We’re closer than you think to agreeing on health-care reform that works
With Republican hopes to quickly “repeal and replace” Obamacare dashed in the Senate, Congress and the Trump administration can take a much-needed time out to consider a common-sense reboot that can unite the party’s factions — and even attract support from across the aisle.
With all the partisan rancor it is easy to overlook the fact that both Republicans and Democrats seek to offer protection to the most vulnerable Americans — either due to sickness or low income.
The key to getting a workable bipartisan bill to the president’s desk is to get the basic rules of the market right, offer targeted financial support for those who need it, and drive competition to ensure that America has a health-care system that delivers high-quality care at an affordable cost.
Here’s our recipe for success:
First, make essential health care affordable for all. The now-discarded Senate bill introduced by Majority Leader Mitch McConnell capped premiums as a percentage of income, including at 2% for everyone below the federal poverty line. We should retain this feature. It would fill a gap in Obamacare by expanding tax credits for premium payments to the uninsured in states that haven’t expanded their Medicaid programs.
In addition, the tax credits should be pegged to high-deductible plans. The road to affordable health care has always run through these plans, which minimize premiums while shielding individuals and families from the health-care catastrophes that might bankrupt them. The problem is that the deductibles can be very burdensome to the poor, the chronically ill, and even to the middle class. The solution is a conservative one: make Health Savings Accounts (HSAs) routine for high-deductible plans, allowing families to shop for everyday services while still providing financial peace of mind in the event of an emergency.
Overnight, the 30 million uninsured — who don’t have access to an affordable plan today — could get financial protection with the knowledge that they have access to care if they truly need it. This would help stabilize the individual market by bringing young, healthy enrollees into the plans because premiums would be much more affordable. Enrollees who pick low-premium, narrow-network plans could see their savings in HSAs accumulate over time.
Then, set aside HSA funds for low-income Americans to spend on routine services, including co-pays for drugs, doctor’s visits, and basic lab tests and scans. With a ready-made market, doctors and entrepreneurs will compete to develop many more affordable health-care services for patients — like 24-hour telemedicine services, tools to find the best doctors and surgeons, or primary-care practices that offer unlimited generic drugs and X-rays for a low monthly fee.
Adding HSA funding for low-income Americans would also greatly ameliorate Democrats’ concerns that Republican efforts to cap Medicaid’s spending growth would unravel the safety net for the poor. States could make a rational decision to let most able-bodied Medicaid enrollees go into a well-functioning individual market and focus their attention and resources on the most vulnerable patients, including poor elderly residents who need nursing-home care and the disabled. Both Medicaid and private insurance markets are likely to be better off with this swap.
Second, let insurance plans experiment with coverage designs within the framework of offering basic coverage. For example, to encourage even wider use of preventive services that can save health-care dollars long term, plans should be allowed to offer premium discounts to customers who sign multiyear contracts, encouraging them to stay with plans that keep them healthier, longer.
Similarly, high-deductible plans should be able to offer no-deductible coverage for any medicines or strategies that prevent complications from chronic illnesses or save money elsewhere. For example, if a plan wants to subsidize a fitness app to get patients with heart disease out for a walk, the rules shouldn’t penalize them.
Such innovations can reduce costs and boost competition among plans to attract new customers. To make sure the plans can afford to keep enrolling people with pre-existing conditions, Congress should set up large, federally backed reinsurance pools that take on the risk of the most expensive patients — thereby ensuring that the most vulnerable in every state will have sufficient funding for necessary care.
Finally, supercharge competition. This is the secret sauce for any successful health reform, and has received far less attention than it deserves. Federal funding for reinsurance could be tied to states allowing more health-facility construction, easing restrictions on nurse practitioners practicing independently, making better use of pharmacists, and finding ways to lower the costs of medical education. The federal government should carefully review how its own regulations prohibit innovative bundles of health-care goods and services from evolving.
By pegging cost-sharing to HSA accounts and high-deductible plans, allowing flexible benefit designs and repealing anticompetitive regulatory fiefdoms, Congress would allow every American to benefit from higher-quality care delivered at a lower cost per life saved, improved or extended.
A more effective and competitive health-care system that lowers costs and expands coverage compared with the status quo is achievable. While health-reform efforts appear to be in tatters at the moment, we think the key strategies for sustainable success are within arm’s reach.
Perhaps, after some time for reflection, Congress will seize them.
This piece originally appeared at WSJ's MarketWatch
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Paul Howard is a senior fellow and director of health policy at the Manhattan Institute. Follow him on Twitter here.
Dana P. Goldman is director of the Leonard D. Schaffer Center for Health Policy & Economics at the University of Southern California. Follow him on Twitter here.
This piece originally appeared in WSJ's MarketWatch