The Obama administration detected faint signs of a pulse last week in its dysfunctional health benefits exchange web site. But the parade of dismal failures, broken promises, and unsuspecting victims under the Affordable Care Act (ACA) will only grow longer. The White House insists that Obamacare is not really as bad as it looks. Besides, says President Obama, “[T]he only alternative that Obamacare’s critics have is, well, let’s just go back to the status quo.”
That, too, isn’t true. Nevertheless, we should acknowledge that most Republican-sponsored bills in Congress and health reform proposals advanced by market-oriented policy organizations have lacked necessary details, conceptual depth, and compelling themes. Rather than just pointing to everything that is wrong with ACA, we need to flesh out a clearer path to a better future.
Obamacare can’t be mended. A simple return to the pre-ACA world is no solution either. We have to transcend this policy disaster, not just end it. Setting a socially acceptable floor to ensure that vulnerable Americans receive necessary care is essential. Yet it must avoid placing a ceiling on better opportunities to improve health outcomes, increase upward mobility, and accelerate economic growth.
Health care choices will become more competitive, affordable, and patient-centered once we begin to depoliticize and decentralize them. Obamacare has stalled at the demolition and site preparation stage of its plan to reconstruct U.S. health care into a system dominated by costly mandates, unaccountable bureaucracies, special interest deal-making, income-distribution transfers, and political dependency. Initial post-ACA reforms first must undo this damage, then proceed more carefully to strengthen incentives for more buyers and sellers to seek and provide higher-value health care.
Far too many health policy reform proposals focus narrowly on who gets additional health insurance subsidies and how large they might be, or how the real costs of health care can be hidden and shifted to other parties. They also lack confidence in the ability of most health care consumers to make good decisions for themselves.
So what should we do instead? First, allow willing parties to find each other in more transparent and accountable marketplaces. Dial back the ACA’s dense set of counterproductive benefits mandates and insurance price controls. Second, replace the unpopular and ineffective individual mandate to purchase Washington-approved insurance with new incentives to maintain continuous coverage instead. Individuals who stay insured would be assured of guaranteed renewability without new health-risk rating, plus protection against exclusions for pre-existing health conditions. Similar guarantees already existed for the employer group market under federal law almost fourteen years before the ACA was ever enacted. They should be extended to the individual insurance market.
What about the much smaller number of Americans who might nevertheless be at risk of being left behind? Greater reliance on state-administered high-risk pools that are more effectively financed (with significant federal taxpayer support) and better structured to set a reasonable cap on non-standard rates can ensure that no one will be “uninsurable” by facing premiums for coverage that are either unaffordable or unavailable due to their health status.
Medicaid will continue to have a vital role to play, provided that it is substantially reformed and rededicated to its core mission of providing coverage to the lowest-income Americans. Instead of overwhelming the program’s limited resources with the large expansion into higher income populations envisioned by the ACA, we need to streamline the Medicaid program. State officials should gain more flexibility in administering it in return for achieving measurable policy objectives that are pre-negotiated with the federal government.
The goal of more generous support of health care access for low-income and other vulnerable Americans in the non-elderly population still must recognize federal and state budget constraints, set realistic priorities, and hit sustainable targets. Additional budgetary contributions should not be expected from the Medicare program, which faces deep problems of its own. Any future savings from Medicare reforms like premium-support financing and gradual means testing will be needed just to maintain Medicare’s sustainability.
Our broader problems today extend far beyond just the cost of health care and the affordability of health insurance. They involve sluggish economic growth; inadequate employment opportunities; fractured families, and disparities in income and education that damage the health of low-income Americans most of all. To fix them, we need to revitalize key cultural values and stop crowding out investments in a much wider portfolio of public policy reforms to achieve far more than mere insurance subsidies and regulation can ever hope to accomplish.
However, at least some of the necessary reshuffling of current taxpayer subsidies for non-elderly purchasers of private health insurance might be accomplished by a gradual transition toward defined-contribution, rather than open-ended, financing of the tax advantages for workers receiving employer-sponsored insurance. Limiting tax subsidies for health insurance and distributing them more fairly across the entire non-elderly population of health care purchasers will increase the cost-consciousness on the margin for many health care consumers. But that alone will not make expensive health care services more affordable. Only vigorous competition to serve the value-conscious choices of informed consumers can do that
Public policy still needs to help consumers choose higher-value options by expanding access to deidentified health data and improving the transparency and availability of information about their comparative cost and quality. In combination with health competition policies that expand entry by new competitors, we should allow better performers to be rewarded with larger market shares and (yes) higher profits.
The best way to encourage greater competition and innovation in health care delivery is to allow it to take place without the stifling regulation and price suppression of ACA-like policies. Taxpayer-funded health programs then can recognize, ratify, reward, and publicize what was actually invented elsewhere.
The route to improved health really begins with a growing economy, stronger families and communities, a revamped educational system, and more intergenerational equity. They all must combine to produce more self-sufficient and optimistic Americans, who then can assist their less fortunate fellow citizens more effectively without the political filters of bloated public programs like Obamacare.
Tom Miller is author of When Obamacare Fails: The Playbook for Market-Based Reform.