The Public Policy

After Obamacare

The health law is doomed to fail. Here are alternatives others are talking about.

By 5.16.13

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Deep in the bowels of Washington’s regulatory agencies, and overshadowed by the raft of recent scandals, Obamacare is falling apart. Key provisions of the health law have either been stalled in implementation or tied up in the courts. Out of money, Health Secretary Kathleen Sebelius is begging health industry executives for funding. Many Senate Democrats are now expressing doubts that the law can work.

Meanwhile, outside Washington, Obamacare is palpably failing. Proponents of the law claimed it would bend the cost curve; instead insurance premiums are through the roof. Enrollment in the ballyhooed insurance exchanges has been pitifully low. Restaurants and shops are switching full-time employees to part-time to avoid massive health insurance costs.

Obamacare, as conservatives always suspected, is doomed to fail. But after it does, what does the government do? The schools of thought can be roughly divided into four camps.

Single-Payer Health Care
Liberals have been in love with this idea for decades. The creation of a single-payer, European-style health insurance system, in which everyone pays into a pot and receives medical care, is almost certainly the end goal of Obamacare. Several members of Congress, among them Rep. Barney Frank, admitted that the point of a health care public option was to pave the way for single-payer. Many lefties were angry that the president didn’t push harder for all-out single-payer back in 2009.

Instead, he’s brought us to a waypoint on the path. Under Obamacare, businesses have a financial incentive to either dump employees onto a government-run plan or end their health coverage altogether, pushing those workers into the open arms of Medicaid. As the cost of private health insurance rises, government care will become more attractive.

As Dr. Dave Dvorak recently wrote, one way to "simplify" this mess is to detach health insurance from employers altogether and create a government-run, single-payer system. He claims “modest taxes” that replace health insurance premiums can fund everything. Given the explosive growth of health care costs, expect those taxes to become immodest, and quickly.

Creative Single-Payer
This label encompasses those who believe some form of single-payer is inevitable, but don’t think a uniform government plan is the right way to go.

Among them is investor Hunt Lawrence. Lawrence proposes a system under which hospitals—rather than employers—would become the basic units of health insurance. He calculates that the government can insure everyone for roughly $8,500 per year: $4,000 would be paid directly to a hospital for major medical care, and $4,500 would be invested in a health savings account. Since hospitals would receive payments, this would consolidate the machinery of the medical system—health insurance companies, doctors’ offices, etc.—within hospitals. Lawrence also believes that such a refining of the medical system would eliminate the need for Medicare and Medicaid.

Another plan is to have each state set up its own single-payer system. This would preserve the illusion of federalism while reducing the bureaucracy required by federal single-payer. Several states have already taken steps in this direction, most notably Vermont, which passed such a law in 2011. So-called Green Mountain Care doesn’t technically fit the definition of single-payer, however, since private health insurers still operate in the state.

Tweak Obamacare
Many commentators—even right-leaning ones—have come to believe that Obamacare is here to stay. In lieu of repeal, they’ve posited several tweaks to the existing law that can make it better. The American Enterprise Institute suggests repealing the independent payment advisory board, the individual mandate, and the medical devices tax. Others recommend making the law more flexible by allowing states to decide how to best cover preexisting conditions. Joe Klein—no conservative he, but of the belief that Obamacare should be reformed—wants the president to placate conservatives with tweaks like medical malpractice reform.

It should be noted that, however many changes are made to Obamacare, they still amount to little more than nipping around the edges. The law is perhaps the most complex ever implemented in American history and involves a total overhaul of the medical system. Anything short of full repeal will still mean seismic changes to our health care.

Which brings us to the final category…

Repeal and Replace
This is the solution favored by conservative Republicans and Obamacare’s most vociferous critics. It’s certainly a long shot, requiring, as it would, the election of a Republican president, a Republican-controlled Senate, and a gritty health-policy shootout on Capitol Hill. But for those convinced that Obamacare will be an albatross around the neck of the economy, repeal is the only serious solution.

After that, most conservatives support a mixture of free-market solutions to tackle the growing health care crisis: allowing insurance companies to trade across state lines, enacting medical malpractice reform to reduce the legal burden on doctors, and deregulating the health insurance industry to allow for a larger menu of insurance plans.

Beyond that, some conservatives want serious changes made to Social Security and Medicare. Paul Ryan famously wants to overhaul medical entitlements with a voucher system that allows individuals to shop around for coverage. Other more sweeping solutions call for abolishing entitlements altogether.

Whatever we do, Obamacare is likely here to stay. Now the challenge is finding a solution that will minimize its damage to our economy.

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About the Author

Matt Purple is an editor at Rare.us.