Dr. Gratzer, a physician, is a senior fellow at the Manhattan Institute. Most recently, he is the author of Why Obama’s Government Takeover of Health Care Will Be a Disaster, part of the Encounter Books Broadsides series.
This is the third in an exclusive, five-part series by Dr. Gratzer on why the debate over Obamacare is just beginning, what a Republican strategy should look like over the next two years, and what real health reform in America should consist of.
Full implementation of Obamacare will not happen.
But let’s be clear: if a complete Democratic win on health care is unlikely, Republicans must accept that their wish for full repeal will be limited until at least 2012. As robust as the November victories were, the GOP still lacks enough votes to overturn a Presidential veto. And, into the future, full repeal will be difficult since Republicans will not see a Filibuster-proof majority in the Senate for years to come.
If the debate will stretch over the coming years, there is opportunity to reshape and ultimately win that debate – but only if Republicans and moderate Democrats are focused and disciplined.
In the next three posts, including this one, I will lay out a three-step agenda: first to change the worst aspects of ObamaCare, then to push meaningful, patient-centered reforms for health care, and then to better our nation’s health (not just our health care).
So, today, I focus on the first strategy - changing the worst aspects of the law.
Opponents of the plan in any new Congress should be open to opportunities for incremental success that can outflank the President’s veto – and provide real hope for American patients, families, and medical professionals in the process. The best approach? Steal a page from the liberal playbook. For years, liberal Democrats have used opportunities to eke out small but significant victories in their quest to expand government’s influence in health care. Thus, they have looked to quietly amended legislation (and not just health-care legislation) with tweaks and used budget battles to push their agenda.
Republicans and moderate Democrats can easily focus on three of the most significant – and controversial – aspects of the law: a tax on medical devices that will impede innovation, a new technocratic committee to “guide” health care spending; health-insurance exchanges meant to spur competition that will instead strangle it with heavy regulations.
First, Congress should take a scalpel out and cut away at the medical device tax, a new tax levied on American companies that design, manufacture, and distribute surgical instruments, MR scanners, and countless other tools used in the practice of modern medicine.
The research-intensive, high-wage sector produces $200 billion in domestic and export activity for the United States. Republican and moderate Democrats alike should be able to rally around the total elimination of this improvised, short-sighted tax on jobs and innovation. Since ObamaCare is so expensive, the device tax actually represents a tiny fraction of the funds needed to pay for it. But in strategic terms, the tax could cost the economy a great deal by making American medical devices more uncompetitive, just as Chinese and European device industries are running at the heels of this successful American industry.
Second, Congressional leaders should consider wiping out IPAB, or the Independent Payments Advisory Board.
IPAB is really a spin-friendly name for a Medicare rationing panel, designed to bring experts together to tell your doctor how to save money from the safety of a Washington conference room. Britain’s experience with a similar panel was harsh, since the only practical way for the National Institute for Health and Clinical Excellence to achieve its mandate was to ration drugs and treatments.
Washington needs to learn: health-care systems don’t respond to top-down innovation. Many liberal economists with no frontline health experience trumpet the Board as a “game changer” that will reverse the deficit painlessly. But Congress knew better. The panel’s value was already so oversold that it was only budgeted to save a (relatively) modest $15 billion by the end of 2019 in the final plan. Yet the danger that IPAB will grow into a rationing machine remains. As former Senate Majority Leader Bill Frist asked rhetorically in a recent interview: “Is it too much power to allow 15 unelected individuals the absolute authority to unilaterally dictate with the force of law how to cut Medicare for as much as 2% a year every year?”
Kill the Board off in 2011.
Third, Republicans and moderate Democrats in Congress should focus on an immediate priority: health-insurance exchanges.
The plan adopted in the Patient Protection and Affordable Care Act calls for state-based exchanges, not a national exchange – meaning markets are exactly as uncompetitive as they were before the Act was passed. Worse, the Act adds new federal benefit mandates, adding new costs to future insurance plans with little value to most Americans. Finally, the Act does nothing to reverse the rapid growth of state insurance benefit mandates. To take just one example of dozens, Wisconsin already had 34 separate benefit mandates in 2009. But this summer, legislators added even more rules. Among them: a law forcing all health insurance plans to charge for and cover birth control costs – even if those insured were seniors or middle-aged couples who don’t need birth control coverage.
Actually, it’s worse: the state-based health-insurance exchange could easily lead to a single-payer option in many states. “There is no specific language in [the president’s health plan] that would prohibit an exchange from denying certification to every private plan that applies,” the analysis finds. Who authored this damning report? The Congressional Research Service.
What’s to be done? The President himself acknowledges the lack of competition. Yet his own plan does nothing to address such anti-competitive regulations – unless you believe the introduction of fifty taxpayer-funded websites is somehow going to make intra-state markets more competitive. The reason millions of Americans can’t even access a basic care plan isn’t the lack of a website to buy it from; it’s the lack of a basic care plan to buy. Regulations force insurers to sell Porsche-level coverage to Americans, when what most people really need is an opportunity to buy a late-model Ford.
If a true national health market is off the table, perhaps a set of regional or multi-state markets could overcome a veto. Congress could create the legal room (and maybe even some incentives) for states to harmonize down their insurance mandates to a similar standard to form state market alliances. Where efficient harmonized rules are achieved, insurance could then be easily purchased across borders.
It’s a short drive from Kansas City, Missouri to Lawrence, Kansas, and the health needs of a Kansas City data entry clerk aren’t likely to be much different from those of a clerical assistant in Lawrence. There’s no reason why insurers shouldn’t be allowed to compete by offering insurance to both on the same basis.