Beyond Repeal and Replace

"What do we do now?" asked a disillusioned Robert Redford on election night in the 1972 film The Candidate. The key question for Republican leaders after Tuesday's election results is what can they do now to turn their opposition to ObamaCare into governing reality. Voters rejected the old Democratic majority's prescription of "rinse and repeat" for further implementation of the Patient Protection and Affordable Care Act (PPACA). They did not quite endorse "dismember and disembowel" as a workable alternative. The next two years will challenge Republican officeholders to move beyond their thin rhetoric of repeal and replace and toward a more tangible and sustainable reform agenda that offers what voters still need and will support.

Until the next presidential election, the short-term tactical agenda for the new de facto majority in Congress remains mostly defund, delay, and debunk.

Their strategies must address issues of practical politics, coverage alternatives, cost containment, and entitlement reform with real answers rather than imaginary ones. Even as the political world shook this week, several basic facts of life remained in place. The current health reform law is on the books. The regulatory apparatus to implement it grinds ahead. A sixty-vote supermajority to pass anything controversial in the Senate, let alone even more votes to overturn President Obama's predictable vetoes of any bills to overturn his legacy law, remains unlikely. Moreover, the broader public will hesitate to support more sweeping repeal of ObamaCare provisions until it sees signs of something better on the congressional horizon.

Until the next presidential election, the short-term tactical agenda for the new de facto majority in Congress remains mostly defund, delay, and debunk. Initiatives to reduce or cut off funding for implementation of the next round of ObamaCare need to be targeted narrowly to succeed. Republicans would be wise first to approve not only a budget resolution but also most appropriations bills, before trying to defund the most vulnerable chokepoints in ObamaCare's implementation. Trying to wind back the ObamaCare implementation clock so that it doesn't get so dark so early is a more promising approach. Congressional appropriations riders could attach new conditions that must be met before proceeding further. While intensifying the spotlight of congressional hearings and investigations on ObamaCare's birth defects and early ailments, Hill Republicans should challenge the next Congressional Budget Office director to re-examine several of CBO's previous budgetary assumptions (particularly involving whether many employers will drop private coverage).

Real health reform beyond the next few years requires not just repealing what cannot work, but enacting new policies that will. To cut the political dependency wires that connect ObamaCare's layers of costly insurance coverage promises to its sweeping control over health care decisions, Republicans must offer more than a return to the pre-Obama status quo. Smarter incentives to reward responsible behavior and better-targeted protections of the most vulnerable portions of the population are essential pillars of more vigorously competitive health insurance markets. Republicans should replace unpopular insurance coverage mandates with a pledge of protection against coverage exclusions for pre-existing health conditions that is limited to those who remain continuously insured over time. This approach needs to be bolstered with the backstop of a high-risk pool safety net that is subsidized sufficiently (though not lavishly) by taxpayers in an income-sensitive manner. Consumers failing to find coverage on the terms they want or can afford from traditional sources should be able to turn to information-heavy/regulation-light health exchanges that are organized by states in a more competitive, choice-expanding manner than ObamaCare would allow. Opening up sale and purchase of health insurance across state lines also would lower the regulation-added costs of health insurance to some extent (probably about ten to fifteen percent on average), as long as such competition among various state brands of regulation is driven by consumer choice and provides sufficient safeguards.

Broader-based subsidies for health care spending must be realigned with the realities of resource constraints in a sluggish economy. Governors know that their fragile state budgets cannot survive future encounters with the "Medicaid on steroids" coverage approach central to ObamaCare. Rolling back or reversing the initial "maintenance of effort" straightjacket imposed by the PPACA on overstretched state Medicaid programs is the first step toward fiscal sanity. Tax subsidies for private health insurance still need the serious restructuring they failed to receive under the flawed "Cadillac tax" that would purportedly arrive in 2018. Any replacement reform should emphasize treating all purchasers of health care the same--regardless of how they buy it--but with upper limits on tax subsidies that are more sensitive to differences in individual income and health risk than crude across-the-board caps allow. The objective of tax reform for health care should be to reduce distortions in prices and spending decisions; not to create new revenue streams.

Congressional Republicans eventually will have to transcend their opportunistic campaign stance that decried every single dollar of Medicare spending reductions imposed by the PPACA. They should acknowledge that a good portion of them will be needed--but just to keep the long-term Medicare program's finances less insolvent rather than fuel ObamaCare's new entitlements for the non-elderly. However, slowing the future growth of Medicare spending needs tools that empower beneficiaries to choose health services of better value and incentivize providers to deliver them. Competitive bidding and premium support reforms can deliver the benefits of value-sensitive, level-playing-field competition in Medicare between private plans and the traditional program. Formulaic across-the-board reimbursement cuts will not.

The hardest nut for Republicans (or anyone else) to crack involves incentives to lower future health spending cost growth without undermining the value of what remains. We can do better than ObamaCare's reliance on hiding, shifting and suppressing real prices or imagining that a host of pilot models akin to science fair projects, if not unicorns, will gain traction in the real world. Progress on health care costs starts with ensuring that consumers have a reason to care about what health services cost and are worth. Limiting public subsidies as defined contributions, rather than as part of seemingly open-ended defined benefits, sends the necessary signals. So does allowing health care providers to profit more from doing a better job, while expanding competition in evaluating and reporting on how different health care providers perform in practice. If Republicans remember that it's better to inform than to mandate, and to rely on competition in place of commands, everyone else can begin to take back control of their own health outcomes and actually improve them.

Thomas P. Miller is a resident fellow at AEI.

Photo Credit: Tom Grill/Corbis

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