The New Congress Should Propose Free-Market Health Care Reforms

WashingtonDCfrom – – by – Paul Haieh

As we prepare to ring in 2015, we will see a new Congress as well as a New Year. When the Republicans take over both houses of Congress, they’ll have an unprecedented opportunity to reshape the health care debate in a positive direction.

Ever since capturing the House in 2011, Republicans have voted more than 50 times to “repeal, dismantle, or defund” ObamaCare — to no avail. Opposing ObamaCare is not enough. Instead, The GOP should couple those efforts with their own positive free-market alternative to ObamaCare.

The good news is that there is no shortage of good alternative plans to ObamaCare that Congress could rally behind. Their proposal doesn’t have to be perfect, as long as it’s a clear improvement to ObamaCare (and to the dysfunctional pre-ObamaCare system).

For example, Georgetown University law professor Randy Barnett has proposed a nice set of free-market reforms in a recent USA Today column. The advocacy group Docs4PatientCare has long promoted its “Prescription for Health Care Reform.” At the beginning of the ObamaCare debates, Whole Foods CEO John Mackey proposed “The Whole Foods Alternative to ObamaCare.”

Some of the common elements in these (and other similar) plans include:

Eliminating mandated insurance benefits, and allowing insurers to sell lean “catastrophic only” coverage plans. For many Americans, such plans in conjunction with a Health Savings Account for routine predictable expenses would cover all their foreseeable health issues.
Allowing insurers to sell policies across state lines. This would immediately create brisk competition in a national marketplace (as opposed to 50 smaller state markets.)
Equalizing the tax status of employer-provided vs. individually purchased insurance. This would help uncouple the economically perverse linkage between insurance and employment.
Eliminating price controls that essentially force the young and healthy to subsidize the insurance costs of older sicker patients.
Although one could debate the merits of specific individual points of these plans, any of them would be a good starting point in crafting an alternative to ObamaCare.

Some of the problems supposedly solved by ObamaCare could also be better addressed with free-market reforms.

For instance, the problem of pre-existing conditions could be handled by University of Chicago professor John Cochrane’s concept of “health status insurance” — basically allowing consumers to purchase options now to “lock in” affordable rates for future health insurance coverage that cannot be cancelled by changes in one’s health status.

The problem of skyrocketing insurance costs to cover new treatments of dubious value could be addressed by UCLA professor Russell Korobkin concept of “relative value health insurance.” His system allows consumers to choose which categories of treatments they want to pay for and which they wish to forgo (in exchange for lower insurance rates), based on their individual preferences and priorities.

I’ve also been encouraged by recent stories in the mainstream press highlighting ordinary Americans seeking alternatives to ObamaCare.

For example, the New York Times recently profiled “health-care sharing ministries” which are “religious alternatives to enrolling in the federal insurance program in which members pool monthly payments to help cover one another’s medical expenses.”

Time magazine profiled the rise of “direct pay” primary care practices, which help “Americans get better health care for less money.” Basically, these are modified forms of “concierge medicine” practices, but aimed at middle class consumers. Patients get better care at lower costs. Doctors spend more time really talking to patients (typically 45-60 minutes, rather than the standard rushed 10-15 minute appointments), allowing them to get at the root of their patients’ concerns. These direct pay practices are a win-win for both patients and doctors.

In contrast, much of the supposed gains in patient “coverage” through ObamaCare have been by expanding the dysfunctional government Medicaid programs. But these gains will prove illusory. As the New York Times noted, “Large numbers of doctors who are listed as serving Medicaid patients are not available to treat them.” In a separate story, the New York Times reported that steep payment cuts of 40-50% will further reduce the ability of Medicaid patients to receive care. The federal government can promise theoretical “coverage,” but that’s not the same as giving patients actual health care.

Hence, Republicans need to make the broader case for freedom as such. When Americans are left free to seek their best medical interests through voluntary trade, they can devise innovative new health care delivery and financing models far better than government central planners.

True, the new Congress likely still won’t be able to repeal ObamaCare in the next 2 years. But they can hold hearings to highlight success stories of ObamaCare alternatives. They can rally behind their own alternative health care plan. They can make their plan a campaign issue for contenders for the Republican Party’s 2016 presidential nomination. And most importantly, they can articulate the case for free market reforms to the American public. Health care will be an enormous challenge for the new Congress — but also an enormous opportunity. Let’s hope they’re willing to seize it.

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