A simple health reform deal

I wrote the essence of what is below on October 31 at my home blog but forgot to post it here due to sugar haze. Since then, a few bubbles of a supposed shift toward the GOP wanting to tweak the ACA instead of arguing for a repeal that will never come. I agree that it seems unlikely that Republicans will actually vote for something of substance based on past experiences, but of course I have been prattling away about health reform deals for quite a while, the eternal optimist and all that (actually I just think eventually reality will intervene).

Here is simple deal that could provide Republicans with some political gains (we got rid of the individual mandate!) and help the ACA’s risk pooling ability in policy terms, which should be the biggest short, medium and long term policy goal for the Democrats; successful policy should pay political dividends for them down the road as well. A starter deal could also get Republicans rolling on laying out and fixing specific problems with the ACA, saving them from having to “start over” after a repeal that is not likely to ever come…..and eventually the ACA could become the entire nation’s health reform law.

  • For 2014, make some amount of the premium paid by individuals buying coverage in the exchanges who are above 400% of poverty (and thus get no tax credit) tax deductible. This will then give everyone with insurance some federal subsidy (Medicare and Medicaid directly, those with employer sponsored health insurance lots via the tax exclusion of the amount paid by an employer, those receiving exchange subsidies directly, based on their income, and then those buying who are above 400% of poverty getting some benefit from the deduction). Long run we need to reduce tax preferenced spending, so maybe the “pay for” could be bringing forward the cadillac tax or more directly capping the tax exclusion….and slowly turning down the very high tax subsidy of cadillac ESI and searching for the “goldilocks” level of subsidy at some point in the future. A slow “boil the frog a little at the time” approach is likely the only way out of what Paul Starr calls “the policy trap” of many liking their insurance and especially the subsidy they get via employer sponsored coverage; the political difficulty of ending/limiting the tax preference of ESI–the essence of all conservative notions of health reform–is what Ramesh Ponnuru is worrying about here.
  • For 2015, replace the individual mandate with the auto-enroll provisions envisioned by Rep. Paul Ryan’s Patients’ Choice Act. Strong auto-enroll policies enacted while allowing an opt out (presumably with some consequences, correct Libertarians?) could actually pool risk better than the weak individual mandate we now have. We will also have to develop a default insurance option to make auto-enroll work, which is the one thing I would add to the ACA if I could do just one thing.

There are also stories about the administration touting a fix to address the “you can keep it” thing, but it is unclear to me what could be done. Work with me people.

Author: Don Taylor

Don Taylor is an Associate Professor of Public Policy at Duke University, where his teaching and research focuses on health policy, with a focus on Medicare generally, and on hospice and palliative care, specifically. He increasingly works at the intersection of health policy and the federal budget. Past research topics have included health workforce and the economics of smoking. He began blogging in June 2009 and wrote columns on health reform for the Raleigh, (N.C.) News and Observer. He blogged at The Incidental Economist from March 2011 to March 2012. He is the author of a book, Balancing the Budget is a Progressive Priority that will be published by Springer in May 2012.

21 thoughts on “A simple health reform deal”

  1. “I agree that it seems unlikely that Republicans will actually vote for something of substance based on past experiences, but of course I have been prattling away about health reform deals for quite a while, the eternal optimist and all that (actually I just think eventually reality will intervene).”

    The reality is that the GOP is dead set against this, and that any GOP politician supporting this will face a massive primary challenge.

    I’m using ‘eventually’ as in ‘the next several years’, and not in the sense of ‘twenty years from now, Republicans deny that they ever used the term ‘Obamacare’, and accuse Democrats of dishonestly laying claim to a very popular program’.

  2. The local Republican party organ (yeah, I know, an unsettling image over your breakfast) that is our daily newspaper is now running op-ed items that Obamacare is meant to fail so that national health care can be instituted. That puts the White House several points past the cleverness I’ve seen so far, but some can worry. I would call it dreaming.

    That said, any solution short of ONE pool, everybody in, makes no sense. This lily of subsidizing the insurance “industry” will requiring citizens get coverage has been gilded so many times trying to tweak it into something functional that it is a shapeless blob that pleases no one.

    If the Democrats were smart they would simply embrace this, but they built their house of cards by appealing to potential campaign contributors instead of the public — or the public’s interest. But if they were smart, that’s what they would have done in the first place, instead of stealing a Republican idea (the first clue there might be a problem later…), taking credit for it, have the Republicans blame them for it failing, then get boxed into the corner of giving most of it back…all except for those subsidies to the insurance companies, which I suspect will survive when little else of the good in ACA is left after what’s coming next as the two parties “compromise” on really screwing up our healthcare.

    Because if millions of Americans were actually enjoying increased access to health care right now, instead of trying to do something 10x worse than income taxes in terms of complexity with no paper-based option available. If I wanted a system to fail, even if I thought subsidizing the insurance companies were the way to go, I probably would’ve designed it a lot like this. And, no, I’m mostly not talking about the flaky website — except for the part about the lack of a paper form.

    National health care. It’s the only cure. You know you’re in, if you’re breathing and alive in America.

  3. A barometer of public attitudes toward the ACA is difficult to come by. FWIW, the largest used car dealer on local TV has begun running ads promoting the “Affordable Car Act,” accompanied by the playing of “Hail to the Chief,” with lines about not having to worry about the status of your pre-existing loans. He is gambling that the ACA is at least not so odious as to present a risk in using it as sort of a template for his ad campaign.

  4. Auto enrollment in a default insurance plan. That sounds sensible but it needs a catchy name. How about something like “Medicare”?

  5. As someone who opposes Obamacare from the left because it’s not single payer, but who nonetheless recognizes it as better than the status quo ante, I do feel that it will fail because the mandate is too weak, and it still makes sense to put off buying insurance until you’re sick.

  6. What’s the goal of these reforms? If the goal is Rube Goldberg tinkering to make the baroque even more baroque, I’m not interested.
    If the goal is to make the US medical system ACTUALLY perform better, let me suggest two reforms, which both address the point that if all you do is screw around with the demand, and don’t address supply, prices will just keep rising.

    Option (a): let qualified medical personnel (nurses and doctors) become US citizens with extreme ease. Yes, this will steal medical personnel away from the rest of the world; it’s a despicable thing to do; and it will further increase their loathing of us. On the plus side, increasing that loathing is popular with the GOP, some story about immigration opportunities goes down well with Dems.

    Option (b): do something about the crazy system in the US that allows the AMA to throttle the number of doctors graduating every year, and so keep up prices. Either go down the union busting road (again popular with the GOP) or create a set of federal medical colleges which don’t care about the AMA caps (popular with the Democrats, and if you call it military preparedness training, probably palatable to the Republicans). At the same time, have the payment for this college be based on “in kind” labor to be performed say for four years after graduating.

    Point being that graduating (or immigrating) LARGE NUMBERS OF doctors without debt breaks the cycle whereby doctors feel they HAVE to earn high the moment they start, to pay off debts; then once they have the debts paid off they kinda feel that salary is what they are naturally entitled to anyway.

    1. Maynard,
      A) I’m not sure of the details, but the immigration system already appears to have some preferences in place for medical personnel.

      B) There’s several systems already in place that produce doctors via federally assisted programs. The military is the big one, but there are others. Congress need only commit to fund them to the extent needed to produce better results. That said, the real problem is in areas like general practitioners, pediatrician, geriatricians. We tend to have plenty of specialists, who are generally higher paid, although there are spot shortages. So a solution need also include boosting the rewards of the much needed but often lower paid generalists. And no union-busting needed, as the vast majority of all physicians aren’t in a union.

      As for large numbers of anyone being without debt in this society in its current state is anathema to the folks pulling the strings. I’d argue we’d all be better off if we had a Jubilee Year for everyone and cancelled most debts, then try to stick with productive enterprises, rather than limit that good idea to doctors. 🙂

    2. For a short time under François Mitterand, in the Mauroy government, France had a Communist minister of health (1981-83), Jack Ralite. One of his policies – reversed of course by his successors – was to get rid of the numerus clausus in entry to medical schools. Good market-based thinking, I’d say.

      1. Except that one of the first things you learn when you study health policy is that increased supply with third party payers and in healthcare in general causes increased prices not decreased prices. This is why every country limits supply of specialists. Look up Jack Wennberg. This is basic, basic stuff that even a casual follower of health policy should know. I’m sorry if I come off as caustic but the amateur and ignorant doctor bashing implied here is silly when it contradicts with the facts.

        1. Simon, I refer you to, for example,

          The US population has increased, from 1980 to 2013, from about 230 million to 315 million. The number of doctors graduated annually has stayed flat during that time. The situation is actually even worse than that would imply because an ever larger fraction of these graduating doctors are female and it is an empirical fact (this is not the place to criticize or praise it) that these female doctors have, on average, a shorter work life than male doctors.

  7. How is this simpler, or easier to explain, or easier to implement than just lowering the Medicare eligibility age to zero?

    Don might object that his proposal is more achievable. But we already know there’s no deal to be made with the Republicans on health care. They’ve proven they will oppose any idea supported by the Democrats, including their own. It doesn’t matter whether we propose an idea they hate, or one they really REALLY hate, there’s no legislative progress to be made until they are turned out of government.

  8. What’s in the deal for the Democrats? The HRC presidency from 2016 is a virtual lock. It looks increasingly unlikely that the Republicans can gain control of the Senate for the next few cycles, and there’s a decent chance that the majority will finally kill the filibuster. In the unlikely event a chastened GOP decides to try to influence policy by any other means than total obstruction, they will have to come up with proposals acceptable to a Democratic presidency and Senate. These will have to be improvements to ACA, not alternatives; and they will compete with proposals from the left to make Obamacare more, not less, of a national health service.

    1. Better risk pooling than an weak individual mandate. I agree about proposals to improve, some of which will be from the left. For example, in North Carolina, there are likely 15-20 counties in which it will take a public option to ever provide a meaningful competitor to BCBS NC. You are more certain of Dem political victory than am I….I would bet that HRC is the most likely person to be the next Prez, but I also thought she was inevitable Dem nominee in 2008!

    2. Hillary Clinton has been heard from on this issue before. If she is elected, the left won’t even have a seat at the table. Single payer will be summarily rejected before the negotiations start.

    3. James wrote:
      “[the Republicans]…twill have to come up with proposals acceptable to a Democratic presidency and Senate.”

      Given most of those are likely to be former Republican proposals, once the Republicans can convince themselves their own ideas might be worth facilitating, convincing the Democrats should be a cinch.

      I rather despair of the left getting a seat at this table. If they’d had a seat capable of influence, we probably wouldn’t be in this mess in the first place.

      What’s in it for the Dems? To be able to point to it and say “It works” although getting that done in time to help over the next year is going to be a tall order.

    4. “The HRC presidency from 2016 is a virtual lock. ”

      First, history disagrees with you; it’s rather hard for one party to achieve three terms, and that’s with the VP running (who has a massive edge). Second, the GOP is working in what? – 30 or so states, to restrict voting. They’ll be working very, very, *very* hard in the next few years, *and* SCOTUS supports this, *and* the states will probably unleash a barrage of last-minute restrictions, figuring correctly that they will profit from and will not be punished for restrictions, no matter if they are overturned later.

  9. We live in a country where the administration had to lie about people getting to keep their policies if they liked them in order to get even the ACA barely passed. Where, when the fact that it was a lie became so obvious that even MSM outlets like CBS started publicly noticing, SNL found it suitable for humor, and the President had to “apologize”, though it was a singularly inadequate apology for what he’d actually done.

    And yet, you imagine, “You’re all going to lose your policies! Every one of you! Bwah ha ha!” is going to be a politically successful approach? Single payer, a government monopoly on the provision of health insurance, was always a non-starter, and with the remarkable failure of the ACA implementation, you think it’s going to be more popular?

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