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ACA Agonistes
Debate Over GOP Health Care Plan is Woefully Short-Sighted

Three GOP senators have put forward the most credible plan to date for an alternative to Obamacare, and the blogosphere is buzzing with debate about the extent to which it differs from the ACA. Wonkblog has a good summary of the main planks:

The biggest, most significant difference between Obamacare and the replacement plan is about financing — how you pay for all those insurance subsidies. The replacement plan repeals a whole slew of industry taxes that had the insurance companies, hospitals and medical device makers all helping to foot the bill. Those are gone. In their place is a limit on the the tax exclusion for employer-sponsored insurance.

Right now, the federal government does not tax health insurance when it is provided to an employee by an employer. The Republican plan would limit the tax exclusion to 65 percent of the average health insurance plan. Any amount of a premium beyond that amount would need to be paid with post-tax dollars. There’s no estimate on how many people this would effect and how much more they would pay for premiums, but Republican Senate aides do say it’s true that people who receive more robust policies from their employers would pay more for premiums.

Over at NRO, Yuval Levin, who has been influential in pushing the GOP to offer better health care policy, highlights the fact that states would be able to automatically enroll people in basic plans for the exact cost of the federal subsidy. As Levin makes clear, there are promising ideas in this proposal, though it would be sure to cause disruptions. We’re just glad to see the GOP really get into the health policy game, because the nation benefits when both parties have concrete programs to advance and debate.

But overall, those fixated on the policy details of employer-sponsored insurance or ACA exchanges are neglecting the big-picture problems. Tinkering with who pays and through which mechanisms might help make the system more efficient at the margin, but the structural deficiencies with U.S. health care go far beyond the problems the GOP proposal is trying to solve. The way medical education works; the way people access health services; and the incentives for over-treatment, to name just a few, will continue to drive up costs unless we address them in a radically new way.

How we pay for health care is ultimately secondary to whether we are delivering efficiently. Even if we just take a few recent examples, story after story has highlighted the systemic problems with how hospitals price care. Even as the two parties debate subsidy levels, this is the larger challenge to focus on.

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  • Andrew Allison

    “How we pay for health care is ultimately secondary to whether we are delivering efficiently.” is completely misguided. The issue is not whether we are delivering healthcare efficiently; it’s whether we are paying for it efficiently, which is manifestly not the case.

  • TommyTwo

    “there are promising ideas in this proposal, though it would be sure to cause disruptions.”

    Anything will cause disruption. Have Americans been replaced by Frenchmen?

    • Andrew Allison

      Give the recent news from the Elysee Palace, I can only say: I wish.

      • TommyTwo

        To go for the obvious joke: If I were Barack Obama, I would be too scared to emulate Hollande.

  • Anthony

    Are we proposing here both insurance industry deregulation and consumer obligation to accept a larger responsibility for their health care costs (Patient Choice, Affordability, Responsibility, and Empowerment Act – Care).

  • qet

    Via Meadia is right but the point is irrelevant. Government cannot control the improvement in efficiency, cannot set it to a timetable, cannot make campaign promises based on improvements that will deliver votes. All Congress can do is encourage improvements in efficiency generally by some combination of regulation, deregulation and funding of basic research and development. That is an excellent long term strategy, but then no politician will be able to claim credit for the resulting improvements, so it’s a dead letter. Congress and the Executive are under the impression that what they are supposed to do, what “governance” calls for, is “policy.” 80% of all “policy” consists solely in Congress taking tax and borrowed Chinese dollars and handing it out to discrete political constituencies, and the remaining 20% consists in forcing certain private economic actors to pay money to other discrete constituencies. From the standpoint of our politics, “who pays” isn’t everything, it’s the only thing. For my part, I support elimination of the tax exemption for employer-provided health insurance, and the other deductions and exemptions that libertarians in their schematic purity want to see eliminated, only if at the same time there is a substantial reduction in marginal tax rates. The GOP needs to stop trying to gain the marginal vote by trending more Democratic. If health insurance is as important as the Wonkblogs and MoneyBoxes of this country say it is, then it merits funding from reduction in other spending programs–farm bills, Pentagon fighter programs, social security (via means-testing), etc.

  • ljgude

    It’s just more deck chairs. The iceberg already buried in the bowels of US Healthcare is that it costs double the OECD average. The ACA just added more superstructure which is threatening to capsize the whole enterprise. No attempt was made at cost reduction, only limitation of the increase to 1.5% of GDP (16% current to 17.5% by 2017). So now the Republicans want to repaint the superstructure? It is pretty clear that Blue Model Democrats are going to go down with the ship, but I am surprised that Republicans seem to want a piece of the action.

  • Boritz

    It was revealing to hear Juan Williams dis the Republican plan on the basis that it doesn’t provide enough of the same goodies that Obamacare does therefore it isn’t a worthy replacement. No discussion of the horrid consequences happening to real people. Just a desire to make a chart and compare which features of each have a check mark in the yes column like you were trying to choose between Turbotax or Taxcut. If Turbotax ate my plan and my doctor and Taxcut didn’t or vice versa I’d have a clear choice I think.

  • Anthony

    An additional observation: as long as discussion/politics devolve into a Republican or Democratic position/plan, health care as provided for majority of Americans will continue to be saddled with huge costs and its infrastructure (along with varied interests) will remain both robust and growing.

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