A Better Healthcare Alternative

Senators Mike Lee and Ted Cruz have thrown out their fix to pull the Senate Health Bill across the finish line, the “Consumer Choice Amendment.”  As described by the Daily Caller:

The amendment, known as “Consumer Choice,” allows insurers to sell plans that do not follow regulations created under Obamacare for patients with pre-existing conditions, with the caveat that insurers have to sell at least one plan that adheres to Obamacare’s mandates. The proposal would allow insurers to sell cheaper plans with fewer benefits.

That’s all well and good, but it sounds like a ploy to simply get the Senate health bill passed, not to actually fix the wreckage in the independent health care market caused by Obamacare.  One doesn’t have to be a medical policy analyst to see that an insurance market with one Obamacare compliant plan and all the others free of such restraints will cause a flow of premium dollars away from the one Obamacare compliant plan, making it unaffordable.  Unless you have a pre-existing condition, why would you want such a plan?

So this plan doesn’t actually fix the independent insurance market, it ghettoizes the Obamacare plans.  I’m unclear if the Obamacare plans become so expensive that the insurance companies have to subsidize them increasing the premiums and out of pocket expenses on every other plan they offer in the state, or if they just give up and continue the current process of bailing out of state exchanges as each state becomes unprofitable; the current “death spiral” trend.  In any case, the health care market gets worse and death spirals the Republicans right out of office, leaving the Democrats to craft their own gimme-free-healthcare bill.

So what to do?  Is healthcare really so intractable that there is no solution?  I don’t think so, and Republicans used to understand the issue much better than they apparently do now.  Republicans used to have all kinds of health reform plans, none of which look anything like the current Better Reconciliation Act.

So here are a couple suggestions that together I think would make a pretty good GOP replacement bill, but first, Republicans are going to have to come to terms with two fantasies that dominate the health care debate:

1. The health bill can’t be a tax cutting bill. Republicans want to get rid of a lot of the Obamacare tax increases, and it’s true that many of them were pretty poorly thought out, but we’re not going back in time to 2009, we’re stuck with the conditions that Obamacare left in the health care market and the expectations that people have from their healthcare plans.  The taxes can be rejiggered any way you want, but it should remain revenue neutral.
2. The Medicaid cuts can’t be part of the bill. I get what the House and Senate are trying to do, and I have to raise a glass to their under cover of darkness attempt to do something about one leg of our multi legged stool of entitlements that are crushing our long term budgetary outlook.  I’ve seen barely a mention in the media (too busy chasing Russian ghosts I guess) of the fact that the Republicans are trying to remove Medicaid as an entitlement program by limiting its federal contribution, pushing ever greater costs, as well as the freedom to design their own programs, to the states.  But that has sabotaged doing anything else with healthcare.  If that’s something that can be put down in a reconciliation bill then it’s something the Democrats can easily change the next time they’re in power, so why waste political capital on a plan that can (and will) be totally reversed with 51 Democratic votes?

Now on to the suggestions!  Many of these I’ve made previously but not under a single list and probably requires a full repeal of Obamacare, but anyway…

A.  Tax Credits available for purchasers of independent health insurance plans that are actually equivalent as a consumer to the employer health plans being covered by private companies. And that would be pricy, something along the lines of a $5000.00 tax credit for individuals and $10,000.00 for families. This would come close to paying about two thirds of the premium cost of the average group plan.

B. But wait you ask, that doesn’t do anything about medical inflation, that encourages people to seek out the most expensive plans they can afford with their tax credit. Not so fast…  Any leftover amount from their tax credit would be rolled into a Health Savings Account (HSA).  So say you find a family plan that only costs $8,000.00 per year, and then $2,000.00, the balance of your unspent tax credit, can be rolled into an HSA account to be used to pay co-pays, and deductibles. That’s a big incentive to be a smart consumer.

C.  Of all of the Obamacare Mandates, the one on Preexisting Conditions is the most popular, and the one that is most likely to survive in any future health bill. I’ve already described in detail how to have pre-existing conditions paid as a secondary payer via Medicaid.

D.  The other Obamacare mandates are mostly idiotic. Pediatric dental care?  Come on!  But none are probably more idiotic the requirement to cover “children” up through age 26.  Of all the mandates, that probably had more to do with the collapse of the Obamacare exchanges than any of the others since they took the young and healthiest group out of the exchanges and put them mostly under their parent’s employee group plans. That should simply be reduced to 21 or 22.  Otherwise it mainly benefits upper class kids in graduate school.  However I recognize that there are constituencies for all kinds of nonsense, so to borrow from Cruz and Lee’s amendment, require that each state have one plan that has one of those mandates. Let there be one plan that really does have pediatric dental care, and if you really want that, that’s the plan you get.  I think the market would provide those options anyway, but one mandate per plan, rather than all of the mandates in one plan, like the Consumer Choice Amendment has, should be affordable.  Of course the priciest mandate, for Pre-existing conditions, would be applicable to all plans but wouldn’t affect the price because they would be covered by the secondary payer.

E.  Of course the media and CBO crying jag over people losing their health coverage due to the elimination of the Medicaid Expansion can be avoided by simply allowing those currently under Medicaid Expansion to keep their plans. I elaborated on this back in June, but if the 14.5 million people currently covered by Medicaid Expansion know they won’t lose their plans (even if no new people are added to the program) that takes a lot of wind out of the sails of the opposition, and as I noted last month, those numbers will only decline over time.

F.  There are other smaller fixes that will help things, many of which I’ve mentioned before, but are not by themselves game changers, such as:

1. A federal cap on non-economic malpractice damages.
2. Allow purchasing pools of small employers and nonprofit associations and clubs (think the Elks Club).
3. Allow consumer purchase of health insurance across state lines. There is some question on whether this will actually increase competition and reduce prices but hey, we allow it for employer health plans, so why not?
4. Allow doctors and other health providers take a tax deduction for indigent care. For some doctors, taking a deduction on the cost of service based on Medicare rates might be a better value than simply being paid for the service with Medicaid rates.

It’s not a fully realized health bill, but I think it’s a good outline that most of the right could agree with.  If not this, it has to be something, and I mean something that won’t continue to wreck the health care market like the current House and Senate versions will.  The clock is ticking.