Magazine | December 17, 2018, Issue

Chronic Condition

(Luisa Gonzalez/REUTERS)
Stasis in the health-care debate

Health care played a peculiarly prominent role in the 2018 midterm elections: peculiar because the significance of its prominence, which is hard to parse, has tended to mislead both Democrats and Republicans.

On the face of it, Democrats ran and won on health care while Republicans ran away from it. In race after race, the Democratic candidate attacked the Republican as a threat to Americans with preexisting health conditions while the Republican tried to change the subject. The strategy seems generally to have worked for the Democrats, and they now feel vindicated. Liberal commentators have been claiming that the election shows not only that the movement for Obamacare repeal has been defeated but that the public is open to significant further leftward advances. Democratic presidential aspirants are racing to champion assorted Medicare-for-all proposals.

Conservatives, too, seem persuaded that a fight over single-payer health care is coming. But burned by their inability to get their act together on Obamacare repeal while they held the levers of power, most Republican officeholders want nothing more than to avoid another health-care debate. Throughout the 2018 campaign, they seemed implicitly to accept the Democratic caricatures of their positions, and they now yearn to return to their Obama-era mode of boldly asserting an abstract distaste for Obamacare while neither offering an alternative nor knowing anything in particular about health policy.

Yet the political and policy pressures acting on both parties suggest that their activists are mistaken about where things are headed and why. Both the left-wing enthusiasm and the right-wing fear are exaggerated. We are likely at a moment of sustained stalemate on health care rather than on the brink of another progressive breakthrough.

That’s because political realities are at odds with policy ambitions on both sides. The revealed preferences of Republican politicians over the past two years suggest that they do not actually want to eliminate some key provisions of Obamacare (especially insurance rules requiring coverage at standard rates for people who are already sick) but think they cannot simply say so. They are therefore essentially stuck pretending to be frustrated libertarians on health care rather than pursuing more-effective market-friendly means to their (and most of their voters’) actual ends.

Democrats, meanwhile, face pressure from their activists to push for radical transformations of American health care even as voters register strong disapproval of sharp disruptions in the system. Voters didn’t like the disruption Obamacare created, and they don’t like the prospect of disruption in the course of replacing Obamacare. Democrats too, therefore, are stuck pretending to be ideological purists while hoping they don’t have to follow through. They would much rather keep attacking Republicans for threatening to disrupt existing arrangements.

Ironically, then, the strongest argument both parties have is, roughly, “Our health-care system is terrible and the other party threatens to change it; you must help us stop them.” But that is not the argument either party’s most devoted activists want to make or hear.

For Republicans, this meant they couldn’t really answer the Democrats’ most effective attack throughout 2018. Charged with wanting to disrupt protections for Americans with preexisting medical problems, they could have answered, as was plainly true, that their proposed Obamacare replacements offered alternative ways to protect such people and that they were open to doing more. But Republicans did not wish to discuss the alternatives and in many cases might not have been capable of doing so; nor did they wish to signal their flexibility on the issue. Instead they offered the bland assurance that they understood the fears of people with preexisting conditions and were committed to protecting them — a pledge that was so devoid of policy specificity that Democrats were able to portray it, in some cases not unreasonably, as dissembling.

Democrats faced their own bind. Instead of attacking Republicans on preexisting conditions and then stopping, many had to push toward proposals involving disruptions and costs that would create massive and probably insurmountable practical and political problems. Single-payer may offer a gratifying ideological totem for the Left, but it offers very little that voters seem to want.

As the Mercatus Center’s Charles Blahous showed this summer, the most commonly cited Medicare-for-all proposal would cost more than $30 trillion in its first ten years, and even “doubling all currently projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.” It would also disrupt the existing coverage arrangements of nearly all Americans, likely including those now on Medicare, and would face enormous opposition from providers of coverage and care at every level. Moreover, Blahous’s cost estimates are almost certainly too low, because they assume that the proposal would succeed in slashing payments to providers.

Democrats have placed immense weight on the circumstances of people with preexisting medical conditions. But even before Obamacare, only a small segment of the population ex­perienced significant difficulty in getting affordable insurance for that reason. The Republican alternatives to Obamacare advanced during 2017 and 2018 would have kept this serious but limited problem from returning in anything like its previous dimensions.

Beyond this scare tactic, Democrats have lined up a series of flimsy and contradictory arguments. First they say that Obamacare has been a great success. But while there is no question that more Americans have insurance coverage now than did in 2014, this modest expansion has come at immense cost per person, and the basic health economics at the core of Obamacare have not worked out. Indeed, the program has decimated the individual-insurance market. As the market-analysis firm Mark Farrah Associates recently noted, there were 20.2 million consumers in the individual market in March 2016 and only 15.7 million by March 2018 — a decline of more than 20 percent (or 4.5 million people) in two years, as a result of exploding costs for all those not receiving subsidies. This decline has been offset largely by the expansion of Medicaid, which is hardly a sign that the economic model underlying Obamacare has been a great success.

Second, Democrats argue that any ongoing problems of this sort must be the result of the Trump administration’s “sabotage” of Obamacare. This explanation is obviously in some tension with the claim that things are going great, and it also isn’t particularly compelling in itself. The administration has taken a series of contradictory steps, some intended to reinforce the exchanges, others to allow people some exit ramps. The net effect seems to have been modest so far, but it’s hard to say whether it has meant more harm than good for Obamacare, or quite what things would have looked like if not for these administrative measures. And indeed, liberal commentators have seemed unsure whether the conclusion they want to draw from the administration’s measures is that Republicans have given up the fight against Obamacare or that Republicans are at fault for any remaining problems with the program.

But third, Democrats imply that all of this argues for a massive upending of the entire American health-financing system in favor of a move to single-payer. This does not follow from either the first or the second claim, or from the combination of the two. A true single-payer program would by definition require conscripting scores of millions of Americans to a new government-designed system. Even incremental moves toward it would pose a threat to Medicare’s current beneficiaries, who would face a new level of competition for government dollars.

An imperative to move toward a more radically government-centered health-care system also does not follow from the experience of American health care over the past half century. Single-payer, after all, is not a new proposal in American health care. As the term “Medicare for all” suggests, we have run a 50-year experiment with this idea.

If rising costs are at the bottom of our health-care troubles in America, then Medicare is more like the problem than the solution. As the Manhattan Institute’s Chris Pope has put it, “rather than offering a solution to the inefficient and costly fragmentation of American health care, Medicare’s structure is responsible for much of the current situation.” By politicizing payment rates, it favors the most politically powerful providers of care and has encouraged the consolidation of such providers into local monopolies able to impose their will on insurers and patients.

The universalization of this system does not seem like what voters were demanding in the midterm elections at all. In fact, as they generally have when the political system has forced them to express some preferences on health care, American voters mostly asked for less disruption and more security in their current arrangements. Such a desire appeals to neither party’s ideological base, but its power has long shaped health-care politics in America.

That means we are likely entering a period of relative stasis in our health-care debates. Neither party is in a position to campaign on what its activists demand, and so each will probably focus on criticizing the most unattractive elements of the other’s health-care message. Democrats will continue to accuse Republicans of wanting to disrupt protections for Americans with preexisting conditions while exaggerating the scope of that population and of the risks it faces. Republicans will continue to accuse Democrats of wanting to upend everyone’s health arrangements through a government takeover that would involve crushing costs and introduce horrible inefficiencies. Each party’s claims will be true of part of the other’s activist fringe, and neither party will really speak to what voters have long sought and wanted.

This peculiarly dysfunctional situation can continue because the notion that voters are worked up about health care is not quite true. Health care was the top policy issue in the last election, but this was hardly a policy-focused election.

In order to achieve anything on health care, either party would have to speak in the language of voter priorities in this arena: It would have to offer reforms that reduce costs and improve access to coverage and care while avoiding sharp disruption of existing arrangements. That means it would need to present ideas that address problems such as the plight of the remaining uninsured, rising premiums, and the unsustainable fiscal trajectory of our entitlement programs while recognizing that for most voters the biggest health-care worry is the fear of losing the arrangements they have.

Republicans are actually well positioned to offer ideas such as these, even if they often seem not to know it. For the individual market, conservative health experts have been developing proposals to use some of the resources now directed to Obamacare’s subsidies to enable states to tailor programs to the particular needs of their residents. Let different states develop different policies while allowing individuals the option of taking the money that would be spent on them and using it to buy private insurance of their choice: Such an approach could encourage the provision of higher-value options while protecting the sick.

Conservative ideas for Medicaid reform, meanwhile, have long coalesced around a number of potential block-granting approaches. These remain appealing as a way of transforming the perverse financial incentives that now distort the program — states get more federal money the more they spend, even if they spend wastefully — while the funding involved could be modulated to find some balance between the need to protect the most vulnerable beneficiaries and the need to contain costs.

In Medicare, too, conservatives can offer Republican politicians a variety of ideas to balance such competing demands. These range from a greater emphasis on the more market-oriented Medicare Advantage program to more-fundamental if gradual long-term reforms such as those proposed by the American Enterprise Institute’s James Capretta in recent years. He would better target financial support to beneficiaries who need the most assistance while bringing greater market discipline to the provision of medical services, especially for those who are not most in need.

Debates about reforms such as these are what our health-care politics have always needed. They are not a distinct response to the last election, because the last election did not suggest that public attitudes about health care have changed in any significant way. That should come as a relief to Republicans concerned that single-payer is around the corner. But they should not feel too relieved: A healthy debate about health care will require them to find ways to promote better policies when health care again assumes a lower profile. And that has not exactly been a Republican strength in recent decades.

In This Issue

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