Conservative Health Policy

Pro-market health policy scholars need to articulate a coherent healthcare policy.

I was surprised to see last week that there are still Affordable Care Act (ACA) cases going through the legal system, occasionally even reaching the Supreme Court. The most recent case concerns the mandate to cover pre-exposure prophylaxis against HIV (PrEP) at no extra cost to patients. And then there are the cases that border on religious conscience, including contraceptive mandates. Even more surprising is the tactic of conservatives to use the courts to reverse a major policy defeat. The truth is that even before the “Great Society” policy wins of the left, US health policy had been trending leftward and continues to do so. Of course, it makes sense that a law as expansive as the ACA, which touched one-sixth of the US economy and infringed on many liberties, would be litigated for decades. These cases were clearly important and have generally clarified the state’s relationship with the citizenry.

I immigrated to the US in late 2007. Shortly after, Obama was elected president, and I had my health policy crash course during the protracted ACA debate. Pro-market health policy scholars, in my view, had made cogent and compelling arguments for market-based healthcare solutions. I was disappointed with the final outcome of the ACA in many ways, but there were parts that seemed reasonable — like the Cadillac tax, which, incidentally, was part of John McCain’s 2008 platform. But in those debates, I had great admiration for Tom Price, Tom Coburn, Paul Ryan and all the gang who were part of the “Healthcare Summit” of White House and congressional leaders (remember that?). The challenge for someone like me — an academic in training, a new migrant, generally pro-market — was finding a coherent policy founded on reality-based economics that also addressed the real issues that the ACA ostensibly sought to address: lack of access to quality care. Forget “affordable.”

The ACA’s three-legged stool — mandates, guaranteed issue, and subsidies — were meant to address some of the intractable concerns to access. I hated the mandates. I always have, and so I was disappointed that the Supreme Court found it constitutional by declaring the penalty to instead be a tax (directly payable to fellow private citizens). Guaranteed issue is tricky, but subsidies, one could just say, is a policy variable.

I was heartened by the solutions offered by Tom Price and Tom Coburn, who introduced H.R 2300 in 2015 and other iterations before that to essentially make health savings accounts with high deductible health plans (HDHPs) the primary vehicle for individual healthcare financing.

Back to the litigation: Invariably, changes to the ACA have been driven by politicians and inexorable reality — the CLASS Act was repealed, the individual mandate was rendered ineffectual, while Medicaid expansion was made optional, and only few holdout states remain. Almost all the ACA consumer operated and oriented plans, popularly known as COOPs, collapsed under the weight of unrealistic economic assumptions. Yes, the more popular components remain, and even the strongest opponents dare not repeal (guaranteed issue, for example). Whenever the option of expanding Medicaid under the ACA provisions has been placed on the ballot, the electorate even in the reddest of states votes in favor. The seeming simplicity of the government-based solutions and their generally emotive appeal makes them acceptable.

This brings me to my main point: Market-based healthcare policy seems quite intractable, and conservatives are floundering in providing realistic solutions. There has been a relentless leftward march in health policy. In fact, the major conservative policy wins are often tweaks to major programs. Perhaps the biggest healthcare policy changes enacted by conservatives/Republicans are: 1) Medicare Part D, 2) Medicare Part C (Medicare Advantage), 3) coverage of dialysis care for patients with end-stage renal disease by Medicare (Richard Nixon). Conservative wins are often minor and rarely ever reverse many of the policy gains of the left, and often do not change the status quo. Examples include health savings accounts (HSAs) and health reimbursement accounts (HRAs). There has been a considerable leftward march when it comes to healthcare policy. Today, conservatives fight to “protect Medicare and Medicaid.”

So, what are some solutions? First, conservatives need to propose a single vision of what market-based healthcare policy looks like. For example, building on HSAs, how about making them the core of market-based policy? Every child should get an HSA account with SSN, combined with a catastrophic lifetime portable insurance plan that can be used even when covered by employer-sponsored insurance (ESI). That is, employer-paid premiums could be used to support such portable plans that employees carry with them. Second, redesign benefits administration to be based on AGI/tax returns. For categorical eligibility, make room for event-based qualifying events but require filing of tax returns. The focus on work requirements for Medicaid, for example, hasn’t been shown to produce any dramatic benefits, yet they remain front-and-center of Republican plans to reduce the deficit. Conservative healthcare policy making is challenging enough in its own right without coming across as callous and wanting to deny vulnerable and sick people access to care.