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Rubio, Walker Release Plans to Slay the Obamacare Dragon
As Peter Suderman writes in Reason any Republican effort to repeal and replace ObamaCare is likely going to be disappointing, given both the enormity of the task and the fact that they’ll be starting with a ball further down left field than when the President took office.
Still, there’s room to maneuver and maybe even to reverse the ratchet in a few areas. Last week, Sen. Marco Rubio and Gov. Scott Walker issued fairly similar plans that attempt to do just that (Walker issued a short white paper; Rubio wrote an op-ed for Politico that sketches his ideas, albeit with fewer details).
After repealing ObamaCare, both plans start by removing the single greatest inanity of our system: that insurance purchased through one’s employer is tax-free, while insurance purchased directly is not. This system is virtually unique in the world — a bad example of American exceptionalism if ever there was one. Moreover, making it easier for people to purchase insurance directly not only removes an extraneous layer from the healthcare system but also will reduce a major source of governmental intrusion (i.e., Hobby Lobby).
The Rubio and Walker plans envision expanded health savings accounts, fewer strings attached to Medicare, the opening of national markets, and other modest moves toward returning things toward an actual insurance market and letting states handle more of the details. The government would remain deeply involved in healthcare, but with less direct meddling.
Is this what we want? Would this be acceptable? Before 2008, all of this would have struck me as sensible, if unexceptionable. Now, I worry that — despite the lingering dislike for ObamaCare — Rubio or Walker’s plan may be too radical to happen.
Published in General, Politics
They have softened the edges enough that I’m not as worried about this.
The best solution is to merely offer every American the right to opt-out – eschew both the benefits and be exempted from the regulations.
It can be sold as straightforward freedom. If you like your Obamacare, you can keep it. If not, you can freely enter into any medical arrangement with any person or entity, as you see fit.
It doesn’t seem to go far enough. Did they eliminate the individual mandate? That is critical to me. Also important is real competition between insurance companies by being able to buy across state lines. I see no mention of that. How about the heavy control of government pricing? We need have introduce free market principles into the system.
Yes, both start with repealing Obamacare in total.
Yep. That’s what I meant about “nationalizing markets.”
This just sounds like what both McCain and Romney had proposed. Personally I think that this is such a complicated market so distorted and perverted by Medicare and Medicaid that straightening it out will be like cleaning the Augean stables.
If not for the entitlement programs and wrenches the wildly different regulatory requirements that individual states can throw at an insurer who might want to offer plans across multiple states, I think this could be solved. But as it is, I fear a lot of the market based reforms conservatives want to try are likely doomed to failure.
Forget it, Trump is god.
This isn’t the cure-all many free marketers believe. The wide variety of regulations on insurance from state to state removes many of the incentives for insurers to enter the national market. It also greatly reduces the economies of scale that a bigger market could provide. For this to be a boon, governors and legislatures will have to come together to level the regulatory playing field, at least on a regional basis.
I’ve never liked the idea of nationalizing anything. Obamacare took the worst ideas of my state (Washington) and made it the minimum required coverage everywhere. Sure, it’s nice that everyone else has to suffer the same way I do, but it’s my choice to live in this leftist Utopia. People in Alabama shouldn’t be saddled with the bad policies dreamed up in Olympia.
Now, if the minimum standards were actually minimal, then everyone would be better off, but what is the chance of regulators limiting their reach?
My understanding is that “nationalization” would work in the exact opposite manner: people in Washington would be able to buy policies from Alabama (or wherever else), thus allowing everybody in the country to take advantage of the states with the best regulatory situations.
How that would actually work in practice without states completely forfeiting their ability to regulate health insurance is beyond me.
Oh I see. Then I’m on board.
On a philosophical level, there is a paramount question which every candidate should have to answer, but none of them probably ever will:
Should the government ensure that everyone can consume healthcare even if they can’t afford it?
Nobody wants to explicitly answer that question, but the implicit answer is always yes. And in that situation, our healthcare system is really just about routing subsidies. For this reason, the real meat of any health care reform is in the details, not the grandiose platitudes: anyone can talk about freeing up the marketplace, but actually making the numbers work is next to impossible.
It’s probably not realistic to expect candidates to put specific proposals on the table. However, until they at least make somewhat detailed explanations of how they would deal with patient groups such as those with chronic conditions or expensive terminal issues, most of these proposals are probably worth the paper they are written on.
This is the non-conservative problem with the “across state lines” meme. Each state determines what is acceptable as insurance within its borders. Being able to buy a policy that meets the less stringent standards of another state undercuts the ability of one’s home state to regulate his behavior. What Obamacare did was override state standards. The new floor for state regulators looks a lot like Washington’s pre-obamacare standards. I saw very little change in what was required to be in my plan. People in other states saw enormous increases in their requirements.
Further, now it wouldn’t matter if I could by my plan from Alabama or some other state where it was cheaper pre-obamacare because the plans in every state are now required to be the same. Opening up state borders just doesn’t matter now.
After the repeal of Obamacare this is no longer true.
I am of the mind that the only way to fix the health care and medical market place is to make it illegal for a third party to pay health care and medical providers. Make all payments go through the customer and the system will have market incentives.
Tom,
These are terrific systems. I have been pushing the HSA concept all along. HSAs are ignored because fiscal conservatives don’t want to give any tax credits and because the left desperately wants to hide how good and how important they can be. They should be the centerpiece for Health Care in a free society.
First, give a tax credit for opening an HSA and retroactively for those who showed good sense and already have. This is so obvious that the only reason it hasn’t been done is the left wing’s attempt to control everything for their own big government designs. I would even go a little farther and recommend direct deposit into HSAs as a means of establishing them. This could be done with Tax Credits from IRS and could be done by employers also. I would give employers Corporate Tax Credit for direct deposit into employee HSAs. Couple this with a more competitive insurance market and making use of our new information technology to bring lower cost treatment regimes rather than just automating the existing expensive ones.
Not only would the already highest capability Health Care system in the world be retained but now we would show the world how to deliver that Health Care to every citizen in abundance. The last and far from the least important feature is that this Health Care system would be a fabulous stimulus to employment especially at the bottom of the job market. Getting $15 hour means nothing if there aren’t any jobs to get.
If we were to lower the Corporate Tax rate down along with this America would take off like a Saturn V.
Regards,
Jim
But who then decides what constitutes an insurance plan? We’re sure as heck not going with a truly free market where people can pick and choose what coverage they want to pay for. No, for some reason or another we’ll still be paying for things we’ll never use so that others can have them. And what about state sovereignty?
I see nothing in either Rubio’s or Walker’s plan that set minimum requirements. Perhaps I missed it. Anyone else find evidence of this?
TKP,
Why don’t we create a Federal Insurance rating system. Before the insurance salesman can bind a particular policy he must get a rating for you. With the internet this would be easy and almost instant. A one page break down that rates the policies strengths and weaknesses on say 6 different capabilities. Then an overall rating number too. This would serve the purpose of disclosure to the consumer that was easily understandable. Meanwhile, no one is required to do anything. Insurance companies can offer any policy that they want and consumers can buy any policy that they want.
It’s called freedom.
Regards,
Jim
“F-f-f-f-freedom? Quit dropping the F Bomb! We need affordable ______!” – Every Leftist when hearing about a free market, whether its selling lemonade or a car.
There are some. The pre-existing condition stuff, for instance. EMTALA has some requirements, iirc. Essentially, the federal requirements that were in place before Obamacare. So, yes, KP would be able to get pre-Obamacare Alabama policies, but he might not be able to get the sort of policies sold in Alabama in the 1980s. Walker’s scheme (Rubio’s isn’t yet fully fleshed out) implements a bunch of incremental improvements to the 2008 model and flushes out Obama’s detrimental reforms. It also has some tax credits to smooth the passage and acceptance of the bill. It isn’t intended to be too radical a change from 2008. “Repeal and Replace Obamacare” is important, and worth doing. Replacing that with “create a libertarian utopia in healthcare” isn’t the plan and isn’t an option. There’s a reason that Paul is campaigning, eccentrically, on single payer (the Congressional Healthcare Plan that Obama originally ran on); there’s just no constituency for radical libertarianism in this field.
This is true. Nor is tort reform, nor HSA expansion, nor Medicaid reform, nor insurance portability after employment changes, nor Long Term Service and Support protections. They’re all just incremental changes designed to help give the freedom to Americans that lets the system improve itself a little. There doesn’t appear to be a way to make healthcare cheap, pleasant, or even just non-heartbreaking.
J of E,
Perhaps the pleasant & non-heartbreaking thing will require you to read Genesis. We are humans and we are mortal and that isn’t ever going to be fun. However, it is quite amazing how 4 or 5 seriously effective incremental improvements can build up to a huge difference in a relatively short time say 5 years. Meanwhile, a giant socialist lie will never improve anything. In 5 years it will have made things worse and in 10 years it will have made things much worse.
Regards,
Jim
I don’t think that the plans are radical, since most people don’t like the costs associated with ObamaCare (both the government deficits and the increase to premiums while decreasing coverage). Most moderates are against repeal because something is preferable (on an emotional level) to nothing.
I like the plans because they start killing the roots of a lot of the problems with our health care system, and we can then watch the market make the improvements that markets make. I wish we would go further, but that doesn’t mean that I don’t think that the first step should go further. (Does that make sense?)
Maybe this is a blog post in itself, but my recent medical treatment suggests that the free market is already bringing down costs. Two weeks ago, I got a horrible rash and some other allergic reactions to something. My doctor couldn’t see me (and is in the opposite direction from work), so off to the Minute Clinic I went. They have set pricing for various ailments, and were able to get me a prescription that was filled as I got my updated tetanus shot. (If I had been paying out of pocket, it would have been incredible. As an insured person, it was merely a very convenient, lower copay alternative.)
When my symptoms worsened, I went to urgent care: cheaper and faster than the ER. I looked up reviews of the three that are a short drive from my house, chose one affiliated with a hospital, and went. I don’t know what my co-pay will be, but it will be less than whatever the ER would have cost. And I waited all of 15 minutes to see a doctor.
Those options just weren’t available ten years ago. But enough uninsured/underinsured/high deductible people have opened up opportunities for those clinics, and they provide a great quality of care for less money.
HSA’s are probably the best vehicle for getting some market incentives into the system, but we have to remember that Medicare and Medicaid make up about 1/2 of health care spending. We will have to do something about those programs also to make sure that the market can work. In the short run Medicaid could be replaced with a subsidy for HSA’s, however that doesn’t work for Medicare, where the system is paying out huge payments as we speak. (HSA’s are terrific for healthy people that will inevitably have large health care costs sometime in the future).
Medicare is the tougher nut to crack as it is going to bankrupt the government very soon, and people currently on Medicare would benefit little from having an HSA started now.
It’s true that the interstate purchase element of the reform reduces state sovereignty. That’s often a tension in conservative federal law. Romney’s plan to reduce the DofEd’s control over education by removing the complex attached strings from funding and replacing them with simple school choice incentives got battered by a lot of conservatives who should have known better (if for no other reason than making federal funding objectionable to liberals is the best way to get rid of it).
Replacing Obamacare with, inter alia, interstate insurance purchase would increase consumer choice (because we don’t want big state governments either), support the free market in interstate commerce, and increase state sovereignty (because Obamacare’s intrusions are greater), but would not support state sovereignty as much as a repeal without replacement.
For what it’s worth, the Medicaid reforms increase state sovereignty in more significant ways than the interstate purchase decreases it.
My grandmother is in a convalescent center right now recovering from a spine fracture, and she is getting excellent care (except for the food). The US has very excellent healthcare it just that we all agree that it costs too much and is inefficient.
Bridget,
Now that’s real hope. Spinning big government fantasies is hopeless. More and more of this. It isn’t just for the young and healthy. There are ways to help at the end of life too. We must think outside the box. Warehousing the elderly and over-medicating them is the S.O.P. I think this is cruel and probably shortens their life not extend.
Got to use brains. Gd gave us brains we’ve got to start using them.
Regards,
Jim
Medicaid reform through federalism is a key component of both Walker and Rubio’s plans. Medicare is part of the Ryan plan, which both candidates support, too. You, James, and the candidates are all on the same page on this stuff.
How does this work financially?
If people could “keep their Obamacare”, presumably everyone who is a net drain on the system (and whom the insurance companies are forced to cover at a loss) would remain in, while those who were net contributors to the system would opt out – leaving the insurers billions of dollars in the hole.
The only way out of that hole would be for the government to write checks to each insurance company to keep them solvent. So the price of freedom, in this case, would be a huge bill sent to the taxpayers in order to keep private companies afloat.
Unfortunately, Obamacare was (cleverly? diabolically?) designed so that removing any one of its central pillars causes the whole system to collapse.