The Patriot Post® · Health Care Option


With control of all the levers, eight years of good conservative ideas and repeated assurances that if put in power the GOP would see to it that Obamacare would go, one wonders why repealing it is so hard. The simplest answer is that the GOP isn’t nearly as conservative on health care as their rhetoric implied. And when the public sands shifted more positively toward Obamacare, they ran for the hills. If you don’t like that one, then another explanation is a profound lack of a basic/unified GOP theme on health care and an utter absence of messaging.


Changing something as impactful as health care requires having a set of guiding principles that can form the core of a consensus, the outline of bumper sticker selling points and a north star when difficult tradeoffs emerge on the details. More on that in a second. The GOP brain trust did none of the above; instead it crafted an Obamacare Lite bill that played to its special interest industry supporters and seemed to assume that everyone would fall in line. Trump is not a health care ideologue; the most we got from him was that Obamacare is a disaster and we are going to get rid of it and have beautiful health care. So he didn’t pound on a table either. He just wants a deal and might be given a pass on his lack of engagement since it was reasonable to believe that the GOP Congress had this wired after eight years of practice.


There has never been a coherent articulation of the goals nor a simple explanation of what the elements are, what is changing and why it’s better. That can’t compete with Democrat sound bites that millions will lose their insurance, there will be draconian cuts to Medicaid, and hundreds of thousands will die — all to give billions of dollars of tax cuts to the rich. No wonder the GOP Senate bill was polling around 20% even though no one really knew what was in it. We are now left with a free-for-all legislative process that might produce 51 votes for another Rube Goldberg mishmash that’s highly unlikely to advance the cause of providing better, more cost-effective health care for the folks.


Maybe at this point of a botched process the best Trump/GOP can hope for is a “win” that can be spun as repeal/replace. At least that might provide some more momentum to the Trump agenda, particularly tax reform; and if so, I’ll take it. But we should be able to do so much better, and here’s a suggestion for how.


Way back when, health care was considered just another service with terms determined by free market forces directly between the consumer and the provider, not dissimilar from hiring a plumber or auto mechanic. There was even a time when health care insurance had little to do with mitigating the risk of medical expenses and much more to do with providing lost income if one were too sick to work. With generations of increasing government involvement and tax policy that incentivized employers to provide health insurance for employees, the direct relationship between service providers and consumers was replaced by third parties.


We have a situation now where about half of the folks get insurance from their employers and another 35% or so from government via Medicare and Medicaid, leaving only 10-15% to fend for themselves and face market forces. The result is that very few folks actually know what is in their health care policies and virtually no one really knows what health care products/services cost. Furthermore, regulations, and particularly Obamacare, limited competition and reduced consumer choices to a point where if Obamacare were left to run its course, the inevitable end game would be single-payer universal coverage. That is certainly an option, but before we get there, why not take a step back and consider the other end of the spectrum by returning health care to its free market origins. With something as uniquely personal and complex as health care, what better way to optimize the system than having everyone free to choose what’s right for them in a free market?

To be sure, there are some societal realities that might require some compromises to pure capitalism, but what might comprise the key principles of a private market system? First, begin to reinstate the direct relationship between consume and provider by getting rid of all mandates, restrictions and policy criteria. Let insurance companies sell whatever policies they/consumers want, anywhere they want. To put this in an Obamacare context, that would mean no individual or employer mandates, no essential benefits requirements, and no restrictions on where insurance companies could operate. Further, the tax treatment of employer provided versus individually purchased insurance would have to be equalized to allow individuals the flexibility to buy their own insurance without a tax disadvantage.


Society has already determined that some basic medical care should be provided to everyone, and medical ethics dictate that folks will not be denied care if they show up at the hospital without insurance. So how does that mesh with free market principles? Unfortunately, there doesn’t appear to be any alternative to squaring this circle other than “government,” so how do we design a role for government that is minimally disruptive to free market concepts? One way would be to have government provide subsidies to the truly poor for the sole purpose of their purchasing private health care insurance with some minimum levels of coverage. It would be the personal responsibility of the individual to obtain the insurance that is right for them with some minimum coverage guaranteed by government subsidy. The conservative purist may not like this, but that train has left the station and is not making a U-turn. That would guarantee “access” to health care but still require the individual to act on it to actually obtain it.


To deal with the pre-existing condition problem and prevent folks from gaming the system as they might under Obamacare by waiting until they got sick to get insurance, there would have to be significant financial penalties for those who chose not to get insurance before getting sick; there is really no other way to discourage folks from trying to game the system because they are not going to be denied treatment. If the pre-existing condition is so extreme that it would fall into the “high risk” category, then there should be pools of funds provided by government to subsidize those conditions. Funding all of that out of general revenues would allow for the elimination of all additional Obamacare taxes. That would have the additional benefit of spreading the cost over the entire country and taking the wildly disproportionate amount of cost attributed to those conditions out of the general insurance pool, which would significantly reduce premiums for the rest of the population.


The toughest part of reinstating a free market system could be weaning folks off direct government-provided health care and having everyone assume responsibility for getting their own insurance (with subsidies if needed), so there will have to be a lengthy transition period. Ditto for the individual market, where folks would need to educate themselves about insurance options. My guess is that if all were allowed to compete freely, there would be more than enough Internet sites eager to walk folks through the process, identify comparable costs, and inform all of the best deals.


There are details that would need to be addressed in implementing this type of system, but they are focused primarily on the definition of basic coverage, the amount of the subsidies, and the operation of high-risk pools; everything else would be left to the free market. Since the most efficient ultimate arbiter of these variables would be the states, the best mechanism for implementing the program would likely be block grants from the federal government to the states, giving states the freedom to fine-tune the variables. Since all of this goes directly to the heart of federal government control/power, it will be no secret that moving in this direction is a long shot. But it has the best chance of accomplishing what should be the primary goal — providing access to better health care for everyone at lower premium cost for coverage chosen by each individual to best suit their needs.


Since such a radical shift will need time to formulate and will be almost impossible to graft onto any compromise bill that might emerge from the current process, it would be better if the Senate/House moved away from repeal/replace to repeal only with a one-year grace period and gave a clear articulation of the free market-oriented replacement goal, ideally with Trump leading the charge; details to follow. Without this type of big picture, principle-driven umbrella over the health care process, we are headed at best for an Obamacare Lite law, slightly shifted to the right on entitlements and government intrusion that will likely be back in the soup in short order with GOP fingerprints on it. True, the above won’t satisfy the conservative purist who wants government out of the health care business, but it does limit the role of government and put personal responsibility back into the mix. Given where we are, that’s not a bad trade.