Republicans and assorted conservative policy organizations are beginning to consider how to address Obamacare in the wake of large Republican gains in Congress. In doing so they are careful not to confuse beating a discredited majority with actually governing. This should be particular concern with regard to healthcare. For many pundits and policy wonks, healthcare policy is all about repeal. The results of the Missouri ballot initiative about health reflected opposition not only to the federal mandate to buy coverage. It was an expression of concern that Obamacare is a massive shift of control over every aspect of medicine from individuals to government.
Yet can Republicans be said to truly be governing by, in effect, adding an exclamation point to their opposition to Obamacare? As Michael Barone recently observed: "if they're not in the business in order to shape public policy, why are they there at all?"
Repeal should take the form of believable changes in healthcare. First, Medicare reform should go beyond the accounting gimmickry pursued by past administrations and addresses. A starting point would be changes in financing that encourages less illness, more individual investment in long-term well-being, as well as a phased in increase in the age and income for Medicare eligibility. The last issue will be hotly debated. Meanwhile, Republicans should propose expanding health savings accounts, the popular Medicare Advantage program, and allow people to stay on health plans when they switch to Medicare.
More broadly, Medicare policies should and can sustain what Dan Perry, the CEO of the Alliance for Aging Research, calls, "the longevity dividend," encouraging the use of innovations that slow aging to extend healthy life. Duke University's Ken Manton points out the decline in disability and increase in life expectancy from such innovations could "through increased productivity and labor force participation generate an additional $500 billion in wealth and $100 billion in tax revenues per year between 2018 and 2028." We should encourage work and wealth creation and discourage early reliance on Medicare subsidies. Once on Medicare, we should reward people for getting and staying healthy and not ration the use of such technologies.
Second, repeal should be rightly framed as a bipartisan effort to stop the explosion of unfunded state mandates under Medicaid and the resulting exodus of physicians from the practice of medicine. As Newt Gingrich has observed, it's time to channel Medicaid dollars directly to consumers, promote more preventive approaches to long-term and mental health services and eliminate the welfare stigma associated with the program. Health plans, states and employers should be given more flexibility to link healthy behavior to rewards, as Mitch Daniels has done through his Healthy Indiana Plan. Consumer choice is great. But personal responsibility must be a condition for receiving support for health coverage.
Third, Republicans should replace a mandate to purchase insurance with many more affordable choices for continuous health care coverage. A better way to make health insurance affordable, even as exclusions for pre-existing conditions are eliminated, is to allow people to buy cheaper coverage and purchase riders for pre-existing conditions. This "health status insurance," as University of Chicago's John Cochrane calls it, "would combine coverage for this year's expenses with the right to buy insurance in the future at a set price. A 'guaranteed renewable' individual insurance contract is the simplest way to deliver both. Once you sign up, you can keep insurance for life, and your premiums do not rise if you get sicker."
Critics would claim the absence of a large risk pool will drive up insurance premiums. But as Cochrane notes: "If you got sick but had something like a health-savings account to pay high premiums, you could always get new insurance. Insurers would then compete for sick people too." In turn, the demand for wellness and disease management programs would flourish.
Finally, Republican should eliminate the billion or so dollars that the conflicted Donald Berwick will help spend on comparative effectiveness. Such research will be used to slow down and ration the biomedical innovation essential to longevity and better health. Instead, one quarter of that amount should be invested in accelerating the development and selection of treatments based on personalized medicine. Such insights are allowing doctors to control illnesses such as diabetes, rheumatoid arthritis, stroke and cancer earlier and more effectively.
Such innovations are critical to the growth in wealth and income that is possible over the next 15 years. They will allow us, in Dan Perry's words, "to take 80 years to get to be 60." Repeal removes a major obstacle to this goal. But reform is necessary for its realization. Republicans would be remiss if they did not seize the moment to address our nation's health care problems with maturity, vision, and compassion.
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