Ethics & Public Policy Center

After Obamacare

Published in The Weekly Standard on February 1, 2010


For the past week, liberals have been trying to persuade themselves that Republican Scott Brown's victory in the Massachusetts Senate race need not mean the end of Obamacare. But that is exactly what it means. The Democrats' health care agenda, in anything like the form it has taken for the past year, is now dead. The notion of a wholesale reinvention of American health care, scooping up a sixth of the economy in one fell swoop of technocratic derring-do and paving the way to a government-run system, will be put aside. Even the goal of “universal coverage” will be dropped, at least for now.

It is nothing short of amazing that the Democrats let things get this bad. They have spent a year trying to cram down the throat of the country an incomprehensibly convoluted, misguided, and anachronistic liberal dream, which grew increasingly unattractive (even to its advocates) with every iteration until even Massachusetts voters turned to a Republican for relief. Democrats have managed to make our existing health care arrangements look downright brilliant by comparison. They have wasted the first year of the Obama administration, and a filibuster-proof Senate majority they will likely not see again for decades. And they have achieved nothing: not on health care, and not on the rest of their agenda.

The Democrats' response to Brown's election so far has revealed deep differences among them — with some intent on pushing Obamacare all the more forcefully while others beg for a change of subject before they too are steamrolled by a disapproving electorate tired of being soothed with lullabies about historic moments.

It is impolite to stick your nose into a dysfunctional family brawl, and conservatives need not step into this breach just now. The Democrats are paying the price for a profound miscalculation, and there is nothing wrong with taking some time to enjoy the show. The public has declared that the left's approach to health care is worse than doing nothing, so why not do nothing on health care for a while and turn to other important concerns. Republicans are under no obligation to toss Democrats a life line.

But after a while, the time will come again to think about health care. The problems with our system, after all, are real. It is only the Democrats' solutions that were fantasies. Sooner or later, the debate will start again, and a chastened but still ambitious Democratic majority will try another approach. When that happens, Republicans would be wise to be clear about their own priorities and proposals, and to learn their own lessons from the debacle that is now completing its final chapter.

One crucial lesson is that large solutions are not wise solutions — politically or practically. In a huge and varied country of over 300 million people, replacing the entire system with another is not what the public wants. Instead, conservatives should offer discrete solutions that would bring about change gradually, while also setting some longer-term aims and goals.

In the near-term, Republicans should advance three basic concepts. First, they should seek to address the problem of insuring Americans with preexisting conditions through state-based high-risk pools, not cumbersome insurance regulations that try to outlaw basic economics. Risk pools, backed with federal money but nowhere near the scale of Obamacare's costs, would give those with preexisting conditions more options in the individual market and make a significant dent in the number of uninsured, but without overturning our health care system.

Second, they should propose to help doctors and patients limit some of the burden of rising costs with medical malpractice reform. Sensible caps on punitive damages would not only save money but also help address shortages of medical providers in key specialties, and allow more Americans to afford and access care.

Third, they should argue that the states be given the lead role in developing more detailed reforms of how and where people get their insurance-to cover more people and slow the rise of costs. The overall goal should be to build well-functioning marketplaces in which insurers and providers compete to deliver the best value to cost-conscious consumers. The federal government should remove bureaucratic obstacles to state experimentation on this front, and offer support where possible, but not design one mammoth new program. The regulation of both the practice of medicine and of insurance is done in the states, and their improvement should be too.

Massachusetts is not the only state that has experimented with health care reform. Utah, for instance, has launched a program whereby small-business employees get their insurance through a state-facilitated marketplace for private coverage. Employers make a fixed premium payment on behalf of their workers, and the workers pick from a number of competing options — adding money if they want a more expensive plan, and pocketing the difference if they choose a less expensive one. In Indiana, Republican governor Mitch Daniels has launched a program that provides health savings accounts to the state's Medicaid recipients and government employees, allowing them to exercise choice and so bring down costs while extending coverage to more people than ever. Other states will try other approaches to lowering costs, improving competition, and insuring more people — each in its own way and in its own time.

These three straightforward approaches would address a great deal of the anxiety Americans feel about health care without creating new anxiety through a massive federal redesign that increases costs and takes away options.

Meanwhile, for the longer term, conservatives should make a case for changes in the tax law that level the playing field between employer-provided and individually purchased health insurance, with a gradual transformation of the tax exclusion for employer-based coverage into a credit available to all. A consumer-controlled tax credit would also enhance the benefits of risk-pools, tort reform, and state-based reform efforts.

And they should press the case for real Medicare reform, not to use the program as a pot of cash, as the Democrats tried to do over the past year, but to put it on a sound footing by empowering enrollees rather than bureaucrats to make decisions. The Democrats wanted to use Medicare's regulatory power to change how medicine is practiced. But new ideas for delivering better care at less cost will come from those providing the services, not Washington bureaucrats. Doctors and hospitals need to be given the freedom to repackage what they offer so that it is less costly and more attractive to Medicare patients.

These ideas would not yield a sudden transformation of American health care, but a gradual improvement in the areas that matter most — cost-control, greater access for the uninsured, and greater fairness for those with preexisting conditions — while sustaining the quality and innovation that characterize American health care. Constructive policy reform consists not of inventing imaginary worlds, but of building on the best of what we have, offering specific concrete solutions to particular problems, and leaving some room for experimentation to see what works and what does not.

Whether in negotiations with a newly humbled Democratic majority, or as alternatives offered to voters in this year's elections, ideas like these would help mark out a constructive conservative health care agenda, and distinguish Republicans from an administration and a Democratic majority that have favored a political power grab over sensible progress.

James C. Capretta is a fellow at the Ethics and Public Policy Center and a health policy consultant. Yuval Levin, also a fellow at EPPC, is the editor of National Affairs.

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