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Opposing Obamacare is No Longer Enough



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Most of the conservative health-care commentary since the election has had to do with continuing to resist Obamacare: refusing to implement the exchanges, refusing to expand Medicaid, etc. And it’s a legitimate point: States stand to further strain their balance sheets if they expand Medicaid as Obamacare demands, and states gain nothing by implementing Obamacare’s exchanges, because they have little flexibility to design those exchanges in a way that best fits their residents’ needs.

But if conservatives’ health-care agenda for the next four years is going to consist solely of saying no to Obamacare, we will do worse in 2016 than we did in 2012. And not just electorally: Health-care spending will continue to grow at unsustainable rates, and the cost of health insurance will continue to grow to unaffordable levels.

Many of us are gnashing our teeth about the Hispanic vote, which was 10 percent of the 2012 electorate. However, as I note in Forbes today, 15 percent of Americans are uninsured, and countless more could lose their coverage if Obamacare continues to drive premiums skyward. When tens of millions of these Americans become dependent upon Obamacare’s subsidies, and the Republican message is solely to take those subsidies away, whom do you think these voters will support?

In order to gain a mandate from the voters to reform our health-care system in a conservative direction, we will need to put forth a concrete agenda that shows how free-market reforms will reduce the cost of insurance, and why Obamacare will increase those costs. We will have to accept that repealing Obamacare is no longer possible, and instead step back and look at the health-care system as a whole and ask: If we were designing a health-reform agenda from scratch, what would it look like?

As Patrick Brennan is kind enough to note below, I have a piece in the December 3 issue of NR with my initial thoughts on the shape that such an agenda could take. It involves using a substantially altered version of Obamacare’s exchanges as a vehicle for reforming Medicare, Medicaid, and the employer-sponsored insurance market. As counter-intuitive as it sounds, such an approach could actually put federal spending on a sustainable trajectory. And it is much more achievable — and a more productive use of our time –than continuing to campaign for full repeal, while the health-care system continues to deteriorate.

Step One of this new strategy would be to improve the market orientation of Obamacare’s insurance exchanges. The exchanges are larded with excessive mandates and regulations that will drive up the cost of their insurance products. Republicans in Congress should require the Department of Health and Human Services to reduce this regulatory burden. The centerpiece of their message ought to be: “Democrats want to raise the cost of your health insurance. We want to lower it.”

And red states shouldn’t feel obligated to hew to Obamacare’s restrictions. Last summer’s Supreme Court decision gave states significant leverage in their health-care dealings with Washington. Utah, for example, has set up a health-care exchange that is far more market-oriented than Obamacare’s. Utah could agree to accept Obamacare’s subsidies in return for a contractual assurance that HHS will not interfere in the operation and structure of its exchange.

There are other things we can do with the exchanges to reduce their fiscal cost, such as repealing community rating; capping insurance-subsidy eligibility at 300 percent of federal poverty (as in Massachusetts) instead of 400 percent; and modifying the growth rate of those subsidies over time.

The next step is to increase Medicare’s retirement age:

Step Two would be to move Medicare patients into Obamacare’s exchanges. For example, Congress could agree to raise Medicare’s eligibility age by three months every year for the foreseeable future. In effect, over time, this would gradually introduce premium-support-style reforms into the retiree population, without requiring Congress to get bogged down in complicated reform legislation.

Congress could also transfer the “dual eligible” population — seniors who are enrolled in both Medicare and Medicaid — onto the exchanges. Because this high-risk population consumes health care through two different programs, its care is usually uncoordinated and costly. The exchanges might help address this problem.

Step Three involves repealing or modifying Obamacare’s employer mandate, if it can be done in a deficit-neutral fashion, so that more individuals purchase insurance on their own instead of through their employers. Step Four involves migrating most of the Medicaid population onto the exchanges, something that will reduce the large disincentive for upward mobility that Medicaid now imposes on the poor.

There are other things that conservatives can do to reform our entitlements and improve our health-care system. But we must keep those twin goals in mind, instead of fighting a fight against Obamacare merely for the sake of fighting. I fought that fight too, so I can fully relate. But I hope we can find a way to put our heads together and pick the right battles for 2016 and 2020; these are battles that we can win, battles that will make a difference in the lives of the Americans whose support we seek.

 — Avik Roy is a senior fellow at the Manhattan Institute and the author of The Apothecary, the Forbes blog on health-care and entitlement reform. You can follow him on Twitter at @aviksaroy.



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