FROM ISSUE NUMBER 17 ~ FALL 2013 GO TO TABLE OF CONTENTS
Conservative Health-Care Reform: A Reality Check
It has been another rough year for Obamacare. Implementing the main components of President Obama's signature health-care law in time for a January 2014 rollout date remains a struggle. A majority of state governments continue to resist the Affordable Care Act's expansion of Medicaid, and only about a third of them have agreed to set up state-administered insurance exchanges. In early July, Treasury officials announced that they would have to delay enforcement of the law's employer mandate until 2015. The feasibility of other provisions, like the individual mandate to purchase government-approved coverage, remains in doubt. Even if the technological infrastructure required for the new insurance-coverage and subsidy platforms doesn't crash during this fall's first season of open enrollment, there are other obstacles to overcome. Many potential applicants will face the sticker shock of higher premiums, while others may take advantage of the "honor system" process for determining eligibility for income-based subsidies as enrollment opens for state exchanges.
Meanwhile, congressional opposition to the law has left the Obama administration short of funds to implement and operate its own federally facilitated exchanges, which in any case continue to face serious legal challenges in federal courts. Even after surviving a near-death experience at the Supreme Court in June 2012 and facing only tepid opposition from the Republican candidate in that year's presidential campaign, Obamacare remains about as unpopular today as it was right after its passage.
Despite all these problems, however, Obamacare will be implemented (at least in part), and many conservative critics waiting for the law to collapse under its own weight will need to postpone their funeral plans until they can do a better job of articulating the conservative health-care agenda to the public. Obamacare may not be carried out as written and may not survive as implemented, but persuading voters to overturn what unfortunately remains, for now, the law of the land will require a serious approach to solving our health-care system's very real problems. Even the likelihood of failure in pursuing the untenable ambitions of Obamacare will not be enough to ensure the success of market-based alternatives. Given the persistent problems of high costs, limited access, and uneven quality that still plague American health care, voters are likely to resist trading in something for nothing.
Building a broader coalition to replace Obamacare requires uniting those who passionately oppose its flawed premises and unprecedented power grabs with many other people who simply seek health-care arrangements that work better and cost less. Most conservative activists and leaders still lack a convincing package of credible reforms that do more than just say "no." To win the continuing health-care debate, conservatives will need to see that such reforms are essential. And to effectively champion alternatives, they will need to keep in mind some key political realities and some key facts about the health-care system that have too often been overlooked on the right.
THE NEED FOR ALTERNATIVES
Many Obamacare opponents hope (and even expect) the law will simply collapse by itself, as assorted dysfunctions and economic effects force its supporters to plead for repeal. This expectation offers a useful excuse for refraining from offering alternative reforms, but it is both implausible and counterproductive.
It is implausible because the failure of Obamacare will take time, and during that time its calamitous transformation of the underlying health-care system will proceed apace. There will be no single moment of wholesale collapse, and the slow march of folly will not present as obvious or easy a political target as some opponents might imagine.
The argument from inevitable collapse is also counterproductive because it sends the message that opponents of Obamacare are rooting for failure, and not much else. At times, incremental proposals to roll back or modify some, but not all, of the objectionable features of Obamacare have been met with the warning, "Don't do anything that might make it less horrible and slightly less likely to fail." But the suggestion that the health-care system needs to get worse before it can get better has diminishing appeal beyond truly die-hard opponents of Obamacare. And the political track record for policies adopted amid systemic breakdowns and political meltdowns suggests not only that failures in government programs actually ensure their expansion and longevity, but also that government grows most during periods of crisis. Sitting back and watching the train wreck is not a winning formula for conservatives.
Of course, if we were grading on a political curve then Obamacare opponents would have to get some credit for not trying as relentlessly as its champions to impose wholesale a blinkered vision of health-care utopia on their fellow citizens. The heavy-handedness and arrogance of Obamacare's means are almost as obnoxious and ill-considered as the economic assumptions at its core. But pursuing alternative reforms need not mean pursuing just another kind of heavy-handed central planning. And the disastrous character of the left's proposed solution to the problems of our health-care system does not mean that those problems are not real. Conservatives need to offer real solutions of their own.
Such solutions should have a conservative character — they should be market oriented, economically sensible, and respectful of individual freedom and the limits of government. But policies of that sort will still require some new thinking from the right. Speaking to the long-frustrated hopes and dreams of patients, purchasers, and providers of care will require conservatives to reach outside of their traditional comfort zones. Achieving real health-policy reform will mean moving beyond the usual gimmicks and short-term tactical dodges of the past and will require an approach that is carefully attuned to the political and practical realities of the health-care debate. A serious reform agenda offers conservatives the opportunity to move American health care further to the right than the system that preceded Obamacare, but only if they are willing to think creatively and constructively about a new approach.
Conservatives are not starting from scratch, to be sure. A proposal composed of the principles common among most conservative reform plans would hit most of the right rhetorical notes — the importance of patient-centered care, greater choice, market competition, decentralized decision-making, and respect for individual priorities. But current proposals usually don't get too far beyond these general principles, and they are often formulated in ways that fail to speak directly to the concerns of most Americans.
In part, this reflects the realities of divided government in our polarized age — where developing a streamlined, consistent core message that appeals to one's strongest supporters takes precedence over finding more complicated, realistic paths through the ambiguities and tradeoffs of imperfect policy options. Moreover, conservative officeholders were initially set back on their heels at the start of the Obama presidency. They have yet to regain a working majority in Congress or find effective ways to prevent the president from rewriting legislation through regulatory agencies. As party leaders attempt to avoid aggravating internal divisions between those who are single-minded in their quest for repeal of Obamacare and those who would rather start by targeting the bill's most pernicious or weakest parts, Republicans have defaulted to the instinctive, unifying strategy of most opposition parties: Criticize and condemn, at least until you can regain the levers of power.
This was a necessary, if not sufficient, stance for a while — particularly during the 2010 off-year election. But it has not achieved the ultimate goals of overturning Obamacare and replacing it with a practical reform based on market competition, limited-government principles, and patient-centered values. If they want to become an effective political majority, opponents of Obamacare will first have to start thinking and talking like a governing majority, by advocating their own, better policies. They have been so focused on chasing Obamacare that they have neglected to give enough thought to what they will do if they finally catch it.
The standard list of potential conservative health-policy remedies includes more equitable tax treatment of all types of health-care spending, deregulation and decentralization of health-care decisions, a reform of Medicare toward a premium-support model, defined-contribution financing of health-coverage choices coupled with more targeted need-based subsidies, and market-based pricing. This is a promising list, but if conservative reformers are to turn this list into a genuinely practical set of legislative proposals, they need to take heed of a series of practical realities that they too often ignore.
THE SAFETY NET
One common failing of conservative reformers to date has been their inclination to view the health-care safety-net programs — especially Medicaid, but even Medicare — as potential sources of funds for long-term deficit reduction or other spending, rather than as programs that serve important purposes but are badly in need of significant structural reforms. Conservatives have attempted to cap Medicaid's financing with crude budget formulas, setting the growth rate of the program at some index (often tied to inflation) while promising the states more freedom in how they would be able to use the more limited grants under the new formula.
The appeal of such policymaking by formula is easy to see. It takes little effort, after all, to demonstrate that, in the Keynesian long run, we are all broke. Under current policies, our health-care entitlements are not sustainable. But drawing attention to our future financial doom and pledging to alter the shape of the cost curve are not equivalent to proposing and executing sustainable policies to solve these problems. To change the trajectory of spending and taxing lines so they converge without doing more economic harm than good requires actual changes in incentives, institutional structures, and the scope of government commitments.
Policymakers can always offer proposals in which rates of growth in the future are unrealistically indexed below past trends or suggest bills that put arbitrary spending caps on certain programs. Such proposals work well on paper and make the job of the Congressional Budget Office easier, as they give the impression of having solved future financial problems. But unless lawmakers find a way to address the underlying causes of cost growth, there is no reason to think a future Congress will make unpopular cuts simply because today's Congress said it should. Our major entitlement programs are designed to grow steadily, with benefits formulas pegged to annual increases in eligible populations, general rates of inflation, and open-ended statutory promises.
Reverses in this automated flow of taxpayer dollars tend to be limited, hard fought, and temporary. In recent years, we have seen how difficult it can be to try to hamper this growth in the failure of efforts to enforce the Medicare sustainable growth rate, limit the reach of the Alternative Minimum Tax, maintain budget-spending freezes, and suspend or limit cost-of-living updates in various programs. Attempting to cut spending using formulas is also risky, and rarely succeeds because it generates anecdotal anomalies and unintentional side effects that erode the initial base of political support. In addition, such formula-based spending cuts often lack politically defensible rationales that extend beyond the short-term goal of reaching aggregate numerical targets. While politically expedient in the near term, nibbling away at problems in the early years and leaving the real work for later in order to minimize current objections generally leads to failure.
One popular shortcut that allows conservative health reformers to avoid having to commit to, and therefore be accountable for, specific reforms is to propose delegating decisions to state governments. This approach, most commonly seen in Medicaid-reform proposals, reinforces longstanding conservative themes of decentralized decision-making and limits on federal government power, and assumes an understanding of the states as "laboratories of democracy." The fact that Republicans hold the governor's mansion in 30 states and control the state legislative branch in 27 states suggests that this principle of devolution also may not be unrelated to the practical politics of the day. This kind of situational federalism, however, is only as good as the next set of election returns. Is there a more principled rationale for delegating more decisions about health policy to the states?
Some conservatives may cautiously answer that it may be wise to keep the trials and errors of health-policy experimentation in 50 separate containers; that way, mistakes can't combine to destroy the entire country's health-care system. But champions of allowing greater flexibility for states to craft their various approaches to Medicaid reform need to answer a simple question: "Flexibility to do what?" Dynamic competition among the states needs to involve more than local officials accepting modestly discounted blocks of federal taxpayer dollars with little accountability for how they are spent. That form of revenue sharing separates the political benefits of public spending from the burdens of justifying its eventual claims on private resources. The consequences of this separation of payment and benefits are all too familiar: Many state officials have already demonstrated far more creativity in maximizing their revenue gains from federal matching-fund formulas in pre-Obamacare Medicaid (for example, by recycling provider taxes, stretching upper-payment-limit reimbursement levels, or expanding optional benefits to new populations) than in improving the health outcomes of beneficiaries.
If basic block-grant proposals are to be considered seriously as elements of an alternative to Obamacare, they must resolve a set of complex problems. They must determine, for instance, how current federal funding commitments are going to be allocated differently among the states, how the block-granted financial support will grow in later years, and what level of current federal guarantees and minimum standards for Medicaid should be maintained. Any plausible reform that could serve as a conservative replacement for Obamacare should address such questions at this level of policy detail.
True decentralization in health care will need to go beyond a reshuffling of federal funding transfers to states. Realigning incentives, restoring decision-making to individuals, and internalizing responsibilities for better choices all must involve some reduction in the layers of political intermediaries between the funder and the beneficiary. Such a reform should involve more targeted and transparent defined-contribution payments delivered directly to individuals. Yet the practical challenges of meeting this ultimate objective are significant and cannot be brushed aside with the facile phrases "premium assistance" and "managed care."
Although states can apply for federal waivers to use Medicaid funds to subsidize the purchase of private health insurance for eligible beneficiaries in premium-assistance experiments, few states have made use of this option. Federal approval of such Medicaid waivers requires passing a difficult cost-effectiveness test. Private insurance alternatives must promise to deliver health benefits and cost-sharing protection comparable to traditional Medicaid, but they must do so without the equivalent legal power to set below-cost price controls on provider reimbursements. In addition to maneuvering through complex and costly administrative procedures, states experimenting with premium-assistance programs must overcome the limited availability of affordable employer-sponsored private coverage for low-wage workers; they must also address the concerns of private employers who fear that a dramatic increase in enrollment in their current health plans will increase their insurance costs.
Some conservative health-policy reformers who do attempt to address the challenges of restructuring Medicaid find themselves constantly repeating the mantra "more managed care." This is a dangerous habit: Managed care is a catch-phrase that obscures enormous differences among various insurers, plan administrators, and health systems in how well or how extensively they actually deliver quality care at lower costs. Moreover, any potential savings to be achieved in Medicaid by shifting to managed-care plans will depend on the current Medicaid program's provider-reimbursement level in a particular state as compared to that state's commercial reimbursement rates. Many states have already greatly expanded the use of managed care in their Medicaid programs in recent years, so shifting their Medicaid programs toward even more managed care will not result in the impressive cost reductions some reformers promise. If managed-care plans are to be part of the Medicaid-reform agenda, therefore, the particulars must be laid out; lawmakers cannot simply assume that managed care will result in large savings down the road unless they have the details of such a plan today.
Finally, reforming the health-care safety net for low-income and medically vulnerable Americans involves more than just reshaping the future financial structure of Medicaid and preserving the sustainable core of Medicare. One of the overriding principles of reform should be to distinguish between societal commitments to basic income support (more transparently called "welfare" in previous decades) and promises to ensure access to essential health-care services for people facing particularly challenging medical conditions. We should be more generous in targeting persistent, condition-based problems and vulnerabilities. Subsidizing access to health-care choices in a competitive marketplace (through high-risk pools, for instance) is preferable to directly providing services through government channels, although markets alone do not and cannot meet every medical need.
Income-based financial support from taxpayers to address health-care vulnerabilities should distinguish better between short-term emergency assistance and longer-term arrangements for those suffering from chronic or permanent conditions. Reformers need to have in mind a socially conscious "floor" for the former — both in dollar amounts and eligibility duration for catastrophic coverage — while avoiding the danger of setting a ceiling on personal responsibility, economic initiative, and social mobility. Short-term assistance can provide stability and opportunity to rebound from health-related misfortune, but it should not dull the incentives to regain more self-sufficiency after the crisis is over.
THE EMPLOYER SYSTEM
If conservative reformers need to better engage with the details when it comes to Medicaid and the health-care safety net, what they tend to require when it comes to reforms of the broader private insurance market is a better sense of timing and pace. Above all, they should see that moving to a health-insurance market based on individual choice and control should not require the rapid elimination of employer-sponsored insurance coverage.
The employer-based system of health insurance has dominated private coverage markets since World War II. Its prominence was aided initially by favorable tax treatment (as employer-paid premiums are excluded from a worker's income taxes and payroll taxes) and later by the exemption of self-insured employer health plans from state insurance regulation (under the Employee Retirement Income Security Act of 1974, commonly known as ERISA). For many decades, those special advantages have provided strong incentives for employers to offer particularly comprehensive (and expensive) coverage to their workers, while generally limiting the range of insurance choices actually offered to workers at a firm.
While this system has great advantages for people with stable employment, it has always caused some degree of disruption in coverage for workers who switch employers or are laid off, since their coverage is tied to their jobs. Workers whose employers do not offer health-insurance coverage and, most seriously, workers losing jobs and facing unemployment generally have been hard pressed to find equivalent insurance in the individual market.
Reformers on both the left and right have for these reasons long sought to disentangle insurance coverage from employment and to create a much broader and more appealing individual market for health insurance. In such a market, financial incentives would be more likely to encourage cost-effective coverage and care, and people would be less likely to experience disruptions of coverage if they changed or lost jobs.
But many conservative reform proposals have sought to do this far too quickly and completely. Impatience in addressing the relative lack of cost-consciousness, portability, and individual choice in most employer-based coverage could jeopardize the relative stability that most people with private insurance now enjoy before effective alternatives are widely available. The conservative proposals of the past several years (perhaps most notably the 2008 McCain presidential campaign's ambitious proposal) that have called for the swift elimination of the tax exclusion for employer coverage have failed to account for several important facts about our health-care system.
First, a significant majority of insured workers will resist being pushed out of their current employer plans and into unfamiliar insurance arrangements. "Better the devil you know than the devil you don't" often applies to consumers' health-coverage preferences. Conservative theoreticians tend to overstate both the degree of dissatisfaction with current insurance options and the eagerness of workers to explore relatively untested alternatives. Obamacare has already drawn a public backlash for failing to keep the promise that "If you like your current plan, you can keep it." Conservative reforms that push too hard and too fast to move insured workers out of employer plans risk making the same mistake.
Moreover, the reality is that most (though not all) employer health plans work reasonably well. Particularly when sponsored by larger employers, they can effectively pool a diversified mix of health risks, ensure steady payment of plan premiums, and assemble sufficient bargaining power to keep underlying health-care costs somewhat in check. Many employer plans can even pre-screen or simplify potential health-care choices for employees who prefer to delegate those decisions to someone else.
Second, any rapid, large-scale transition from employer-group to more individualized coverage will not go smoothly. Changes in the tax treatment of insurance coverage cannot avoid producing highly visible winners and losers as the indirect employer subsidies are exposed and dismantled. Furthermore, the private market for individual health insurance is not ready to absorb a sudden influx of new customers if the employer-group market is forced to shut down too quickly. The most likely political result (even absent Obamacare) would be substantial government regulation of the overwhelmed individual market, as more pressing constituent demands for near-term stability and security overrode the market's need to evolve with dynamic competition over time. Moving too quickly when reforming the tax treatment of health coverage would ultimately be self-defeating.
Finally, the role of employer coverage in limiting the reach of government must not be overlooked, and employers offering coverage should not be treated as the problem with American health care. The business community represents one of the key organizing forces for civic institutions throughout American society. Employers supply the resources, connect the communities, and support the families that help maintain a healthier balance between the private and public sectors in the United States. It is no "historical accident" that private health insurance took hold and prospered within the supportive infrastructure of the workplace. With or without favorable tax and regulatory treatment, no other institution in the private sector could have competed as successfully with the centralizing forces of the modern welfare state in the second half of the 20th century; certainly none could have done as much to stand in the way of New Deal and Great Society attempts to expand government into personal health-care arrangements.
In short, employer-sponsored health insurance has provided the countervailing political power and institutional shield necessary to counter the forces pushing for various forms of national health insurance, socialized medicine, and political control over coverage and care. Conservatives should not be too cavalier about disarming their political allies and dismissing the private-sector capabilities they provide — at least until worthy successors have demonstrated some success and staying power. A new approach to public subsidies for private coverage must therefore move slowly and incrementally, beginning with those Americans who do not have offers of employer coverage to build a more robust individual market around them which may in time also prove appealing to people covered in the employer market.
When determining the scope and pace of any transition from employer-based coverage to a more individualized market for health insurance, reformers must keep in mind that many people will be relatively risk averse when approaching a re-ordering of their existing health-care arrangements. Americans are generally more concerned about making sure they have stable, secure health coverage than they are about whether that coverage allows them freedom and choice. To persuade the public, therefore, conservatives must offer an attractive proposal for improving health-care options and outcomes; offering new coverage and care arrangements that promise only to be "not as bad" as Obamacare will not be enough.
A surprisingly large number of health-care consumers are not interested in engaging in the active personal management of their health insurance and care, preferring to delegate most medical decision-making to others. Market-oriented reform proposals, therefore, also need to include comprehensible and familiar default arrangements for this segment of health-care consumers. Even more confident and independently-minded Americans generally will settle for insurance coverage and other health-care financing mechanisms that provide predictable costs and stable access in return for less actuarially precise pricing and fewer bargaining opportunities at the point of service. Conservatives tend to overestimate the public's desire for choice.
When it comes to medical care, people want reliability and security more than just about anything else. Conservative proposals will need to emphasize their ability to protect current arrangements, to make transitions gradual and largely optional, and to provide reliable access to quality care at a lower price.
The tension between health-care freedom and health-care security is even more pronounced in the arena of Medicare reform. Aggressive proposals that address the program's daunting demographic and fiscal challenges tend to fall by the wayside when short-term political calculations intervene. That is why in recent years even the House Republican budget proposals for a leaner, defined-contribution approach to financing Medicare benefits have had to pull their punches, delaying implementation for a decade and leaving all Americans now aged 55 or over untouched. It is hard to make the case that an urgent fiscal crisis requires swift action when you're delaying that action for a decade.
The case for substantial Medicare reform has been further undermined by the fact that Republicans criticize Obamacare's approach to Medicare primarily because it reduces projected rates of future spending and takes resources away from the program. Although this plays well with senior voters, it naturally leaves some Americans wondering whether Republican officeholders have their own alternative suggestion that could achieve similar fiscal savings in the program without limiting access to the care that seniors expect.
These are difficult issues. The temptation to straddle or dodge them as long as possible is surely understandable. Mounting the political equivalent of Pickett's Charge into the forces defending the Medicare status quo certainly is not an appealing or promising strategy. But the facts, numbers, and trends now in place won't change by themselves. This is why we need a principled, long-term reform plan that accounts for the fact that the voting public, current Medicare beneficiaries, and entrenched interests may be willing and able to adapt and adjust only if the pace of change is gradual, and likely slower than would be ideal. The hour is late to redress unsustainable fiscal and operational imbalances within the Medicare program. Several decades of opportunities have been squandered. It is crucial to finally get moving in the direction of meaningful structural reforms.
In the case of Medicare, then, the problem that conservatives face is roughly the opposite of the one that bedevils their efforts to change the tax treatment of health insurance; the nation will have to move faster toward reform than conservatives generally propose to do. They can focus on ways of making the reform itself gradual and incremental — as the most recent version of the House Republican proposal seeks to do — but they must begin that reform sooner than a decade from now.
In a sense, Medicare reform is the area in which conservative health-reform ideas are furthest along. The Ryan proposals, which are built on decades of work by both experts and politicians, have now been affirmed by nearly every Republican member of Congress and were included in the policy agenda (such as it was) of the last Republican presidential nominee. Substantively, conservatives have less work to do on this front than on others, but politically they must buckle down and build a case for the potential of gradual reforms to deliver long-term solutions. Such reforms need to be part of any serious menu of conservative health-care ideas.
If Medicare reforms are furthest along of all the conservative policy ideas, reforms of the actual health-care delivery system are probably furthest behind. Most conservative health-policy reform proposals have failed to engage delivery-system issues very deeply, if at all.
This reflects partly a disinclination to criticize the "home team" of private-sector health-care institutions and physicians, and partly a healthy skepticism about the wisdom or effectiveness of political interventions in the practice of medicine. But it also signals a reluctance on the part of reformers to acknowledge serious, longstanding problems in the American health-care system and a hesitance to get their hands dirty trying to fix things. Simply deferring to the infallible wisdom of doctors, relying on the invisible hand of the market to self-correct price and quality distortions, and assuming that innovative excellence will quickly become widespread throughout the system is a strategy destined to fall short in practice. Instead of dismissing out of hand Obamacare's science fair of medical-delivery experiments and untested vaporware (such as accountable-care organizations, bundled payments, medical homes, value-based reimbursement, and patient-friendly information technology), Republicans should offer persuasive, constructive critiques and suggest alternative strategies to achieve similar objectives.
Conservative delivery-system reforms would need to serve four goals above all. First, they must redesign payments so they reward results rather than try to micromanage processes as they do now. Second, they should better measure what matters to patients and other private payers. Third, they need to remember that favoring competition is not the same as (and indeed must be at times the opposite of) protecting incumbent business interests. And fourth, they will need to remove public-policy-related barriers to entry and exit.
Policies that favor supply-side expansion in health care — like loosening scope-of-practice restrictions, facilitating telemedicine and medical tourism, and relying more on post-market-entry surveillance of innovative products rather than endless pre-approval processes — can reinforce demand-side reforms that emphasize patient-centered decision-making and allow prices to be set by the market. Neither set of reforms will reach its full potential unless buyers and sellers are mutually accountable for the risks and rewards of their decisions — not absolutely and irreparably accountable, but accountable enough that real rewards and consequences can inform choices and action.
Changing the locus of health-care decision-making and exposing the system to more market signals also requires a richer stock of information to make expanded choice and competition more meaningful. Yet most conservative reform proposals fixate on the superficial bromide of "price transparency" for discrete services and procedures, which only account for a tiny fraction of overall health-care spending. Reformers need to focus more seriously on better ways to measure what matters rather than settling for what is easiest to measure. Health-care transparency involves more than price quotes for à la carte orders from a limited menu. Reformers must encourage collaborative efforts to develop and aggregate enough data to provide accurate, accessible estimates of providers' performance, including information about costs and outcomes. It is vital that this data be gathered at the relevant level of decision-making, whether it involves overall institutions, organized medical teams, or individual practitioners. But the ultimate judgments regarding what that data tell us, and which measures are most important to patients, providers, and payers, cannot be delegated solely to centralized bureaucracies that are driven by their own agendas. The information must be made available to patients.
In defining health performance-quality measures, conflicts will inevitably arise between standardization and customization of those measures. These conflicts are likely to be resolved in the direction of standardization, as medical practitioners will balk at being judged by inconsistent or conflicting metrics and being pushed to practice more than the single standard of care they find appropriate. Health-care cost comparisons initially appear easier to produce for discrete services and procedures, but the more relevant metrics concern broader episodes of care that may involve multiple providers, complex health conditions, and developments appearing well after an initial diagnosis. Producing, disseminating, and acting on information about health-care "value" — the more elusive combinations of quality and price that should point us toward producing better health outcomes at lower costs — is not easy. But if market-oriented health reformers don't engage in this area of policy development more creatively, too many patients, providers, taxpayers, and other payers will be left at the mercy of political elites and dominant interest groups handing down guidance from a great distance.
The alternative to more centralized bureaucratic regulation is the empowerment of patients through information they want, trust, and can use. Recent legislative and judicial moves to open up access to Medicare provider data — such as the Medicare Data Access for Transparency and Accountability Act sponsored by Senators Grassley and Wyden, and a ruling in federal district court overturning a 34-year-old injunction against the release of Medicare physician-payment information — are important steps toward such overdue health-care transparency.
HEALTH CARE IN CONTEXT
Laying out these criteria for judging the various conservative health-reform proposals should not be read as an argument for one massive, comprehensive health-care bill from the right to substitute for the massive, comprehensive measure that the left is now attempting to implement. Instead, these suggestions compose a case for offering the country a series of steps toward a better health-care system, one informed by a conservative vision and agenda in which health-care is understood in its full and proper context.
The most important unmet tasks of true health reform involve more than improving the value of care (and its related insurance financing) delivered to patients so that more people will choose to purchase it voluntarily. A richer approach to health-care policy must also re-examine how other types of public and private investments can boost the lifetime health of our fellow citizens. Health-policy reformers should look beyond insurance, financing, and regulatory issues to consider other policy instruments that could promote healthier behavior, health literacy, skill formation, and improved decision-making. Key factors that shape the health-related behavior and capabilities of individuals over their lives include education, nutrition, family, culture, and early childhood development. We need to rebalance our health-investment portfolio to focus on what matters most in improving and maintaining health.
And indeed, we need to think beyond health policy itself. The path to making private health insurance more affordable and our entitlements more sustainable requires not only a different approach to health financing but also more effective macroeconomic policy and stronger social institutions and cultural values. Economic growth will not solve the most intractable health-policy problems, but it can provide better job opportunities, rising disposable incomes, increased personal saving, and more productive investment capital, all of which help to regenerate the stock of human capital needed to compete internationally and reinvigorate the independent sector of civil society. Policies that improve the overall ratio between independently productive citizens and those who must depend on them offer the best insurance policy of all. The combination of steady and gainful employment, two-parent families, stable communities, civic involvement, functioning school systems, and expanded opportunities for earned success is a simple but powerful prescription for better health.
The health-care debate must therefore be about much more than Obamacare; it must be understood as part of a larger debate about the future of the country. Short-term political strategies and clever tactics are necessary elements in halting and reversing the institutionalization of Obamacare — which is essential to the future of our health-care system and to maintaining the proper relationship between the citizen and the state in our society. But they are not sufficient to get that job done, and they are even less equipped to address the legitimate, longstanding concerns of most Americans about the cost, quality, complexity, and accountability of the options they have in the current health-care system.
The standard list of potential conservative health-policy remedies has promise but remains underdeveloped and incomplete. We can do better, and we will have to — not just to meet the imminent threat of Obamacare but to face the challenge of replacing it with health policies that meet our needs, suit our values, and allow America to prosper and thrive.
Tom Miller is a resident fellow at the American Enterprise Institute.