Republicans making same old mistake on health reform

October 16, 2013
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When will Republicans ever learn?

They've spent four years spewing hatred at Obamacare and have little to show for it.

Meanwhile, they've failed to do the simple thing that even my 4-year-old knows he has to do when he wants to get me to change my mind: Offer a real alternative.

That's not because Republicans don't have any alternatives. In spite of the claims of Democrats and popular belief, there are several legitimate conservative proposals to reform the broken American health care system. I’ll describe some of them shortly.

The problem is, Republicans and conservatives have hardly even tried to agree on a common plan for health reform.

The lack of a Republican plan has been the key reason why they have repeatedly failed to defeat or defund what remains a generally unpopular law—including the most recent effort that sparked the partial government shutdown and the crisis over raising the government’s borrowing limit.

Americans may not like Obamacare, but they’re sure they don’t want to go back to the status quo. So, in the absence of a competing offer, they’re sticking with Obamacare. At least that’s how I read the polls.

This unsolicited advice to the GOP, which will go nowhere I’m sure, is offered in a friendly manner. Because I agree with several of the Republican criticisms of Obamacare. Most especially, that it spends a lot of money—about $200 billion a year—to treat symptoms of the dysfunctional U.S. health care system (the problem of the uninsured and underinsured) while doing only modest things to address the causes (industry-wide structures that make everything about health care unaffordable).

But Obamacare—whatever faults it may have—actually offers a treatment for the dysfunctional system. Republicans, as a whole, have steadfastly failed to offer one. At least in the past four years.

They did offer an alternative plan to the Clinton health plan back in 1994, which probably played a role in that plan’s ultimate demise. They did usher in marginal reforms in 2003: tax-favored status for health savings accounts, as well as a prescription drug benefit and privatized option for Medicare recipients.

And both George W. Bush and John McCain, as presidential candidates, offered sweeping reforms that would have dramatically changed the health care market. But those plans never received broad acceptance by the rest of the party.

Instead, Republicans staged 40 impotent votes in the U.S. House to repeal part or all of the Patient Protection & Affordable Care Act and then launched the recent quixotic quest to defund it.

That's too bad. Because it’s becoming apparent to many people—as stated recently by Eli Lilly and Co. CEO John Lechleiter—that there is a whole lot more post-Obamacare health reform to come. Yet Republicans again fail to give Americans a choice.

Why? Two reasons—one political and one ideological.

The political reason is that Republicans, as a whole, have been unwilling to tear up the existing health care system. I think that’s in part because they have received so much support—financial and political—from the entities in that system. Health insurers, drug companies, medical device makers and physicians all have given handsomely to Republicans over the years. Conservative health economist John Goodman makes that point well here.

The ideological reason is that there are competing thoughts within conservatism about how to fix health care—and these competing schools of thought hardly talk to each other, let alone work to form a consensus. Again, Goodman provides a good summary of the situation. Some are focused on reforming the marketplace for third-party insurers. Others, like Goodman, are focused more on scaling back the roll of third-party insurance so they can create a true market among providers. Still others spend most of their time on Medicare, rather than the rest of the health care system.

Here’s a quick and by no means exhaustive rundown of some of the conservative/Republican ideas for health reform:

Goodman wants to eliminate the tax break on health insurance premiums for employers and instead give refundable tax credits to all individuals who buy insurance. He tentatively proposed $2,500 per adult and $8,000 for a family of four.

Goodman’s plan was the basis of a bill proposed by Republican legislators, known as the Coburn bill, which became the basis of the McCain plan. This bill is still around.

The American Enterprise Institute unveiled a proposal in August called “Best of Both Worlds.” It would try to create univeral insurance coverage by eliminating the employer tax break in favor of individual tax credits and create insurance policies that run for multiple years, in order to encourage behavior and care that improve health.

Ramesh Ponnuru and Yuval Levin, in a proposal published in April, would extend the employer tax break on health insurance to all individuals as well as allow insurance to be sold across state lines, and create high-risk pools to help manage the transition for the sickest Americans.

Another idea is, somewhat counterintuitively, to use Obamacare’s architecture to enact a free-market reform of health care, based on Switzerland’s health insurance system. That was proposed by conservatives Avik Roy and Douglas Holtz-Eakin here.

“For far too long, conservatives have failed to coalesce around a long-term vision of what a free-market healthcare system should look like,” Roy and Holtz-Eakin wrote in a Reuters article. “Republican attention to healthcare, in turn, has only arisen sporadically, in response to Democratic initiatives. Obamacare is the logical byproduct of this conservative policy neglect.”

Obamacare, whether you like it or hate it, won’t be the last attempt to fix health care. Democrats certainly didn't get everything they wanted in the bill, and they'll push for further reforms. Republicans should, at long last, accept that they lost the most recent health care battle, but be ready with well-developed policies to win the next one.

That’s how our government—when it’s working—works.

  • We'll see
    De-coupling health insurance from employment is definitely an idea who's time has come. One element which I have argued here for a long time is elimination of employer tax breaks for insurance, in favor of individual credits. The obvious questions then concern funding the credits; my answer would be a per employee tax on business, because it seems doubtful the savings that employers realize by eliminating this benefit would be passed along to employees. This sort of solution seems unlikely to pass muster with conservatives who oppose anything that looks like a tax. Having said this, what proof is there that any, even reasonably moderate Republicans, embrace any of the models, which still have elements of the ACA, and thus will usher the end of the world as we know it.
    • Evaluating Reform
      With so many "reform" ideas on the table, it would be nice to have a common evaluation tool. I typically ask a number of questions about a reform idea in order to be able to compare one with another: * Are all or most Americans likely to have health insurance coverage under the proposal? Can the old/sick/poor afford the coverage? * Is the coverage "real," i.e., does the insurance provide protection for most illnesses? * Does the program contain elements to restrain cost increases, increase healthcare efficiency? What are the projected TOTAL healthcare costs under the proposal and how do these compare to a common base projection? * How are these total costs allocated between government and the private sector, and within the private sector, between employers and individuals?
      • To dave k
        All these questions are good ones. However, I think that the conservative proposals cannot, by their very nature, provide answers to your latter questions--"Does the program contain elements to restrain cost increases, increase healthcare efficiency? ... How are these total costs allocated between government and the private sector, and within the private sector, between employers and individuals?" The conservative mechanism for restraining costs is the consumer, armed with price and quality information and financial incentives to seek value. The conservative vision is to reduce the costs borne directly by governments, employers and third-party insurers but also to reduce the taxpayer resources these entities now benefit from. Conversely, the costs borne by consumers would rise, but so would the tax benefits directly available to them. Conservatives believe that, in the end, costs and the burden of them would shake out in the best way, but they are not going to pre-specify what that way is. I'm not saying this is the right approach--it's open to lots of criticisms and I don't think most consumers find the deal conservatives are offering them to be very attractive. But the evaluation framework you offer would, it seems to me, exclude these conservative proposals from the very start. I, frankly, would rather keep everything on the table--from a single-payer national health insurance program to these conservative proposals.
      • Free Market
        The Republican alternative should be the Free Market. Healthcare started as a benefit for some companies. Progressive health care is only adding the government administrative costs (crash and burn website) and control. Healthcare changes should include interstate commerce, tort reform, removal of laws which benefit pharmaceutical companies (a prescription used in our family is $4800 per Canada is $1200 per month due to their caps). Tax? Taxes are out of control! Government job security...but we're losing jobs. Also, did anyone notice the government shutdown? Except for Veterans? Great debate...thanks for the op!
        • Healthcare Options
          JK, I agree with your premise about the Republicans, and it would be very helpful to have their "competitive bid" as well. Too bad they haven't been able to make party compromises to come up with such a proposal. Additionally, I know you mentioned some of the special interest groups driving the Republicans, but I would also add that we have the same issue on the Democrats side, as they seem disinterested in addressing the tort reform issue related to health care. From the book, America the Beautiful, penned by Ben Carson, M.D. he quotes from Howard Dean of the Democratic party, that the difficulty in addressing tort reform is that the Law Lobby will not support it. I understand that true tort reform would diminish attorney income, but like everything else, we all need to make some sacrifices for the common I reflect on that point, that is an across-the-board national issue. And actually, the numbers I have seen relative to the impact of positive tort reform are greatly understated, since it is not just the awards which are provided, but also the overhead costs which companies pay to maintain their legal support as well as the premiums which they pay to their insurance carriers. In any event, I laud your inputs, as the Republican party surely does need to propose an alternative to the ACA.
          • Right on.
            You reminded me...I used to work in a larger metro city. Prominent attorney (you'd know their names) law firms actually stalked the well know large hospitals for customers!!! On the hospital property!! Malpracticeland.
          • Healthcare Options
            I believe the fallacy in your option, well stated as it is, is threefold: a) as we move increasingly to a socialistic state, the government has ever greater control of our lives, and costs expand much greater than they would in a free enterprise system, b) most young people, especially those that are single, will not sign-up for getting sick is pretty far from their mind, although the government is counting on them to support the sick, the aged, and the chronically infirm. c)While the ACA administrators are in denial, there is little question that when ACA kicks in fully, we will not have the options we have today about who provides our healthcare. Frankly, I have never been convinced it is a commodity like soap, toothpaste, paper towels, etc. as an example, whether you are first or last in your medical class, all carry the title of Doctor, and they all do not have the same capabilities. d) Lastly, there is a values issue here as well. I just do not believe that healthcare is a right, certainly not as so defined in our U.S. c Constitution. My belief is that we as citizens have a prioritization responsibility to discern between paying for our healthcare vs cellphones, autos, quality of clothes/vacations, etc. and not have the government assume responsibility for our healthcare and clearly at a higher taxation cost, so that we can have ever more discretionary income.
            • Healthcare Options
              Sorry, but the above comments by me were intended to respond to Betrn'uOctober 16, 2013 7:49 PM, and not intended to be free standing.
              • Patty Free Market
                How can you express the desire about Free Markets, and then use Canada and the cost of a medicine as an example. You state Canada has caps, which is exactly the opposite of free market.
              • Good Article/Good Comments
                Great article and a lot of good comments. Yes, it would be good if the Republicans would be more constructive rather than obstructive when dealing with the ACA. I just watched Congressman Luke Messer speak on MSNBC a few minutes ago; he was defending the Republican's approach to defund the ACA and showed no sign of trying to be a reformer. Too bad for Indiana and the country. One other comment--articles and commenters continue to talk about the health care system in terms of a "free market;" we are a long way from a free market given the forces (insurance companies, physician groups, hospitals, pharmacy lobbyists, etc.) between the consumer and the provider. I wish the anti-ACA folks would stop using this phrase as a simplistic way to bash the ACA.
              • Individual insurance
                I don't see anyone objecting to our 'socialist' education system, where we all pay for k-12 education, regardless of use. Yes, it is for the betterment of society, but so is healthcare. We should all be able to purchase this outside of employment. The main cause of bankruptcy in our country is due to unplanned medical expenses. Even a sizeable bank account can be wiped out a few months into cancer treatment.
              • Re: Mike
                Your comments did not address any issues I raised. Maybe we can discuss on another thread. Thanx
              • Conservative conflict
                Conservatives do not believe it is government's responsibility to provide health insurance for its citizens. I think that is one reason they are conflicted and cannot come up with workable options. If you don't want something to begin with, it's hard to find good solutions to make the program you don't want (government provided health care) to work very well.
                • Re: Alan
                  I think you have it about right. A fundamental question that seems to be avoided is "As a first world country, do we believe that every citizen, regardless of economic status, has a right to health care?" I would hope our answer to that is yes. I am an emergency room provider and 40% of my patients pay nothing for their care. They either have Medicaid, in which case my taxes pay for their care, or they are uninsured and I pay for that in the form of increased insurance premiums and reduced income for my provider group. I think the pain needs to shared a bit more by having more people in the insured group that are able to pay. I see it the same as police or fire protection, or the military. Some things simply aren't improved by free markets and competition. I expect that one day we will have a single payer plan, like Medicare for all, that will reduce costs and provide uniform care for all citizens.
                  • Comparison
                    Comparing police and fire to health care is apples and oranges. Police and fire personnel are paid by citizen taxes (unless that too is your goal) whereas doctors, nurses, etc. are professionals of free will who, I believe, would chafe under what would occur under "government medicine."

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