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Why Obamacare Is Still With Us

The Josiah Bartlett Center’s Andrew Cline writes in USA Today that to replace Obamacare, Republicans must first agree to make a gradual transition toward a freer market in health care.  (Editor’s note: We did not write the USA Today headline. That was the work of an editor at the paper.)

 

Why Obamacare is still with us

By Andrew Cline 

Republicans in Washington have failed to deliver on a signature campaign promise — to repeal Obamacare — despite controlling the House, Senate and White House. After last week’s flop, the party’s various factions pointed fingers faster than an all-mime production of “Gunfight at the O.K. Corral.” 

The most common accusations — inept management, poor leadership, rogue senators — identify only symptoms of a larger problem. The “root cause,” so to speak, is that the Republican Party does not enjoy the same clarity of purpose on health care that the Democratic Party enjoys. 

On health care, Democrats have two advantages over Republicans. One is a shared purpose: universal coverage achieved through aggressive government intervention. The other is their willingness to achieve that goal incrementally.

Obamacare did not achieve universal coverage. The percentage of uninsured Americans has fallen from 14.6 percent in 2008 to 11.3 percent. But Obamacare moved the country closer to the goal, which brought more strident left-wingers on board. 

Republicans do not share such clarity. There is broad agreement only on the political goal: repealing Obamacare. There is no agreement on the principles, never mind the details, that would guide replacement.

There are two primary reasons for this lack of clarity. One is that the Republican Party does not insist on ideological conformity from coast to coast. Keeping the likes of Sens. Rand Paul and Susan Collins under the tent helps the party win majorities in Congress. But that ideological diversity can make it harder to govern. 

Democrats have a spread, too, but it is narrower. Nearly a third (29 percent) of Republicans say the federal government “has a responsibility to ensure health coverage for all,” while only 14 percent of Democrats say it doesn’t, according to Pew Research data. 

The other reason is that health care does not lend itself to quick “get the government out of the way” fixes. The health care marketplace is thoroughly distorted by government interference (this was true well before Obamacare). These distortions have to be slowly and carefully unwound. Because many of them have grown popular, no majority can be found for quickly abolishing them. 

If there were a quick and easy free-market solution, it would be law by now. But the political reality is that government’s heavy hand will not be removed any time soon — because most voters don’t want it to be. 

Another factor: Medicaid comprised 28 percent of state budgets in 2015, which explains why so many Republican governors pushed back against the last Obamacare repeal bill. (For comparison, elementary and secondary education accounted for 19.5 percent.)

Pew polling shows that only 5 percent of Americans say government shouldn’t be involved in health care. Given the country’s lack of an appetite for a pure free market in health care, Republicans might consider turning to a leader from the past for guidance. Conservative health care analyst Avik Roy reminds Republicans that in his classic 1964 “Time for choosing” speech, Ronald Reagan offered a guidepost, saying “no one in this country should be denied medical care because of a lack of funds.” Taking his lead from Reagan, Roy offers a path forward. 

Roy, who has urged Republicans to bridge their internecine gap, points out that health care is the No. 1 driver of runaway federal spending. With every day that passes under the current system, the country slips into worse financial shape and the country becomes more dependent not just on Washington, but on the bureaucracy itself (see Medicaid). 

Roy offered a plan in 2014 that would cover more people than Obamacare while reducing government interventions and spending. It would replace Obamacare with Swiss-style subsidies for lower-income Americans while transitioning the inefficient government-run Medicaid program toward a more market-oriented system. 

It would be an improvement over the current system, yet it is not even considered because it is not free market enough for most Republicans. Opponents to options such as this one pretend that the alternative is a true free market in health care. It isn’t. There is no appetite for a true free market at the moment. The alternative to a transitional model is the status quo. 

We can either move incrementally toward a freer market, or we can drift toward single payer. Those are the options. If Republicans cannot agree on that, then Obamacare really is here to stay. 

Andrew Cline is interim president of the Josiah Bartlett Center for Public Policy, a free-market think tank in New Hampshire. 

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Manuse Plan Would Protect NH From Obamacare Exchanges

Charlie Arlinghaus

February 22, 2012

As originally publish in the New Hampshire Union Leader

Contrary to some of the misinformation circulating in Concord, a state-run health insurance exchange bureaucracy operating on behalf of the federal government is a bad idea, is not required by any federal regulation, and would be an expensive strain on our state budget.

At the centerpiece of President Obama’s health care legislation is a mechanism known as an exchange — i.e., a new federal or state bureaucracy to be set up to administer the rules and regulations regarding health insurance under the so-called Affordable Care Act (ACA).

The ACA included hundreds of new regulations and federal mandates to govern health insurance once the law takes full effect. In addition, federal agencies are in the process of issuing thousands of new rules to implement the myriad provisions of the law. To administer those rules, there will be a state-level exchange in each of the 50 states.

The federal government had hoped each state would set up its own exchange and manage the regulations for it while assuming the operating costs of the new regulatory agency.

The law can’t require states to set up an exchange. It provides that the federal government will set up and fund a state-level exchange if the state government chooses not to. The majority of states around the country have balked.

Much of the information in this debate is easily misunderstood. One particular piece of information exists only in New Hampshire and is incorrect. Our HHS commissioner mistakenly claimed that not running the exchange ourselves will cause us to lose our federal Medicaid funding, decimating the state budget.

This claim has not been made in any other state. The Obama administration, which has been eager to have every state establish an exchange, has never alleged any such thing.

It seems unlikely that there is a condition attached to Medicaid that no one else in the country knows about except one lawyer in Concord.

The Cato Institute has published a more authoritative legal analysis to show why this claim just isn’t true. The misunderstanding stems from a problem with the original draft of the state bill. The debate in New Hampshire centers on Rep. Andrew Manuse’s House bill prohibiting a state-run exchange.The original version included language that could have cost significant Medicaid dollars based on requirements that new information be able to interface with the state exchange whether federally or state-run.

Rep. Manuse quickly changed the language to make the bill simply a prohibition on the state setting up an exchange, whether by itself or through contract. That’s a very sensible compromise.

Another big question mark has been the financing of a state-run exchange. While federal grants would cover the setup, no one is quite sure how much an exchange would cost the state to operate. The final rules haven’t come out. However, we have some hints in that the Massachusetts version costs $29 million to operate.

New Hampshire’s costs are likely to be in the neighborhood of $10 million annually.

Exchange supporters have taken to saying we pay either way. What they mean is that they believe that the federal government would likely tax participants (fees on insurance plans, brokers, insurers and businesses related to their policies) and that states, if forced to fund a program this expensive, would have to look at similar fees.

Although local exchange supporters believe the federal government can impose these taxes already, the federal government itself doesn’t agree with them. In the President’s budget proposal, he asked Congress for $860 million for the express purpose of funding federal exchanges. Mind you, the start-up money for state-established exchanges is elsewhere in the budget so the $860 million is just for the 20-30 states not creating a state bureaucracy.

So the administrative function of the federal health law isn’t funded unless we fund it for them.

They haven’t finished the rules, but they want us to create the administrative agency. They don’t have the money or the authority to raise it, so they want us to assume the financial cost.

I think Rep. Manuse has things about exactly right.

Charles M. Arlinghaus is president of the Josiah Bartlett Center, a free-market think tank in Concord. His email address is [email protected].

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