The United States healthcare system has been distorted so badly, and for so long, that it will take more than one reform effort to correct the problems further imposed upon it by the Affordable Care Act.
But before proceeding too far down the Washington rabbit-hole over what it means to “repeal and replace” Obamacare, we need to remember that unless we move toward market-based federalism, we’re still heading in the wrong direction.
When I ran for president last year against both the Republican and Democratic Parties, I often highlighted the absurdity of “health insurance.” It’s become a farce because it eliminates accountability for the real cost of healthcare in the marketplace.
Can you imagine if, every time you went to the grocery store, the clerk asked you with whom you had “grocery insurance”? The grocer would then adjust your prices according to what an employer-provided insurer chose to include on their menu of favored treatment.
Certainly there must remain a role for catastrophic insurance, as well as providing help for the very needy. The true purpose of any type of insurance — health, auto, or life — is to spread risk, not spread wealth.
Obamacare didn’t lower costs, but hid them with subsidies
And therein lies the problem with President Obama’s Affordable Care Act: It did little to move us toward marketplace solutions that would drive down the cost of healthcare. Instead, it “lowered” the price of care by hiding its costs through subsidies.
One of the fundamental realities of politics is that, once a subsidy is provided, it is extremely difficult to roll it back.
That’s why Republicans and Democrats — moderates and conservatives — should avoid fighting over redistribution of wealth and instead turn towards market forces and allowing innovation by the states. If incorporated in the Senate version of the GOP health plan, it could make it worth supporting.
And the good news is that, in the give and take between moderates and conservatives in the GOP, Senate Majority Leader Mitch McConnell, R-Kentucky, may stumble upon two proposals that could unite both factions of the party.
And from a political standpoint, it’s worth noting that these ideas owe as much to moderate skeptics of the bill like Sen. Susan Collins, R-Maine; as to waving conservative skeptics like Sens. Ted Cruz, R-Texas, and Mike Lee, R-Utah.
We can make progress on healthcare if we are pointing in the right direction, whether that pointing comes from a conservative or a moderate.
Improving the partnership on Medicaid by cutting strings
Consider Medicaid, the state-federal partnership for providing medical care for low-income individuals. The Senate version’s changes to the program, by putting a ceiling on federal outlays, have become a sore spot for governors, including Republican governors.
This needn’t be the case. Indeed, Collins and Sen. Bill Cassidy, R-Louisiana, have put forward legislation to offer states greater flexibility — that is necessary — over their Medicaid program. Some states will favor richer benefits and others will be more thrifty.
Medicaid block grants can provide the way forward. Instead of continuing to dictate rules for Medicaid, Senate leaders should convert the program to a zero-growth block grant. Funds could even be increased, now, above two percent growth rate, as long as the block grant growth rate is capped at a zero percent.
When I was Governor of New Mexico, I knew we could have saved as much as 25 percent of the cost of Medicaid if we had the flexibility to administer the program from Santa Fe, not Washington.
I understand what governors mean when they say that the feds shouldn’t cut Medicaid funding unless they also cut the dictatorial strings from Washington.
But if the Senate does truly eliminate the red tape, devolving Medicaid funds to states will lead to better low-income health care opportunities at lower costs.
Health Saving Accounts are pro-innovation and will help lower prices
Another change in the direction of innovation currently being considered would allow people to use health savings accounts to also pay health care premiums. This was introduced into Friday’s revision of the bill at the request of Cruz and Lee.
The current health savings account concept is too limited. By allowing “large health saving accounts,” the effect on the healthcare system would be powerfully pro-market: Families would control more of their own earnings, and workers would control money currently dictated by employers.
Equally important, this puts pressure on health care prices. Because consumers keep what they save on both out-of-pocket expenses and premium, they will shop for their healthcare in more cost-conscious ways. Recent research shows price reductions on average of 20 percent across a range of healthcare services.
Let’s stop focusing whether the House-passed American Health Care Act, or whether the current Senate version, is “pure” enough for critics of Obamacare to support.
Instead, let’s make sure that market-based and decentralized solutions — whether from conservatives or moderates — are incorporated.
(Photo of Senate Majority Leader Mitch McConnell, R-Kentucky, and Sen. Susan Collins, R-Maine, departing the Capitol for a briefing at the White House in April 2017, by Win McNamee/Getty Images)