Thursday, March 3, 2011

The Republicans Had Better Get Organized on Health Care

If the past week is any indication, the Republicans will have real trouble come 2012 trying to convince voters they have a plan to fix the American health care system.

Last weekend, President Obama endorsed the Wyden-Brown bill that would give the states the opportunity, in 2014, to take their share of the almost $1 trillion the new health law collects and use it to craft an alternative health care plan to their liking.

With Republicans now controlling the “trifecta” in 16 states—the governorships as well as the state legislatures—it is a very interesting offer.

I found an editorial this week in the Wall Street Journal criticizing the offer puzzling.

In an editorial titled, “Obama’s Health Waiver Gambit—the White House offers the mirage of state flexibility," they wrote:
Mr. Obama's new faith in federalism is trailed by his customary rhetorical asterisk. Any state that the Administration decided deserved a waiver would still need to cover the same number of uninsured, and its coverage would still need to include the same comprehensive benefits and be as "affordable" as the Administration says it should be. That is, it must be as heavily subsidized.

So perhaps states could opt out of some consumer or employer mandates, which is a minor release valve. But they would still need to find other mechanisms to achieve the same liberal priorities, which in practice leaves little room to innovate—especially for a straight tax deduction or credit to purchase individual coverage or alternative insurance designs like high-deductible or value-based plans.
Say what? Getting rid of the individual mandate—the thing Conservatives are focusing their Constitutionality challenges on—is only an offer to jettison “a minor release valve?”

It looks to me like the WSJ is saying conservatives would not be able to cover as many people as well as the Democrats are on their way to doing under the Affordability Act.

First, let me remind you that the CBO has estimated that the new law would only cover about two-thirds of the uninsured. And, that the standard of coverage demanded by the new law sets the “Silver Plan” as the standard—essentially a typical comprehensive major medical plan with a $1,000 deductible. And, let’s not forget that the Affordability Act would require a family of four making $65,000 a year to pay $6,175 in out-of-pocket annual premiums net of any federal subsidy—hardly what the WSJ called, “heavily subsidized” premiums.

The WSJ laments that there isn’t enough “room to innovate” with tax credits and high deductible plans.

Why not? Why can’t a Republican tax credit plan be devised using the Democrats money pot? I see no reason an actuarially equal conservative high deductible plan that gave any excess Democratic cash to consumers in the form of deposits to Health Savings Accounts can’t be crafted that is financed with tax credits. And, all of those Republican governors’ complaints about Medicaid? Here is the block grant of all block grant offers!

Could a Democratic HHS Secretary play games and deny a state an actuarially sound conservative alternative? Sure but after the offer the President put on the table this week, suffer lots of political consequences doing it.

Could the Democrats rig the game by demanding things like too rich a definition of the standard benefits? Sure. But a Republican governor could also put a more reasonable plan on the table and dare a Democratic HHS Secretary to reject it.

Just how would a Democratic HHS Secretary deny a state any reasonable health care alternative experiment that had just passed both houses of the state legislature and had been signed by the governor?

It is notable that more liberal states like Vermont and Oregon look like they are ready to take up this challenge by crafting even more liberal health plans for their states. You have to give the liberals credit--at least they walk their talk.

By embracing Wyden-Brown, President Obama has offered the Republicans a put up or shut up political challenge: Show me how you can cover as many people as well as we did.

The Republicans are afraid of this challenge? The Republicans don’t think they know how to cover two-thirds of the uninsured for the same money the Democrats are spending? The don’t think they can craft a consumer-driven plan with a health savings account for the same money it will take to provide the “Silver Plan?” They think telling a family of four making $65,000 a year that still has to pay $6,175 for a plan with a $1,000 deductible that they are still too “heavily subsidized”?

If I had been advising the Republicans this week I would have told them that focusing on criticizing the benefit side of the new health care law, as they all did, was the wrong strategy.

Where they could have been critical of the President’s challenge, and still been consistent with their past arguments and objections to the new law, would have been to point out that the $1 trillion Democratic money pot they would have to use to fund their alternative comes from the new law’s tax increases and Medicare cuts they opposed last year. In essence, they could have pointed out that they still oppose having to fund their version of health care with the “fruit from an objectionable tree.”

I still think it’s tantamount to immoral to raise $500 billion over ten years in taxes to pay for this, and not go after the real problem of cost, when about everyone believes there will be many trillions of dollars of waste in our health care system over those same ten years.

But for one Republican after another to admit that they couldn’t take their state’s share of a trillion dollars and use it to craft a health care system that covered their portion of the 32 million more people, using the new law’s modest “Silver Plan” as the standard of coverage, and still leaving big gaps in premium support for the middle class, that was startling to watch.

They better have a health care plan they believe in come 2012.

They also had better be able to explain it.


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