The Corner

Politics & Policy

Is BCRA Better Than Obamacare?

Health-care policy ultimately comes down to trade-offs. This is particularly true when one party is altogether opposed to reform, the other party has a Senate majority of just two, and many of its members are using their leverage to protect various parochial interests.

The Senate GOP has assembled a fragile, slightly amended compromise, the Better Care Reconciliation Act, which contains a vast array of provisions intended to pull together legislators with very different objectives. It is not clear whether it will have the votes needed to pass. But the essential question facing members is ultimately simple: Is the package proposed better than keeping Obamacare?

In short, the answer seems clearly to be “Yes.”

It repeals the mandate that individuals purchase highly regulated health-care plans, whose average premiums cost eight times more than median health-care costs.

It makes it easier for individuals to purchase insurance that is more affordably priced in proportion to their needs and risk preferences.

It maintains the guarantee that individuals with pre-existing conditions be able to purchase affordable coverage, but reduces the collateral damage from doing so.

It repeals taxes on health insurance and repeals taxes on out-of-pocket health-care spending.

It repeals taxes on prescription drugs, repeals taxes on over-the-counter drugs, and repeals taxes on medical devices.

It reforms Medicaid to increase the incentive for each state to spend federal funds efficiently, and gives them cause to avoid future benefit expansions that are unjustified or unsustainable.

It begins to address the inequity in Medicaid payments, whereby federal taxpayers currently give wealthier states substantially more money than poorer states.

It refocuses the Medicaid program on the neediest beneficiaries, by reducing the payment for states to expand services for able-bodied childless adults to align with the amount they are paid for treating the disabled, elderly, children, and pregnant women.

The 172-page bill falls short in many areas, and inevitably includes many flaws. The Consumer Freedom Option could have allowed for a cleaner separation of a fully competitive insurance market from the highly-regulated-and-subsidized exchange safety net. The Medicaid caps should have been designed to address the inflation of program costs through enrollment growth. I would have preferred fewer shameless special exceptions from rules for Alaska. It will undoubtedly need further incremental patches to further reduce out-of-pocket costs, but offers a good framework for addressing that problem.

The bill does not even begin to address the essential challenges of hospital consolidation, provider competition, and physician payment. It leaves Medicare entirely unreformed. It provides little relief for those in states intent on frustrating the emergence of competitive markets within their borders.

The BCRA proposed by the Senate GOP is not an attempt to construct a utopia. It is an attempt to reconstruct a satisfactory non-group insurance market and to rationalize the Medicaid program. Its goal is limited to cleaning up the biggest messes established by the Affordable Care Act. In that modest objective, and given the political minefield in which these changes must be advanced, it succeeds admirably.

Chris Pope is a senior fellow at the Manhattan Institute.

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