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Let States Lead on Obamacare

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Let States Lead on Obamacare

USA Today January 24, 2017
Health PolicyAffordable Care Act

Trump’s team has the tools to spark a 50-state health care revolution.

President Trump, the House and the Senate have all taken the first steps toward repealing the Affordable Care Act. Yet many critics (and even supporters) of the move share a common concern: With the ACA gone, what comes next?

We hope any replacement plan engages the states as true partners and allows for greater local accountability. Fortunately, there is already a mechanism to let states take the lead — a shift that would generate bipartisan consensus the ACA never achieved.

The Department of Health and Human Services has discretion under the ACA to offer states waivers from many of the law’s most expensive and onerous regulations.

The Department of Health and Human Services has discretion under the ACA to offer states waivers from many of the law’s most expensive and onerous regulations. The Trump administration can use the waivers to immediately signal its commitment to promoting market competition and empowering patients and consumers. Along with new reforms to promote transparency on pricing and quality, the administration and Congress can facilitate a health care revolution from the ground up.

Trump’s pick for HHS secretary, Tom Price, can put even more punch behind this approach by allowing states to merge ACA and Medicaid funding, and granting greater flexibility to state Medicaid programs.

This two-pronged program, freeing states from ACA regulations and Medicaid restrictions, would open the floodgates for state-based policy innovation. States could make high deductible health plans with health savings accounts (HSAs) the default standard to qualify for subsidies on the exchanges. For Medicaid recipients, they could add worksearch requirements and expand access to plans that provide unlimited access to basic health services for a flat monthly fee.) Others might aim to shift more money to poor residents directly by boosting refundable tax credits, which would improve the lives of the poor much more than simply handing them an insurance card.

A state like Arkansas, for example, might allow insurers to lower prices for younger enrollees by raising them for older ones (they can now only charge older people three times as much); give insurers more flexibility in defining essential benefits, and put all able-bodied, working-age Medicaid enrollees into the Arkansas exchange (or a private exchange).

By giving state employees a set amount of money to shop for insurance plans through an insurance exchange, states could instantly inject greater market competition into health care markets and boost buying power for patients shopping with high deductible health plans. With the assistance of the Trump administration, states could also pool Medicare and Medicaid data that would allow entrepreneurs and innovators to launch new health care products and services for consumers — creating a Travelocity.com for health care.

The point here is that states would finally have direct responsibility for their systems, and financial incentives to make them economical. That would lead to transparency and accountability for patients and consumers, as well as improved incentives for low-income residents to seek work.

The Republican case for reform is ironclad. Even when fully implemented, Obamacare will leave 25 to 30 million Americans uninsured.

Congress could even allow states that wanted to stick with the Obamacare status quo, like New York and California, to do so. If costs rose beyond a federal baseline, states would have to pay the difference with their own dollars. If costs fell, states could keep the difference and spend the savings at their discretion.

With states encouraged to pursue essentially 50 different health-care innovation zones within a predictable budget framework, Congress and the Trump administration would have a stable platform for debating and passing additional reforms to empower patients and consumers, one bill at a time.

The Republican case for reform is ironclad. Even when fully implemented, Obamacare will leave 25 to 30 million Americans uninsured. Insurance premiums are spiraling out of control, and entitlement spending on health care programs like Medicare and Medicaid remains on course to sink state and federal budgets.

But Republicans shouldn’t pretend that the solution is another top-down solution imposed on the states that will be just as vulnerable to repeal the next time the White House and Congress change hands.

They should simultaneously be bolder and humbler, setting a framework for a sustainable safety net for low income Americans, spurring real market competition across every state, and creating direct accountability for state policymakers who have the most to gain — or lose — from seeing health care reform succeed.

This piece originally appeared in USA Today

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Dr. Tom Coburn is the Nick Ohnell Fellow at the Manhattan Institute and a former two-term U.S. Senator from Oklahoma. Follow him on Twitter here.

Paul Howard is a senior fellow and director of health policy at the Manhattan Institute. Follow him on Twitter here.

Photo by Alex Wong / Getty

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