What the GOP Candidates Should Say on Health Care

Published August 13, 2015

National Review Online

At the two GOP presidential debates last week, health care was not front and center for most of the conversation. At the session for those in the top ten in polling, Donald Trump was given a chance to clarify his past support for a single-payer health system. Ohio governor John Kasich did better explaining his support for expanding Medicaid in his state. But at the earlier debate for the candidates outside the top ten, both Louisiana governor Bobby Jindal and former New York governor George Pataki also did well explaining why they believed Kasich had erred.

Beyond that, not much was said on health care. In fact, both debates were light on policy proposals in general.

That’s also been the case on the campaign trail, especially with respect to health care. At this point, what we know about the GOP candidates is that they all dislike the Affordable Care Act — a.k.a. Obamacare— and have pledged, explicitly or in indirect ways, to repeal and replace it. What we don’t know is how well they can articulate their reasons for taking this position, or, with the exceptions of Governor Jindal and Florida senator Marco Rubio, what exactly they would do differently in a replacement plan.

No one is expecting miracles here. What’s underway is a political campaign, not an academic conference at a Washington think tank. The candidates are not expected to know everything about health-care policy, or even to write lengthy and detailed plans for reform. In fact, there’s a good reason to avoid getting too specific: Specificity creates convenient political targets for adversaries to exploit.

Still, the Republican candidates must understand that generalized denunciations of the evils of the ACA are not going to be enough in 2016. The ACA will be in its third year of full implementation of its major provisions as the presidential campaign shifts into high gear, and the media and most of corporate America will be parroting the argument of the Obama administration that the law is working as intended and therefore should not be rolled back. Further, there will be many millions of people receiving new subsidies for health insurance because of the ACA. That alone creates powerful momentum in favor of the status quo. In this environment, the burden will be on the Republican presidential candidate to make a compelling case for what is wrong about the law and why an alternative vision for reform would be better for the country.

That won’t be easy, but it’s not impossible. A majority of the electorate is still more than a little wary of Obamacare, and open to hearing convincing arguments for moving in a different direction. Here are a few suggestions for how a candidate can begin to tap into that potential political support:

  • Emphasize that Obamacare is government-run health care. The president bristles when Obamacare is described this way, perhaps because he knows the shoe fits. The law transferred massive authority to the federal government to decide what health insurance Americans must purchase (or be penalized), where they must purchase it, how it is priced, and how doctors and hospitals should organize themselves to take care of patients. If this isn’t government-run health care, what is? The GOP candidates must stress that the choice voters face in 2016 is continuation down this road of ever more federal control, or a change in direction toward a more decentralized, market-driven plan. Voters understand that a fully federally run system of health care will ultimately lead to more bureaucracy, less innovation, and lower-quality care for themselves and their families. That’s the logical and unhappy endpoint of Obamacare that the presidential candidates must run against.
  • Put Obamacare’s insurance gains in context. It does no good to pretend no one gained coverage under Obamacare, but the gains must be put in context. From 1999 through 2008, about 86 percent of all Americans were enrolled in health insurance. Obamacare will raise that percentage to perhaps 90 or 92 percent. Many of those gaining coverage were already eligible for Medicaid or the Children’s Health Insurance Program (CHIP) but had failed to sign up for these programs. In 2013, there were about 3.7 million children eligible for Medicaid and CHIP but not enrolled in either program. Many of them have now signed up for insurance in response to the various public sign-up campaigns launched in conjunction with ACA. Most of the others who have gained coverage are those who can get insurance offered on the ACA exchanges without paying very much by way of premiums themselves. So far, about 76 percent of exchange-eligible households with incomes between 100 and 150 percent of the federal poverty line (FPL) have signed up for coverage, while only 16 percent of eligible households with incomes between 300 and 400 percent of the FPL have taken the government up on its offer. In other words, Obamacare looks like a great deal if taxpayers are paying your premiums for you, but not so much if you have to pay for most of it yourself.
  • Debunk the myth that Obamacare has slowed cost growth. The Obama administration has relentlessly promoted the myth that the ACA has slowed cost growth. The facts show otherwise. The government’s own experts have said repeatedly that the main cause of the recent slow pace of cost growth is the deep recession and the slow recovery that followed it. Further, beyond the effects of the economy, there is a detectable slowdown that predates the ACA by several years. In 2001, health spending grew at a rate of 9.6 percent. By 2008, spending growth was just 4.8 percent. The most plausible explanation of this deceleration is the growth of higher-deductible health-insurance plans and Health Savings Accounts, which grew dramatically when liberalized in a 2003 law signed by President George W. Bush.
  • Acknowledge that reform is necessary. Americans are uncomfortable with the government-centric approach of the ACA, but that does not mean they want to go back to the pre-ACA status quo. There were substantial problems in U.S. health care before the ACA was enacted that prompted many Americans to support reform. Among other things, insurance was too insecure, especially for people with a pre-existing condition, and insurance was essentially unaffordable for lower-income households without access to employer plans. Reform was necessary, but it wasn’t necessary to put the federal government in charge of everything, as the ACA does.
  • Pledge to protect employer coverage and provide transition provisions to a new approach. About 160 million American workers and their families get good health insurance today through their jobs, and they don’t want to lose it. In 2008, GOP nominee John McCain proposed a sweeping reform that would have ended the federal tax preference for employer-paid premiums and replaced it with a universal tax credit for coverage that could be used to enroll in an employer plan or to buy coverage in the individual market. The policy rationale for this shift was sound: The change would help lower-income households more than upper-income households, and would strengthen competition and choice. But the policy was also easily attacked as destabilizing the employer system on which so many millions of people now depend. That proved disastrous for McCain. In 2016, the candidates should pledge to leave the employer system largely as it is, with only a new upper limit on the tax preference to encourage cost discipline. Similarly, the candidates should pledge to provide transition provisions in a new reform plan to avoid unnecessarily upending coverage for the many millions of people who are now on Medicaid or in the exchanges owing to the ACA.
  • Propose to give everyone without job-based coverage a tax credit. Before the ACA, people without access to employer coverage got no assistance for health insurance. The ACA provides an expensive “premium credit” program, but only for highly regulated plans, and the assistance is withdrawn for those with higher incomes. The result is that middle-class families get very little help from Obamacare, even as they are required to purchase something. A Republican plan should propose an alternative schedule of tax credits that is available to everyone outside the employer system, including the middle class. The credit could be used to purchase any state-approved insurance plan; the only requirement would be that the policies must provide for catastrophic financial protection for the enrollee. If funds from the credit were left over after paying premiums, the recipient could deposit the excess in a Health Savings Account. The availability of this credit system would ensure that every family in America could get affordable health insurance.
  • Promise “continuous coverage protection” for those with pre-existing conditions. The ACA attempts to solve the pre-existing-condition problem by forcing everybody in America to buy government-approved health insurance. A GOP alternative should protect people with pre-existing health conditions by ensuring they never pay more than the healthy for coverage so long as they stay continuously insured. This would create a strong incentive for everyone to stay enrolled in at least catastrophic insurance. And it could be done even as the individual and employer mandates were repealed.

For the moment, the GOP candidates are jostling for position by emphasizing their experience, political philosophies, and general dispositions on issues such as immigration. That’s fine at this early stage. But, at some point, voters are going to want the leading candidates to go beyond generalities, including on health care. That will be a challenge for the campaigns, but also an opportunity. The candidates who seize this opportunity and clearly explain what’s wrong with the ACA and what they would do instead could gain an advantage that might prove important as the calendar turns from 2015 to 2016.

– James C. Capretta is a senior fellow at the Ethics and Public Policy Center and a visiting fellow at the American Enterprise Institute.

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