A Congressional Off-ramp to a Patient-Centered Healthcare System
The Patient Protection and Affordable Care Act (aka Obamacare) was the wrong solution for what ailed (and continues to ail) the U.S. health care system. It has not achieved the President’s two main goals: universal coverage and bending the cost of health care down. The U.S. health care system is now worse-off due to its passage—higher premiums and deductibles, website glitches, narrow networks of doctors and hospitals, to name a few.
Beyond being bad policy, the chaotic manner in which Obamacare was passed, without a single Republican vote, has created many additional, and unnecessary, adverse consequences. For evidence, look no further than the continuous need for the Supreme Court to address the Act’s deficiencies.
Yesterday (on March 4), the U.S. Supreme Court (SCOTUS) heard oral arguments in King v. Burwell. The Court is deciding whether the Obama Administration’s actions were unconstitutional when the IRS offered government subsidies to people who purchased health insurance on the federal exchange.
The Act explicitly states that subsidies are only available to people who purchase insurance on an exchange established by a state. Thus, if the Administration wanted subsidies to be offered to people who purchased insurance on the federal exchange, the wording of the law should have been changed through the Congressional process.
Of course, differentiating between state and federal exchanges is nonsensical. But, in the chaos that preceded Obamacare’s passage, such nonsensical concerns were all but assured.
In reference to its previous ruling on Obamacare, Chief Justice Roberts said, “It is not our job to protect the people from the consequences of their political choices.” Applying a similar standard here, the Court’s job is not to decide what causes the least disruption – or what is good policy. The Court should only decide what is meant by the phrase “an exchange established by the State.”
Thus, if the Court maintains that the federal government is not a state, then about 5.5 million people in 37 states will lose their government subsidies. Making the situation worse, Obamacare both mandates that these people purchase health insurance with a plan that covers expensive mandates, and in many instances, has therefore made the unsubsidized cost of their health insurance less affordable.
While it is not SCOTUS’ responsibility to consider the ruling’s impact on millions of people, it is Congress’. And, both Speaker John Boehner and Senate Majority Leader Mitch McConnell have created task forces to address these potential problems.
With the endorsement of Republican House Majority Leader Kevin McCarthy, on February 3 the House approved the establishment of a trio of committee chairmen to develop a replacement agenda for Obamacare. On the committee are Representatives Paul Ryan (WI), Fred Upton (MI), and John Kline (MN). They outlined their reform plans in a March 3rd Wall Street Journal editorial. The Congressmen are proposing to provide states with an ability to take “…an off-ramp out of Obamacare toward patient-centered health care.” Such reforms represent the correct approach to improving the U.S. health care system.
There are two essential parts to the Congressmen’s vision: “First, make insurance more affordable by ending Washington mandates and giving choice back to states, individuals, and families. And second, support Americans in purchasing the coverage of their choosing.”
The off-ramp is predicated on several important reform principles.
First, the off-ramp recognizes that the root cause of many of the health care system’s problems are the rules and restrictions created by the current third-party payer system that drives a wedge between doctors and patients.
The off-ramp calls for empowering patients and families through reforms that include allowing states to: relax the Obamacare requirements; opt-out of the new employer mandates; offer greater choice in health insurance; and, allow people to purchase health insurance across state lines.
These types of reforms increase choice and competition – and like in any market, greater competition ensures that the health care system becomes more responsive to patients’ needs, creates transparency in pricing, and helps control overall health care costs.
Frivolous lawsuits are also driving up health care costs. The risk of litigation incentivizes doctors to practice defensive medicine. According to the American Medical Association, defensive medicine adds hundreds of billions of dollars in additional costs – PricewaterhouseCoopers estimates these costs at $210 billion a year.
The off-ramp includes implementing medical-liability reform to bring down these unnecessary costs as well.
The off-ramp also offers individuals in the states that take the off-ramp a refundable tax credit, which is payable in advance, to purchase insurance. This policy corrects a health insurance distortion created by our current tax system while directly assisting the individuals who are losing their Obamacare subsidies.
Implementing the off-ramp is the right policy to minimize any disruptions that could result from the Justices’ decision in King v. Burwell. In fact, implementing the off-ramp is the right plan regardless of the outcome of the Supreme Court case.
The SCOTUS decision is expected to be handed down in late June. If implemented, the off-ramp will empower all states with a choice: embrace the one-size fits all approach of Obamacare which increases the role of the federal government in our healthcare system or take another path that puts patients first.
Wayne Winegarden, Ph.D is a Sr. Fellow at the Pacific Research Institute and a Contributing Editor to EconoSTATS at George Mason University