The Corner

Conservatives Need to Go Beyond Repeal and Be Serious about Health-Care Reform

This morning I mentioned that I thought Senator Ted Cruz’s effort hat least succeeded in reminding people what the debate over Obamacare isn’t over. That’s good. But many challenges remain. AsTom Miller of the American Enterprise Institute rightfully notes in a new paper called “Conservative health care reform: A reality check,” the law is facing many implementation problems and remains unpopular, but it would be naive to assume that it will simply collapse under its own weight and disappear. That means that conservatives “need to do much more than just say no,” he argues.

Obamacare may not be carried out as written and may not survive as implemented, but persuading voters to overturn what unfortunately remains, for now, the law of the land will require a serious approach to solving our health-care system’s very real problems. Even the likelihood of failure in pursuing the untenable ambitions of Obamacare will not be enough to ensure the success of market-based alternatives. Given the persistent problems of high costs, limited access, and uneven quality that still plague American health care, voters are likely to resist trading in something for nothing.

That means that conservatives need to have an alternative to Obamacare. It should be a serious and full-blown free-market alternative, Miller argues, rather than “the usual gimmicks and short-term tactical dodges of the past,” and it “will require an approach that is carefully attuned to the political and practical realities of the health-care debate.” Of course, he notes, “conservatives aren’t starting from scratch,” but what they have so far is not enough:

A proposal composed of the principles common among most conservative reform plans would hit most of the right rhetorical notes — the importance of patient-centered care, greater choice, market competition, decentralized decision-making, and respect for individual priorities. But current proposals usually don’t get too far beyond these general principles, and they are often formulated in ways that fail to speak directly to the concerns of most Americans. . . .

The standard list of potential conservative health-policy remedies includes more equitable tax treatment of all types of health-care spending, deregulation and decentralization of health-care decisions, a reform of Medicare toward a premium-support model, defined-contribution financing of health-coverage choices coupled with more targeted need-based subsidies, and market-based pricing. This is a promising list, but if conservative reformers are to turn this list into a genuinely practical set of legislative proposals, they need to take heed of a series of practical realities that they too often ignore.

Miller has some good suggestions about what an alternative needs to look like. First, it must recognize that the safety net is not only a cost, and does actually provide a real service to some. Unfortunately, because it casts its net so wide, the current system caters first and foremost to the middle class, and doesn’t do a good job helping the poorest Americans. 

Reforming the health-care safety net for low-income and medically vulnerable Americans involves more than just reshaping the future financial structure of Medicaid and preserving the sustainable core of Medicare. One of the overriding principles of reform should be to distinguish between societal commitments to basic income support (more transparently called “welfare” in previous decades) and promises to ensure access to essential health-care services for people facing particularly challenging medical conditions. We should be more generous in targeting persistent, condition-based problems and vulnerabilities. Subsidizing access to health-care choices in a competitive marketplace (through high-risk pools, for instance) is preferable to directly providing services through government channels, although markets alone do not and cannot meet every medical need.

Income-based financial support from taxpayers to address health-care vulnerabilities should distinguish better between short-term emergency assistance and longer-term arrangements for those suffering from chronic or permanent conditions. Reformers need to have in mind a socially conscious “floor” for the former — both in dollar amounts and eligibility duration for catastrophic coverage — while avoiding the danger of setting a ceiling on personal responsibility, economic initiative, and social mobility. Short-term assistance can provide stability and opportunity to rebound from health-related misfortune, but it should not dull the incentives to regain more self-sufficiency after the crisis is over.

Second, a conservative alternative shouldn’t move away too fast from the employer system:

Impatience in addressing the relative lack of cost-consciousness, portability, and individual choice in most employer-based coverage could jeopardize the relative stability that most people with private insurance now enjoy before effective alternatives are widely available.

Third, conservatives should start reforming Medicare now. To be fair, conservatives have already offered some ideas about how to reform Medicare; on that score, they are somewhat ahead of the game. However, they have also been very inconsistent about the need and the urgency to reform the program. In fact, they have sometimes gone so far in their defense of it that they’ve been called the party of Medicare. We don’t have the luxury to wait another ten years before conservative ideas are implemented in Medicare. Miller writes:

In a sense, Medicare reform is the area in which conservative health-reform ideas are furthest along. The Ryan proposals, which are built on decades of work by both experts and politicians, have now been affirmed by nearly every Republican member of Congress and were included in the policy agenda (such as it was) of the last Republican presidential nominee. Substantively, conservatives have less work to do on this front than on others, but politically they must buckle down and build a case for the potential of gradual reforms to deliver long-term solutions. Such reforms need to be part of any serious menu of conservative health-care ideas.

Engage in real and deep reform of the health-care-delivery system:

Conservative delivery-system reforms would need to serve four goals above all. First, they must redesign payments so they reward results rather than try to micromanage processes as they do now. Second, they should better measure what matters to patients and other private payers. Third, they need to remember that favoring competition is not the same as (and indeed must be at times the opposite of) protecting incumbent business interests. And fourth, they will need to remove public-policy-related barriers to entry and exit.

Miller makes a really great case that conservatives need to move beyond their usual repeal-Obamacare message and offer a true alternative. The whole thing is here; this video is a good summary.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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