Thursday, I laid out the case for why Obamacare should be repealed, instead of propped up and tinkered on by additional top-down, boardroom thinking. It’s clear that whatever replaces Obamacare must focus on quality and incremental local solutions, not one-size-fits-all government mandates.
In this respect, the federal government’s biggest task for replacing Obamacare is to get out of the way and let state policymakers and health care providers innovate.
First off, let’s get clear what Americans want: They’d like many choices of affordable health insurance plans that allow them to choose their doctors. They want to buy a plan when they are young, then keep their plan from job to job and into retirement. And they’d like it to be truly affordable. These “must haves” are obvious to people of any political orientation.
Instead of approaching this challenge like designing a single system or product (the way Obamacare was constructed), Congress needs to help these conditions develop organically, while preserving freedom of choice for Americans. Here are some further thoughts.
Expand health savings accounts. As we age, our need for medical care increases, yet current government policies offer few incentives for people to save for their future health care needs. The one exception is health savings accounts, which are tax-deductible accounts owned by individuals that roll over from year to year. But those accounts are currently available for just one type of insurance plan—a high-deductible plan.
The improvement would be to expand the scope of health savings accounts so that they can be used with any type of insurance design, as well as to become the accounts into which any funds (either private or public) to help pay for health care needs can be deposited. That way, people would not only have more options, but also a place to keep (for future needs) any savings they get from buying better value insurance and medical care.
Create space for diverse payment models. Congress should remove regulatory obstacles to innovative approaches to providing or paying for medical care. For instance, many direct primary care practices use a monthly subscription payment model instead of the traditional fee-for-service model. This model eliminates significant administrative costs and allows doctors to spend more time with patients. Yet federal and state regulations that inappropriately treat those payments as insurance (as opposed to payments for medical care) further inhibit adoption of this approach that simultaneously reduces costs while improving quality.
Allow innovative new delivery models. In a similar fashion, federal and state lawmakers should remove the regulatory obstacles to other health care delivery innovations, such as specialty hospitals, free-standing emergency rooms, and telemedicine. Indeed, too often those regulatory barriers exist not to protect patients or consumers, but rather to protect less efficient providers from competition.
In general, federal health policy should focus on establishing a few basic rules while leaving most of the detailed decisions to either the private sector or state governments.
For instance, any federal tax relief for health care expenses should be the same regardless of a person’s employment situation. Today, those with employer coverage pay no income or payroll tax on their health insurance benefits, but those purchasing coverage on their own have to use after-tax dollars to buy coverage.
In addition, those who rely on public programs should be able to take the value of their benefits in the form of a contribution that they can apply to the plan of their choice, not dumped into a one-size-fits-all government program.
The federal government should also return to the pre-Obamacare status of setting only minimal rules for insurance markets and deferring to state regulation of insurance as a financial services product.
The federal government should not attempt to design and manage America’s health care system. Federal laws and regulations should allow and encourage insurers and medical providers to compete in offering better quality care at lower costs.
This will require returning health care decision-making to patients and their doctors, and returning policymaking to the lowest level of government that is best equipped to handle it: state legislatures.
Some politicians don’t like the idea of relinquishing that power, but after seeing the results of decisions made in Washington over the last few years, I think it’s worth a try.