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Why Don’t the Republicans Have a Vision for Health Reform?



April 2nd, 2013

In a recent Health Affairs post comparing the House Republican budget and the Senate Democratic budget, Uwe Reinhart says the contrast could not be more stark:

At least the American people now have before them the visions the two parties have for our country, especially in regard to health policy.

What are those visions?  The Democratic vision he says, is that people “should have access [to health care] on roughly equal terms.”  The Republican vision, by contrast, “signals to millions of low-income Americans without health insurance that they are on their own in health care.”

A Republican vision for health care? Unfortunately, there isn’t one.

After paving the way with an ObamaCare-type reform in Massachusetts, Mitt Romney backed away from recommending a similar reform for the country as a whole. As a presidential candidate, he called for reform at the state level, but offered little guidance about what those reforms should look like.

Republicans on Capitol Hill aren’t much better. Last year I recommended a Health Contract with America – laying out five core principles — to the Republican doctors in the House of Representatives. But even though this is a very homogenous group that agrees on most things, they couldn’t even agree on a few principles to guide reform.

One reason the Republicans can’t agree on what to do about health care is that the people who advise them don’t agree. As I explained in a recent post at my blog, the conservative think tanks have been all over the map in their recommendations. There is simply no agreed upon vision for health care among those on the right of the political spectrum.

(Of course, there isn’t any uniting vision on the left either; but for better or for worse, the left is stuck with defending ObamaCare.)

Think how different things were four years ago. The 2008 election – which brought Barack Obama to the White House — was primarily an election about health care. In that election, the McCain health care plan was more radical and more progressive than Barack Obama’s proposal. Nonetheless, I believe the Obama team spent more money attacking the McCain health plan than has ever been spent on any public policy proposal in the history of American politics.

What was so bad about the McCain health plan? Well, the McCain health plan didn’t promise access to health care on “roughly equal terms.” It promised access to care on exactly equal terms. Based on a proposal Mark Pauly and I made in Health Affairs almost two decades ago, the McCain plan promised the same amount of federal help in the form of a fixed sum, refundable tax credit.

The legislative vehicle for this plan, by the way, was a bill co-sponsored by Paul Ryan – the author of the Republican budget that Reinhardt tells us would leave millions of people “on their own.”

What was it that Obama found so objectionable about the McCain approach?  This may surprise some readers, but Obama objected precisely because McCain wanted to treat everyone the same! To labor union members with lavish health benefits they said: McCain wants you to pay more (get less of a tax subsidy) so that less fortunate families can pay less. Obama promised to protect the haves from any such efforts at redistribution to the have-nots. The Obama message on health care was not a message of altruism. It was an appeal to selfishness.

Obama never once promised that people would have access to health care on roughly equal terms. To the contrary, he explicitly rejected that idea.

Let’s take the employer mandate. ObamaCare requires the maids who work in Hilton hotels to have very expensive health insurance. Yet it gives no new help either to them or to their employer to pay for the insurance, even though family coverage will cost almost half of their annual wage.  Instead, it leaves in place a tax subsidy system that will pay for only 15% of the premiums – at most. And the employer mandate (tax) is binding, even if the maid is already covered by Medicaid!

ObamaCare also requires a Hilton Hotel manager to have the same minimum health insurance as the maids. But it leaves in place a subsidy system under which the government will pay for almost 50% of her premiums.

Can you think of a social insurance scheme that is any more regressive?

Tell me which is more likely to allow people to obtain health insurance “on roughly equal terms”?

  • A system under which the fiftieth worker hired causes the take home pay of every other worker to go down? Or a system under which people get the same help from government, no matter how many employees are hired?
  • A system under which a worker who increases the number of weekly hours worked from 29 to 30 is subjected to fines and penalties for having no health insurance? Or a system under which people get the same help from government, no matter how many hours they work?
  • A system under which the government’s tax assistance for the purchase of health insurance can vary by $10,000 or more for people at the same income level? Or a system under which people at the same income get the same help from government, regardless of where they work.
  • A system under which families at 130% of poverty are forced into Medicaid or one that gives them access to private insurance?  (Sorry, there are just too many studies showing that Medicaid is not “roughly equal” to a Blue Cross plan.)

Professor Reinhardt makes much of the fact that the Democratic budget would spend $1.8 trillion more on health care than the Republican budget (because the Republicans would repeal ObamaCare) over the next ten years. He implies that this reflects Republican indifference. Yet this is the same professor who has told us repeatedly that we spend more on health care than other countries without any better results.

We don’t need to spend more money on health care. And if we do, we will only cause more health care inflation. Instead, if we replace the current system of tax subsidies and make certain tax preferences conditional on proof of health insurance, I believe we can offer every adult individual a tax subsidy of $2,500 and every family of four a subsidy of $8,000 without any increase in the size of government. With narrow networks and managed care, I believe health insurers could offer comprehensive coverage for these amounts – especially if combined with Health Savings Accounts. People could add to their tax credit with after-tax dollars and have more options if they chose to do so.

As I have written before, when it comes to health care I am more egalitarian than most liberals I know. I am not alone. Most Republicans in Congress are comfortable with the McCain/Ryan approach, but are hesitant to endorse it for fear of the kind of demagoguery that John McCain was subjected to. If truth were known, the average Republican in Congress is more egalitarian than the average Democrat when it comes to health care.

Republicans are also more egalitarian with respect to education. But I will save that for another day.

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10 Responses to “Why Don’t the Republicans Have a Vision for Health Reform?”

  1. kbuckley Says:

    Political polarization aside — the simple fact is that markets, not governments, should pick winners. It’s disingenuous to claim savings through government efficiency. I have to agree with John’s libertarian principles, but are legislators really dealing in healthcare policy, or political currency?

    It’s upsetting how far afoul we’ve run of individual liberty or personal accountability. The only certainty in party “vision” is that they don’t have the best interests of the individual in mind.

  2. Gabriel Says:

    I wonder if John Goodman is healthcare’s Cassandra – seeing and warning of what is to come with no avail.

  3. Thomas Miller Says:

    John has a tendency to view failure to agree with him, or to recognize his preeminence in apparently thinkng of every significant right-of-center health policy reform idea first (at least over the last 25 years), as “failure to have a vision” or at least support the “right” vision. Not really. It’s just having a different vision that may agree in part with his one, but disagree as to what matters more in one way or another, now and then..We certainly agree on a lot, but far from everything. Healthy competitioni in ideas doesn’t mean that all assertions and assumptions are equally true, nor does it mean that someone has a monopoly on wisdom. It does mean that we all are challenged to be more persuasive and convincing in refining, clarifying, revising, and even occasionaly “rethinking” what will never be 100 percent perfect,. And then find that the politicians (and even sometimes the voters) are likely to mess it up even more. But then, try again to get it better next time..

  4. Brian R Williams Says:

    Somewhat in defense of Republicans, they have proposed numerous reform plans, many of which demonstrated plenty of vision, all of which would take us in the right direction. But they get caught arguing for cuts in the rate of growth for health care spending, relative to the baseline, as scored by CBO … instead of talking about how more freedom can make everyone’s health care better.

  5. Anthony S Says:

    If we can’t a party agree on the policies, especially when we live in a two-party system, I am afraid we are headed into some very scary times.

  6. Anthony S Says:

    I want to emphasize that the polarization of politics and the gridlock in Washington has stymied ideas to flow in Washington and as a result we are facing graver threats in our health care system and beyond. It’s time for things to start changing for the better or things will get much uglier.

  7. Anthony S Says:

    John, I think the Republican party ought to take your recommendations seriously because from what I’ve seen they tend to be the most uniform and consistent ideas out there on health care reform.

  8. cosullivan Says:

    If only those in government understood basic economics…

  9. Lloyd Says:

    Both parties should look at entitlement reform that cuts costs and rely on sources that are outside of the beltway. They need to promote good health care plans without fearing those within their own party.

  10. Richard Walker Says:

    Republicans — and a great many Democrats, even liberal ones, who see the train wreck that is Obamacare coming — should quit worrying about their message and hew to the line Goodman recommends here. This law isn’t just awful — it’s god-awful! The battle will come to them and when it does, this message will be the perfect cure for ails our health care system, and our country for that matter.

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