"Going forward what is needed are Republicans who will (1) articulate a vision of reform that is consistent with Republican values and (2) negotiate with interests whose agreement must be had."

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Why Don't Republicans Have An Alternative To Obamacare?
By John C. Goodman, January 19, 2015

The Affordable Care Act is one big mess. Even most Democrats know it’s a mess. It’s disliked on the left almost as much as it’s hated on the right. So you would think that Republicans would have a golden opportunity to offer an alternative. But they don’t have one.  They’re not even close.

Why is that?

In a post the other day, Ezra Klein pointed out a problematic trilogy: (1) virtually all Republicans say they want to repeal Obamacare, and most say they want to replace it with something better; but (2) replacing Obamacare means tackling the tough problem of health care reform; and (3) Republicans don’t agree among themselves on whether they even believe in health reform.

Why don’t Republicans believe in health reform? Because (this is me, not Ezra) they think about health reform in the wrong way.

How All Democrats and Almost All Republicans Think About Health Reform. To almost everyone on Capitol Hill, health reform means insuring the uninsured. And since most of the uninsured don’t have a lot of money, that means taking from people who have more and subsidizing the health insurance of people who have less. But that implies three very un-Republican things: higher taxes, redistribution of wealth and bigger government.

As Ezra explains, “so much of what health reform demands offends conservative sensibilities or constituencies.”

Except for one thing. The dastardly deed has already been done. That is, Obamacare has put a lot of money on the table for health reform and there isn’t a chance in the world that it’s going to be returned to its rightful owners (and, as I argue below, it probably shouldn’t be). Klein writes:

“The irony, then, is that Obamacare might be the best thing to ever happen to conservative health reformers. If they have any chance of getting their party to prioritize heath reform, it’s only because Obamacare is so loathed by their co-partisans, and if they have any chance of actually designing a workable policy, it’s only because Obamacare has given them money they can use toward their plans.”

Over the next ten years, Obamacare will cost almost $2 trillion. Where is all that money coming from? It’s mainly coming from special interests who agreed to higher taxes, lower fees, etc. in order to help pass the Affordable Care Act. More than one-third of it comes from cuts in Medicare spending and AARP agreed to all of them. Then there are cuts in hospital spending, taxes on the self-insured plans of large companies, taxes on labor union plans, taxes on medical devices, taxes on drug companies, etc.

And here is something else. Almost none of these special interests are asking for their money back. I know of one company that estimates its annual cost from Obamacare is $1 billion – and they are not asking for their money back! Even if they did, it’s unclear that they deserve to have it back. After all, in return for higher taxes, lower fees, etc., all those special interests are expected to gain financially from Obamacare. What they gave up with one hand they expected to more than get back with the other.

There is a second way that Republicans and Democrats tend to think alike. They believe that health reform means reforming the private sector. The reason: They believe that our most serious health care problems (cost, quality and access) originate in the private sector. In fact, our most serious problems originate in the public — not the private – sector. True health reform means reforming government.

How Everyone Should Think About Health Reform. I have never thought that the goal of health reform should be to insure the uninsured (although I’m not opposed to that). The goal of health reform should be to undo all of the perverse incentives that have been created by bad government polices. Consider that:

• We offer low-income families free coverage through Medicaid and the CHIP program, but give them much less help if they choose private insurance instead. As a consequence, every time we expand these government programs, people drop their private coverage.
• We spend billions of dollars on “uncompensated care” for people who can’t pay their medical bills, but give much less help to people who buy private insurance instead. As a consequence, people choose to be insured by the emergency room rather than by Blue Cross and Blue Shield.
• We generously subsidize insurance at work, but give very little help to people who must buy insurance on their own – absent the new Obamacare subsidies. This means that most people have non-portable insurance that they must give up when they switch jobs.
• Even under Obamacare, young, healthy, low-income families find it in their self-interest to remain uninsured until they get sick and then enroll in an employer plan or obtain insurance in the exchange – with no penalty.

When people act on these perverse incentives, they shift costs to others in the form of higher taxes, higher premiums, higher medical bills, lower wages, etc.

How can we correct all of that? By taking a do-no-harm approach – making sure that government is not causing the very problems we want to solve. Under a do-no-harm approach:

• We don’t spend any more money enrolling someone in Medicaid than we are willing to spend subsidizing private insurance.
• We don’t spend any more on free care at hospital emergency rooms and in other settings than we are willing to spend subsidizing private insurance.
• We don’t give someone at work more (or less) subsidy than we give people who purchase insurance on their own insurance.
• We don’t allow people to game the system by waiting until they get sick and then enrolling for the same premium everyone is paying.

A do-no-harm approach creates a level playing field – free of government distortions — upon which the private sector is free to make choices and solve problems.

[Major, major snippage: please go here to read the rest]
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