Health policy doesn’t exactly rank high on the summer reading bucket list. Let’s be real — for most people, it’s not all that fitting for the beach, and it surely doesn’t pair well with red wine during a gossipy book-club meeting.
(I would be lying if I denied reading about health policy on the beach, but it’s hardly typical.)
However, in case you’re interested in what a post Obamacare world ought to look like, I highly recommend Phillip Klein’s new book, Overcoming Obamacare for reasons beyond it being roughly 100 pages with large font. Klein, the commentary editor for the Washington Examiner, concisely lays out the nuances among three different schools of thought on how to solve a problem like Obamacare.
Reform School
Avik Roy, Senior Fellow at the Manhattan Institute, champions the Reform School. In his view, incrementally transcending the federal health law without full repeal is the most politically feasible option. His proposal looks beyond lightening the regulatory load that Obamacare imposes on health insurers, employers, and consumers. The overarching goal is to slowly whittle away the major government health care takeover that occurred in 1965 — the passage of Medicare and Medicaid. Obamacare certainly comes with a steep price tag, but its overall cost is small potatoes compared to the total amount of government intervention in the health care industry:
As a means to this end, Roy seeks to progressively raise the eligibility age for Medicare and offer refundable tax credits to low and middle-income individuals (including those entitled to Medicaid) as a way to offset the cost of competing private plans on a universal exchange platform.
Roy’s proposal has sparked controversy among market-oriented health reformers because his vision holds onto some of Obamacare’s key components such as the exchanges’ sliding scale subsidies and using revenue from capped tax exclusions on employer-sponsored health insurance to finance tax credits for low and middle-income Americans. (This is very similar to the federal law’s ‘Cadillac Tax.’) However, he does inject market competition by allowing more consumers to choose private plans over government payers.
Repeal and Replace School
The recently released health reform proposals put forth by Republican presidential contenders Scott Walker and Marco Rubio mirror many characteristics of the Repeal and Replace school. Those who share this ideological thinking believe that Congress can muster enough votes to repeal the law so long as a credible alternative is ready for implementation. Like the Left, these advocates attempt to provide universal coverage. Contrary to the Left’s agenda, Repeal and Replacers seek to extend coverage through consumer-driven mechanisms by directly providing refundable tax credits to low- and middle-income individuals without (and in some cases with) employer-sponsored health insurance. As previously discussed, the feds will unfortunately be sticking around in health care decision making for a while. So when the government continues to write checks, it’s the least-worst option for them to deposit an age-based credit into a consumer’s hands rather than into the insurance company’s (as is today’s status quo). Patients will feel more empowered when they are given resources for health care needs to use at their discretion.
States will also get to play their role as ‘laboratories of democracy’ by experimenting with their Medicaid programs and catering to the medical needs of those with pre-existing conditions in separate high-risk pools.
Restart School
All schools envision less government intervention in the health care business, but Restarters have issues with the ideas of Reformers and Replacers. Michael Cannon, Director of Health Policy at the libertarian Cato Institute, argues that refundable tax credits are equivalent to an implicit individual mandate, since the government will still be in the business of determining what constitutes an appropriate health plan to qualify for a credit. He also argues that providing tax credits is, in effect, redistribution of wealth when it exceeds the amounts of one’s tax liability or is distributed to those with low incomes who do not have any tax liability:
Rather than having conservatives fall into the Left’s agenda in which it is the government’s responsibility to provide everyone with some type of assistance for the purchase of health care, he pushes for expanding Health Savings Accounts (HSAs):
His alternative is to change the current tax exclusion for employer-based health insurance into an exclusion for large health savings accounts. Under the current system, HSAs face a number of limitations. HSAs can’t be created by individuals who aren’t already enrolled in a qualified high-deductible plan; they can’t be used to pay for health insurance premiums; and the contributions are limited to $3,350 for individuals and $6,650 for families
Under Cannon’s framework, employers could put, say, $10,000 in a large HSA for individuals to use as they see fit. Workers could choose to use that money to remain in their employers’ health plans, they could purchase plans of their own, or they could save that money and let it roll over to the next year to pay future medical bills. Those who are self-employed could also make large HSA contributions.
For a more in-depth discussion of Overcoming Obamacare, you can also view the following policy forum sponsored by the Cato Institute here.
Click here for the Health Care Update archive.
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