GOP Pledge on Health Care: ‘Repeal’ Is Great, ‘Replace’ Needs Work

by John R. Graham

Let’s start with the good news: The GOP has pledged to repeal Obamacare “immediately” (see page 27 of the Pledge), which means it will be the first legislative order of business on Monday, January 3, 2011, if the GOP takes the House.

If a million North Korean soldiers pour across the DMZ or Iran launches a nuclear weapon towards Israel, I suppose that the deadline might slip, but I can’t see much else that should interfere with this priority. If it doesn’t get through the Senate, that’s fine. If the president vetoes it, that’s fine too. However, the GOP will never gain credibility on repeal unless they do this right out of the starting gate.

If the repeal does not pass immediately, then they can attack bits and pieces of it (as described by Grace-Marie Turner). The important thing is that they will have shown that they are serious about repeal.

When it comes to “replace,” however, the Republican alternative is still significantly malformed. Indeed, there’s more than a whiff of big-government Republican in it. It completely ignores the single most important reform to private health insurance: Amend the tax code to give individuals, instead of our employers, ownership of our non-taxable health dollars. The Pledge expands Health Savings Accounts, which is good, but avoids this big challenge.

The other reforms are part of an unofficial conservative canon, advocated frequently here and at other conservative organs, but are nevertheless wrong-headed, because they increase federal power over health care instead of decreasing it.

Medical-liability reform is necessary and beneficial, but it’s not Congress’s job to do it. It’s a job for state legislatures, as Lawrence J. McQuillan, Benjamin Zycher, and I have written elsewhere. (It’s Congress’s job to make sure that taxpayers in states with effective medical-malpractice laws don’t subsidize those with expensive ones, which it can do by voucherizing Medicare and Medicaid.) As I’ve discussed previously here, purchasing health insurance across state lines might be a good idea, but states can also do that on their own. That, or Congress can make clear that states can enter into a compact to facilitate this, as they have for auto insurance. Congress never passed a law attacking state sovereignty over life or homeowner’s insurance either, and the states figured these out decades ago without federal interference.

The Pledge gets worse from there, with proposed health-insurance regulations that reflect an inexcusable lack of understanding the economics of insurance. Making it illegal to “deny coverage to someone on the basis of a pre-existing condition” without mandatory coverage means people can wait until they become sick to apply for health insurance. The only way to mitigate this is through mandating continuous coverage, which the Republicans and President Clinton did in 1996. However, that did not address the fundamental problem that the government gives our employers monopolistic control over our non-taxable health dollars, as I’ve written elsewhere.

“Preventing insurers from dropping your coverage just because you get sick” was also in the 1996 law, and is also redundant, because state laws have the same provisions, as I have — you guessed it — written elsewhere.

With respect to funding state high-risk pools, I’m still struggling to understand how giving more federal money to states somehow reduces federal power over health care. However, this is what scholars including Thomas P. Miller and James C. Capretta have consistently recommended, so it’s understandable that the GOP has picked it up. Nevertheless, this funding can only makes sense as a one-time subsidy to help people who fall through the cracks when Congress changes the tax code to make health insurance personal property instead of an employer-based (so-called) benefit. After this reform, people will only buy health insurance if carriers guarantee that their premiums will not jump up after a catastrophic illness (as described by professors Mark Pauly or John H. Cochrane).

In my humble opinion, the GOP better get its head around these issues quickly, because Obamacare will come right around again if they fail to execute real reform once they get their chance. Nevertheless, House Republicans deserve congratulations on their commitment to introduce a repeal bill next January 3.