Republicans Do Have Ideas for Health Care – Carl Rove … Oh no they don’t and here’s why

2013

Writing in the August 21, Wall Street Journal Opinion Pages Carl Rove defends Republican proposals to deal with health care as alternatives to Obamacare. He takes issue with those who say Republicans have no viable ideas that will expand coverage and make health care affordable. By the way, while it pains me to say it, I am one of those people who say what Rove does not like; Republicans do not have viable alternatives. They may have ideas, but they are as ineffective as much of Obamacare.

Here are the key ideas from his WSJ article. You can judge whether these ideas expand coverage and help manage the cost drivers of health insurance premiums or address the misdirected incentives throughout the health care system or make health care truly affordable. Don’t get me wrong Obamacare doesn’t actually do many of these things either, but remember, we are looking for an alternative better than Obamacare.

My comments are in bold below each of the ideas.

Republicans Do Have Ideas for Health Care

Many congressional Republicans, such as Oklahoma’s Sen. Tom Coburn and Wyoming’s Sen. Mike Enzi, have long advocated making health insurance completely portable so workers can take their plans with them from job to job. This means giving individuals who buy coverage for themselves a tax advantage similar to the one that employers enjoy when they cover employees. That change also could make coverage more affordable for the self-employed and even universal for all workers.

Okay, does it mean making coverage portable or does it mean changing the tax code? Employers don’t enjoy a tax advantage, health care is a business expense like any other expense. It’s the employee who enjoys the tax break because the considerable value of health benefits is tax-free. This represents the single largest revenue loss to the federal government. What should happen is a GRADUAL reduction of this tax break to level the playing field and encourage modest reductions in plan values. We should also eliminate the ability for premiums to be paid by employees on a pre-tax basis which only serves to mask the true cost of coverage for some Americans. How could a worker take “their plans” given each employer has different plans? In fact, federal law already assures a worker can get uninterrupted coverage as a result of pre-existing conditions when changing jobs. In addition, how effective could this be unless there was also a mandate for employers to offer coverage or is he saying there should be no employer-based coverage? In any case that idea has nothing to do with making health affordable any more than the Obamacare tax credits do.

In the House, Republicans such as Texas Rep. Sam Johnson and Louisiana’s Charles Boustany (a cardiovascular surgeon), want to allow smaller companies to pool their risk to get the same discounts from insurance carriers that bigger companies do. Others, including Rep. Marsha Blackburn of Tennessee and Wisconsin Rep. Paul Ryan, want to spark increased competition by allowing health-insurance policies to be sold across state lines, as are auto insurance policies.

Well, the truth is that large companies mostly self insure, they do not get discounts from insurance companies. Small companies are already pooled to some extent, but in any case pooling the risk doesn’t change the cost of anything. Somebody in the pool will pay less and somebody will pay more, costs are costs regardless of the pool … just like what is happening in the Obamacare exchanges. Selling across state lines may be okay, but harping on the competition theme is nonsense. Only a small part of the total premium can be affected by competition of this kind and an insurer without substantial customers in a given market will not be able to obtain meaningful provider discounts which is where the real cost lies. Another non- idea.

ObamaCare reduced the amount families can save tax-free for medical expenses; the House Republican Study Committee wants to raise the amount. Paired with health-savings accounts, this can put quality health care within the reach.

Oh please, most people didn’t use the flexible spending accounts in the first place and even fewer placed more than $2500 in an account. While I think the amount should have stayed as it was, it has nothing to do with putting “quality health care within the reach.” Please note that you need the money in the first place to put it in a FSA or HSA.

Defensive medicine—the use of unnecessary tests and procedures to ward off malpractice suits—cost Medicare and Medicaid an estimated $55.6 billion in 2008, according to a 2010 study in Health Affairs. Thus Texas Rep. Lamar Smith has championed medical liability reform at the federal level to rein in junk lawsuits, despite qualms that the issue should be left to the states.

Not a bad idea, but no big deal either. The part of overall health care costs affected is relatively small and the major suits are centered mostly in certain specialties and states. For example:

From an interesting blog you might want to visit.

… malpractice payouts rose steadily through the 90s and, by one estimate, were about $4.45 billion in 2003. The tables below are from the 2010 version of the second and third references (Link Here and Here for the 2011 numbers which came in after this was written). From them, you can see that by 2010, the total amount paid in the U.S. for malpractice claims dropped by as much as 25% to $3.33 billion. In 2011 paid medical malpractice claims dropped even further to $3.18 billion.

Further examination of the 2010 malpractice payouts show that about $1.2 billion (36%) of these payouts occurred in just three States: New York, Pennsylvania and Florida. If you add Massachusetts, New Jersey and Illinois you can account for 52% of total malpractice dollars paid in 2010 (20% in New York alone! See Figure Here). If you examine the number of paid claims in each State in 2010, again you can see that three States (the first three above) were responsible for 31% of the total paid claims in the U.S. that year.

Texas Reps. Mike Burgess (who practiced obstetrics and gynecology) and Joe Barton have introduced bills to establish transparency in pricing and medical outcomes so patients can compare the costs for procedures at area hospitals and their relative success in performing them. Louisiana Rep. Bill Cassidy, also a physician, has introduced a bill that would allow Medicaid patients to convert the value of their government benefit to pay for private coverage.

Both these ideas are a joke. Do you really think patients are going to or have the ability to (or want to) shop for hospital care? Hospital quality measures have been on-line for years (such as they are); have you ever looked up your local hospital? Transparency in pricing you say? Is that the price paid by Medicare, Medicaid, your local insurance companies or the poor stiffs paying the bill themselves? Why not propose a law that says every payer (including the government) pays the same and see what happens? As far as that Medicaid proposal goes, it’s not worth commenting on.

As I said at the start Republicans do not have viable alternatives and what ideas they do have are an embarrassment to any knowledgable person.

Isn’t our objective to assure that every American has access to good health care? I purposely did not use the word “affordable” because nobody knows what that is. But the way to reach affordable is by striving for an efficient health care system that provides only the care needed, when needed in the most cost-effective way possible.

Instead of the “take a shot in the dark” approach, if Republicans are serious about fixing what they don’t like, they should get a knowledgeable group together to go over every line of Obamacare, analyze the objective of each provision, assess that objective and determine why it’s not valid or develop a viable alternative. Start with the controversial Medicare advisory board, look at its objective and find a better way of managing Medicare’s long-term costs.