Republicans’ struggle to repeal and replace Obamacare demonstrates that they desperately need a goal for health-care reform. That goal should be universal coverage.
The Affordable Care Act is in bad shape, with premiums increasing at an alarming rate, insurers leaving the exchanges, and a new administration much less willing to prop it up. We aren’t in a “death spiral,” but some action will be needed — especially given the progress made in the Senate yesterday. No matter how often President Donald Trump says he’s “not going to own” any problems, the public will disagree. He’s in the White House. Republicans control the Congress. They are the governing party.
Unfortunately, Republicans don’t seem to know what they want to achieve, other than being able to say that they repealed Obamacare. This clearly isn’t enough to pass good, sound legislation.
What they should address is a crucial failure of the ACA: For all the talk about universal coverage, some 29 million Americans remain uninsured, according to the most recent census data. Conservatives should argue that they can do better, with the goal of getting the number to zero.
Why? Each of us is in the market for medical care, whether we have insurance coverage or not: We all face the risk of acquiring a devastating disease, or of suffering a terrible accident. Those who don’t have insurance against that risk create the possibility that the cost of their medical care will be passed on to the rest of society in the form of higher premiums or higher taxes. Conservatives, who value personal responsibility, should be the first to argue that individuals should be covered by health insurance. And in a nation as wealthy as ours, a medical emergency should not leave anyone broke. We should have a safety net so that no one falls too far. Universal coverage advances both personal responsibility and social assistance for those who need it. Conservatism is consonant with this objective.
How can this be achieved? A single-payer, “Medicare for all” system won’t do it: It would reduce the quality of medical care, limit access to care, and stifle innovation, productivity, and medical and technological progress. A straight repeal of the ACA — or repeal-and-delay — would be terrible, leaving millions more without coverage. An effective plan will need subsidies generous enough for low-income Americans to purchase insurance, market discipline to control the cost of health care and to encourage innovation and productivity, expanded choice for consumers, and strong incentives for young, healthy individuals to purchase insurance coverage.
Let me sketch some ideas that would advance these goals. Taxing employer-provided health insurance would (among other good things) reduce healthcare costs and create a pool of money to fund subsidies, in the form of refundable tax credits, available to low-income Americans for the purchase of health insurance. Deregulating the individual market for health insurance — allowing insurance companies to offer plans that cover only catastrophic medical events, not routine medical care — would make insurance more affordable and expand consumer choice. Funding high-risk pools would provide access to medical care for people with pre-existing medical conditions who might otherwise struggle to get insured in a deregulated market.
Under this framework, there would be a strong incentive to purchase health insurance even without the ACA’s individual mandate: Catastrophic coverage would be less expensive, both to the government and to the consumer, than comprehensive coverage. A sufficiently generous tax credit would provide added motivation, as only those who actually purchased insurance would be able to claim it.
But conservatives should warm to other measures to encourage individuals to purchase health insurance. (Especially given the Congressional Budget Office’s unshakeable faith in the power of the ACA’s individual mandate.) For example, automatically enrolling Americans who are eligible for tax credits into health insurance plans, with the option to opt-out — as described by my AEI colleague James Capretta — should be strongly considered in GOP health reform efforts.
Republicans can’t just let the individual health insurance market deteriorate. That would be wildly irresponsible — and politically infeasible. Instead, Republicans in Congress and conservatives more broadly need to offer a positive alternative to the ACA. Universal coverage — reached through market discipline, expanded choice, and assistance for those who need it — is the right goal to get them there.