Avik Roy on the Future of Conservative Health Reform Efforts

by Reihan Salam

Back in 2005, Ross Douthat and I made the case that Republicans needed to embrace the cause of coverage expansion, as a large and growing number of Americans were either uninsured or found themselves navigating the individual insurance market, thus creating a large political constituency for reform. Avik Roy offers a smart framing device for how to think about the politics of reform:

Much ink has been spilled about the GOP’s slippage with Hispanic voters. But voters with insecure health coverage are an even larger constituency. Latinos made up 10 percent of the 2012 electorate. But 15 percent of Americans lack health insurance, and many more teeter on the edge of losing their coverage.

Obamacare, for all its faults, is directly targeted to this group. Which Republican policies are? If you are a voter who will get subsidized insurance under Obamacare in 2014, will you vote for someone in 2016 who seeks to take those subsidies away, without a better solution in their place?

Avik goes on to offer an outline for how conservatives might use the structure created by the Affordable Care Act to reform the health system, including Medicare and Medicaid, drawing on his excellent article in the latest issue of NR. In the article, Avik provides much-needed historical perspective:

In 1967, Congress projected that Medicare would cost a modest $12 billion in 1990, inclusive of inflation. Actual Medicare spending in 1990 was not $12 billion, however, but $110 billion. This year, we spent $550 billion on Medicare. Ten years from now, the Congressional Budget Office projects that we will spend $1.1 trillion on the program. When it comes to health care, liberals’ half-loaves always seem to grow into industrial bakeries. Another example: the State Children’s Health Insurance Program, or S-CHIP, created in 1997 by a Republican Congress at the behest of Ted Kennedy. A decade and a half later, one in four American children are enrolled in this Medicaid-like program.

Conservatives, by contrast, have never coalesced around a vision of what a free-market health-care system would look like. As a result, Republicans’ compromises have been myopically tactical, and have tended to move health care in a liberal, rather than a conservative, direction.

The heart of Avik’s article is a 4-step plan for transforming the ACA structure into a more market-friendly health system that conservatives ought to embrace:

(1) Relax the mandates and regulations governing insurance policies available on the state-based exchanges — it occurs to me that this might require creating a federal insurance exchange, with relatively light federal regulations that could do an end-run around heavily-regulated state insurance markets. The concern, of course, is that a national exchange could more easily evolve into a more centralized, government-controlled health system.

(2) Move Medicare beneficiaries to the reformed exchanges.

(3) Embrace the fact that there will be a migration from employer-sponsored insurance (ESI) to the exchanges, and reform the tax treatment of ESI to accommodate the resulting increase in expenditures on exchange subsidies. 

(4) Move Medicaid beneficiaries to the reformed exchanges, and trim non-health expenditures to accommodate the shift in public health expenditures from states to the federal program.

It will be interesting to see if Avik’s vision for transforming the ACA will gain traction among conservatives.