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March 27 2012

Real Reform: Don't Stop Thinking About Tomorrow

Charlotte Hays

As much as I love reading Jennifer Rubin, I disagree with her contention that the Obama campaign should hope that Obamacare is overturned by the Supreme Court. Rubin is quite right in arguing that the Court’s upholding the law would rally Republicans.

But if the law is overturned, we have to go back to the drawing board on health care reform. The status quo ante was not good enough—and few citizens have the stomach for the kind of national trauma we experienced when this massively unpopular law was rammed through Congress in the first instance.

Nobody wants a rerun of that and I think voters will prefer market-based reform that reduces, not vastly enlarges, the role of government in our lives. They will likely not want this reform to be carried out by legislators who are more eager to etch a place in history than in improving health care.

Is it too soon to start thinking about what really good health care reform would look like?

James Capretta and Robert Moffitt are already doing just this. Indeed, they argue that Obamacare won't be reversed by Congress unless there are “credible” ideas of what kind of system should replace it.

They say that several points that must be recognized before a better system can be planned: that the U.S. health care system has historically been innovative, that the biggest problem is rising costs, and that a driver of these escalating costs is government. There is also the fact that health insurance is generally tied to employment:

The people who use the insurance (workers) are not the people who buy it (employers); many Americans thus have no idea how much is spent for the health care they receive. As a result, there is no clear relationship between cost and value, without which there can be no real prices, no real incentives for efficiency and quality, and thus no limitations on the growth of costs.

There is also the problem of people who do not have health insurance, though advocates of Obamacare have tended to exaggerate this (no doubt very important if you are unfortunate enough to belong to this small sliver of the population).

Capretta and Moffitt write:

To be credible, the replacement for Obamacare must address in a plausible way the genuine problems with our system of financing health care. Pre-eminent among these are the explosion in costs, the rising numbers of uninsured, and the challenge of covering Americans with pre-existing conditions.

The good news for Obamacare opponents is that much of the work of building such a plan has already been done. A small but persistent band of reformers and economists has spent many years promoting and refining the elements of a market-based approach to remedying what ails American health care. These ideas have animated scores of plans released by various organizations, including some proposed after Obamacare's enactment. And while these plans differ in their details, they share a core set of seven principles that should form the basis of any proposal for replacing Obamacare.

The first requirement of effective health reform, they write, is that consumers must be aware of the cost of health care. There must be tradeoffs and calculations. A system of “defined contributions,” in which citizens pick from plans provided through competing insurance companies, might be the solution.

What would be the role of government?  

Under this approach, health coverage would be provided through competing insurance plans; government's involvement would come through the provision of a fixed financial contribution toward the purchase of insurance by each beneficiary. That subsidy would not vary based on a person's insurance plan, giving Americans every incentive to shop for good value in their health coverage and to get the most for their defined-contribution dollars.

Whereas Obamacare treats us all like children, who must be ordered to buy a government-approved health insurance policy (we can't even decide what we want in a policy!), this system would rely on personal responsibility and choices:

The second pillar of reform should be personal responsibility and continuous-coverage protection. Obamacare attempts to address the challenge of covering people with pre-existing conditions with heavy-handed mandates, especially the requirement that all Americans enroll in government-approved insurance plans (the so-called "individual mandate"). A replacement program for Obamacare should come at the problem from the opposite direction, with government forsaking coercion and instead extending a new commitment to the American people: If you stay continuously enrolled in health insurance, with at least catastrophic coverage, you will never again face the prospect of high premiums associated with developing a costly health condition.

It’s impossible to guess what the Supreme Court will decide about Obamacare. But it is possible to begin planning for a better system, whether we are given the opportunity because of the Court, a new Congress, or (heaven forbid) waiting until this unworkable law collapses of its own weight.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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