to use every dollar they save for other purposes.

Transition: We cannot abolish ObamaCare and start all over. We must transition from where we are now to where we want to be; and that is a process that will take several years. In the meantime, we can make two promises that are easy to keep:

• If you and your employer like the plan you have, you can keep it.

• If you have an individual or family policy you like (even one purchased in an exchange), you can keep it.