17 August 2010

A Conservative alternative to the PPACA

The Hill's health care blog flagged an interesting proposal from the conservative Heritage Foundation on "Getting Health Care Reform Right."  It's pretty depressing stuff in that it's both incoherent and devoid of any real solutions.  It's a sad point in our political discourse when one half of the ideological duet has nothing, nothing at all to offer.  To sum up, Heritage proposes:
  1. Repeal Obamacare
  2. Privatize everything
  3. Profit!
OK, I oversimplify, but not by much.

The good:
End or repeal the tax deduction for employer sponsored health care.
This is actually part of the the hated Obamacare, but the cap is probably too high and phases in late.  And I think it's actually structured as an excise tax on expensive plans, but it's fundamentally the same thing. Still, it's the one useful part of the whole thing.

The incoherent:
States should take the lead in health care reform by ... structuring a consumer-based marketplace for health insurance, and expanding affordable health care options for their citizens, including setting up pooling arrangements to protect persons with pre-existing conditions... existing health care spending, such as Medicaid ... should be redirected to help low-income individuals and families purchase private health insurance..
State-run consumer-based marketplaces? Check. In Obamacare.
High risk pools? Check.  Also in Obamacare.
Pre-existing condition exclusion? Check. In Obamacare.
Premium assistance for low-income consumers to purchase private healthcare insurance? Check. In Obamacare.
   Of course the key distinction Heritage is making is that these should be initiated by the states, because "Oh Gosh, health care is so different in each state that a one-size fits all solution could never work." This is, in my opinion, not true federalism speaking, just the cynical certainty that few of the states would actually do anything to institute such marketplaces.  How many states have them now?  Why would that change if PPACA were repealed?  The Heritage folks are the fierce defenders of the status quo and their real intent here is to ensure that nothing happens, and some of these battles are easier to fight state-by-state.  I admit that I was hoping that health reform would have more dramatically altered or eliminated Medicaid, as is suggested by Heritage. But it is just bizarre that they advocate repeal and replace with, well, much the same thing as they are fighting to repeal.

The disingenuous:
The federal government should promote interstate commerce in health insurance.
This is code for "allow health plans to avoid regulation by domiciling in the states with the weakest regulatory structure." If you want to have a discussion about deregulating the insurance industry, do so openly and honestly. It would be a disaster, by the way, but make an honest proposal if that's what you're after.

The delusional:
 Medicare should be a defined-contribution system in which the government provides a contribution for benefits and seniors are able to apply their contribution to the health plan that suits them best. Medicaid should be restructured to mainstream healthy moms and kids into private health insurance through premium assistance.
    This is just a crock; a bait-and-switch by an organization/ideology which has hated and tried to kill Social Security programs for 75 years.  Starting with Medicaid: Premium assistance is a laughably unworkable replacement for Medicaid, unless you are going to quadruple the amount of money plowed into the program. Medicaid is already expensive from a budgetary point of view and the only reason it works to the limited extent that it does is because it can price-fix the market at unsustainably low rates.  If poor folks were shunted off into private plans, these plans would have to pay doctors and hospitals reasonable reimbursement rates (not a terrible thing from my perspective), but then the per-beneficiary cost would be way higher!  Is the "consumer" who already lives below the poverty level going to be able to make up the difference?  No way. Is the insurer willing to eat the difference? No. Can you legislate that health care providers have to accept the same crappy rates they currently get? Yes, but then you haven't really changed anything, just recreated the failed boondoggle of Medicare Advantage on a smaller scale.  Don't get me wrong, Medicaid is broken and I wish that the government would just federalize medicaid. But privatizing it is exactly the opposite of the right path.  Unless you want to kill it, which Heritage does.
    As for Medicare, this too is a bogus plan. "Shift to defined contribution" is translated as "shift the risk of future cost increase onto patients."  Does it work?  Sure, in that the costs get shifted off the books and the government is insulated from the future risk. And no, in that the goal of the program -- ensuring every retired American has health care insurance -- would be severely compromised when future unsustainable cost increases happen. This is a dishonest proposal designed to kill Medicare, make no mistake about it.

Also: Private health insurance must be portable—that is, owned by Americans so they can take their package from job to job.
Well, this is a modest proposal. Sounds simple enough -- it's just like care insurance, or like the individual health insurance market now, right?  Well, yes with the minor detail that it would mean the end of the employer-sponsored model we have had since WWII. This would quite simply require the end of the group plan. Now, the Wyden-Bennett Healthy Americans Act would have done just that and there's a fair argument in favor of that as a policy.  But it's a pretty major proposal to slip in without addressing the consequences.

So there you have it. Your conservative alternative to the existing Health Care Reform in a nutshell.  No serious attempt to address the number of uninsured. No tangible cost controls. Kill off Medicare and Medicaid, deregulate private health insurance, and let the wonders of the private market work their magic!  It'll be a Randian paradise!


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