What a difference a few weeks make. Just as Republicans were desperately trying to extricate themselves from the fiasco of tying budget passage and debt ceiling legislation to repeal of the Affordable Care Act, the White House came to their rescue with its disastrous healthcare.gov start-up.
It’s now looking like the most egregious healthcare.gov glitches will be fixed by year-end, but with enough problems remaining in 2014 to continue to provide fodder for conservative (and other) critics. Unfortunately for the administration, just as the technical bugs are ironed out the spotlight will move to other aspects of Obamacare.
Premiums are going to take a jump next year, reflecting the lower than projected enrollment by the young and healthy (thanks in part to the healthcare.gov fiasco and the confusion created by Presidential and Congressional attempts to allow non-compliant plans to be extended). There’s a good chance of wholesale cancellations, too, as some insurers take a long look at the unhealthy business they’ve acquired and decide to abandon the exchange market. And it’s almost a given that every other increase in premiums or cut in coverage or cancellation of insurance will be blamed on the upheaval of the Affordable Care Act.
It’s enough to make gleeful Republican leaders believe in the Tooth Fairy.
But will the Tooth Fairy continue to deliver, notably in the Congressional midterms in 2014 and the Presidential election in 2016? The public attention span is notoriously short, and while the current chaos may influence the 2014 midterms, by 2016 the healthcare.gov disaster is likely to be a fading memory. Barack Obama won’t be running for reelection, so harping on the present White House’s incompetence will have limited impact. And while the eventual imposition of IRS fines on those still without coverage will certainly generate a new round of outrage–even assuming the IRS gets the calculations right–Hilary Clinton, or whoever the Democratic candidate turns out to be, will reasonably be able to ask “So where was the Republicans’ better idea?”
And that’s the GOP’s problem. They’ve been unable to come up with a credible alternative that controls health care costs and reduces the numbers of uninsured. While the “just say no to Obamacare” policy may have been vindicated for now, this is going to be a much riskier card to play as 2016 approaches. The millions of newly enrolled Medicaid eligibles and newly-subsidized private insureds will not rush to vote for the party whose policy is to jerk their benefits—and has no alternative.
So what’s the answer for Republican policymakers? Is it possible to produce a plan which appeals to Republican voters—and enough independents to achieve electoral victory—and avoids the pitfalls of Obamacare? How can the Tea Party’s obsession with less government be combined with traditional GOP values of business friendliness and personal responsibility in such a way as to appeal to more than a minority of voters?
It seems the Republican Party needs some help. They’re not totally bereft of ideas, but they’ve absolutely failed to come up with a clear message or a consistent theme.
If the Republican Party hopes to continue to capitalize on the problems of Obamacare, it needs to have a credible alternative. We’ve now defined the GOP’s problem: how to reconcile mainstream Republicanism with the Tea Party’s obsession with less government and simultaneously appeal to independent voters.
One approach Republicans might consider would take pieces of several recent conservative proposals, notably that from the American Enterprise Institute, and organize them into a coherent whole that emphasizes the ability to choose and purchase coverage like other products and services, along with affordability and security.
Medicare Parts A and B would be converted to a single premium support program with federal funding limited to the second lowest cost of all competing plans, including traditional fee-for-service. This would control the rising costs of Medicare—the biggest contributor to the growing federal debt—far more certainly than the disjointed approach of the Affordable Care Act (does anyone really believe the IPAB will be effective?).
Medicaid would be split into two programs: long term and home health care, and other services (primarily preventive and acute care). Long term care and home health care services are mostly provided to the elderly and disabled, a relatively stable group, while preventive and acute care services are typically provided to working age individuals and their children, a group which is considerably influenced by economic ups and downs. Services for the elderly and disabled would be funded through block grants, with overall escalation limits, to give states flexibility in program design. All Medicaid eligibles would be allowed to choose state-sponsored plans for other care or, mirroring Medicare, have the state contribute to a private plan of their choice.
The tax deductibility of employer-paid insurance would be eliminated and the increased federal revenue directed to private health insurance premium support. During a transition period, employers would be required to report to their employees the actuarial value of their health care coverage in order to establish a base compensation level for future years. Employees would then be free to opt into or out of employer coverage.
A new Catastrophic Expense Protection program would be created. This would establish for Medicare beneficiaries a new limit on total out-of-pocket payments for Part A and Part B. More importantly, it would also establish for all non-Medicare individuals a “safety net” limit on out-of-pocket payments, tied to income, funded similarly to the present Medicare Part A.
Could this approach appeal to both Republican and independent voters?
The changes to Medicare are consistent with past Republican recommendations but rely on competition to avoid artificial limits on expenditures. A 2012 Kaiser Family Foundation study showed that such a model could cut Medicare’s payments for up to six out of ten beneficiaries, by a few dollars in some cases and by close to $500 a month in others. While this proposal would predictably be resisted by high-cost providers and by the AARP and its lobbyists, taxpayers might reasonably ask why they should subsidize some seniors’ care far more than others, sometimes by thousands of dollars a year.
Medicaid would become more flexible at lower cost while offering eligibles the chance to participate in mainstream health care. States would be able to optimize long term care and home health services for the most vulnerable population without the bureaucratic restrictions of the current waiver process. Allowing Medicaid eligibles to choose private plans (with states contributing premium support) would bring more eligibles into the health care “mainstream” and facilitate access to and continuity of care.
The elimination of employer coverage tax deductibility is also consistent with previous proposals, but involves less regulatory complexity, assuming that employer and employee self-interest will result in the replacement of paid coverage by corresponding wage increases. This would have multiple positive effects: it would extricate employers from the administrative burden of health insurance, eliminate a contentious issue between employers and employees, remove a benefit whose cost is increasing faster than wages, make the treatment of employees in large and small businesses more equitable, eliminate “job lock,” and allow employees, using their increased income, to choose the coverage that best fits their needs. Directing the additional federal tax revenue to premium support “discounts” would significantly enhance the affordability of coverage beyond the catastrophic level.
The major innovation is the creation of a catastrophic expense program, something that Tea Party conservatives may find hard to choke down. However, it was Ronald Reagan who proposed catastrophic expense protection as part of Medicare, and this proposal is far from a liberal giveaway. Rather, it’s insurance in the traditional sense of protection against disaster, in this case the financial disaster that can follow a tragic accident or illness. Insurers would offer such insurance as both a standalone product and as a base for broader coverage. In the form of very high deductible insurance, it would also minimize provider bad debts, create a risk pool in which all under-65s participate, and make additional coverage far more affordable. Right-wingers may cringe at the idea of kinder, gentler Republicanism, but this is a highly effective approach if the goal is to provide a degree of security for every American.
Collectively, the four recommendations follow a consistent theme of giving Americans personal responsibility for their health care choices while enhancing price competition, strengthening safety net protection, reducing administrative overhead, and controlling federal expenditures, while utilizing a single approach—premium support—for each of Medicare, Medicaid, catastrophic coverage, and other private insurance.
Is there any chance of Republicans adopting such a model? If they are serious about wanting to win elections, they are going to have to move beyond being the party of “NO” (NO immigration reform, NO agreements with foreign governments, NO action on climate change, and NO, NO, NO Obamacare), and decide what their policies really are—starting with health care.
Roger Collier was formerly CEO of a national health care consulting firm. His experience includes the design and implementation of innovative health care programs for HMOs, health insurers, and state and federal agencies—as well as leading a consulting team charged with rescuing a disastrous federal government health insurance start up (TRICARE).