Welcome to Wonderland, Alice. How on earth did we get here?
Republicans have spent the last eight years fighting Obamacare and promising to repeal and replace it. They were elected to control both houses of Congress and the White House in no small part because of this promise. But in their first year in control, they stumbled through several failed attempts to legislate the Affordable Care Act out of existence. Their only significant victory was to reduce the penalty for the individual mandate to $0.
The Democrats fought to save the ACA. Legislatively, they took their ball and went home, refusing to even sit down and discuss a legislative fix to the obvious problems. The results of their Obamacare masterpiece include rising premiums, skyrocketing deductibles, a limited choice of doctors, and now roughly half of American counties’ having only one insurer willing to offer plans.
Here’s the surprising thing: Democrats are no longer worried about saving Obamacare. They know it is failing and they have moved on. Since Republicans failed to repeal and replace the ACA, Democratic leaders are convinced that Republicans will get all the blame for higher premiums and the next Democratic Congress and administration will enact single payer. This is where they wanted to be in the first place. Why should they put more time and energy into rescuing a corpse, when all it can possibly get them is responsibility for a failed policy?
Republicans are spooked by the fear of looming higher insurance premiums — the continued existence of Obamacare guarantees that premium increases will be announced in September. The failed health-care program can be kept alive only by larger and larger annual infusions of cash. If you’re eligible for subsidies, your higher premiums are picked up by the government. But if you’re paying for your own insurance, you get to choose between doing without some necessities in order to pay the higher rates, or dropping out of insurance altogether. Republicans are hoping that pouring federal dollars into a new “reinsurance” plan will keep these premium hikes to a modest increase. This is the magic plan that will save House Republicans in November.
Going down this rabbit hole is a recipe for disaster. Paying off the insurance companies for one year will only lead to a bigger payoff the next year and the year after that and so on into perpetuity. This strategy does nothing to solve the problems created by Obamacare. But it does mean that Republicans will now own the failures caused by it.
As long as there are only two options – single-payer nationalized health care, or bailing out Obamacare through payments to the insurance companies — the Republicans can’t win. A third must be added to the game.
What would this third option look like?
First, there would have to be a transition plan from the ACA to any new system. People can’t feel like they’re in health-care free fall while Congress figures out what to do next. We can bridge this gap by allowing people to buy state-regulated insurance through short-term plans that don’t have to comply with Obamacare’s insurance rules; a version of this idea has already been proposed by the Trump administration. These plans could run up to 364 days and be guaranteed renewable at the choice of the person buying the insurance. This option will also provide an opening for lower costs and could cover more people. For example, Idaho has proposed to allow plans that don’t comply with Obamacare, and the prices proposed are much lower that anything in the Obamacare market. The Urban Institute has also said that Trump’s proposal could cover as many as 4 million people in 2019. This reform should be tied to a proposal by Senators Susan Collins and Bill Nelson to give states freedom to use some of their ACA funds for reinsurance.
It would probably be necessary to increase funding for such a bridge proposal, but the result would be worth it. Combining these two ideas would increase the number of people who can afford to buy the insurance they want, help stabilize Obamacare premiums, and allow lower premiums and deductibles for those who choose short-term plans.
That would allow Congress to move into step two of the plan: a replacement of the ACA built from the design by Senators Lindsey Graham and Bill Cassidy. Over several years’ time, this plan would turn federal health-care policy into a system of block grants to the states so that they could design their own health-coverage systems. The most obvious immediate benefit of this plan is to let each state customize its regulations to deal with the state’s unique problems. It should be self-evident that the health-care problems of Montana are not exactly the same as those of New York City; trying to shoehorn everyone into the same program is one of the reasons we’re in this mess now. Former senator Rick Santorum and others have been working as a group to develop this plan.
What key elements would make this plan work?
Most plans like this include four key components: 1) Block grants would be used to support private marketplace options; 2) there would be some type of risk mitigation, to keep premiums lower; 3) People in state-government plans could choose to opt out and take their money to the private insurance market; and 4) there would be a major expansion of health savings accounts and/or flexible-spending arrangements to provide further consumer choice.
Republicans are choosing their direction now.
In a recent interview, Santorum focused on the need to shift control of health-care options from the federal government back to the individual: “The emphasis will be on expanding the choices and control of individual patients. State systemic designs would replace federal government mandates, and individual control would replace bureaucratic straitjackets. And, with market forces more in play, the costs to both patients and taxpayers should be held in check.
“It would end today’s failed system of higher costs, lesser access to care, oftentimes worse care, and fewer choices. Choice; control; security: Those should be our watchwords.”
Republicans are choosing their direction now, in the debate on the omnibus spending legislation. We are already at the “curiouser and curiouser” stage in national health-care policy. Failure to enact legislation to reverse the disastrous course of Obamacare will guarantee that the whole private health-care system disappears down the rabbit hole forever.