A GOP quip in need of a GOP policy: how would repealing Obamacare create jobs?

Ryan Streeter

In her new role as one of two liaisons between the new crop of GOP faces in the House and the House leadership, Kristi Noem was set afoot yesterday to bolster support for the tax deal.

In doing so, she rightly pointed out that the tax package is merely just a first step and that we need to do more to spur growth, starting by repealing the "job-killing health care law." 

This expression, the "job-killing health care law," is part of a package of Republican talking points (see, for instance, this post on John Boehner's blog just a day before Noem's comments). 

Along with entitlement reform, replacing Obamacare is one of the most important things this country needs to facilitate growth. Notice I said "replacing," not "repealing."

Simply repealing the "job-killing health care law" will not create jobs. Ms. Noem acknowledged this today in the weekly Republican address, when she said that Obamacare needed to be replaced with "common sense" reforms that Republicans outlined in their Pledge this past fall.

The Plegde gets part of the way there, but it needs much more specificity and should focus on how growth-friendly alternatives are possible and hold together. Republicans should start talking about them soon and incorporating them into their leader-approved talking points. Presidential hopefuls should start driving this debate early. 

Why? Two reasons:  

1. The key components of a robust replacement policy are already fairly well developed. They just need to be polished and sold publicly. So far, such components have not had a policy champion as, say, entitlement reform has had in Paul Ryan.
2. Average American households saw their wages getting pushed downward by rising health insurance costs before Obamacare, meaning that repealing the law will just put us back in that broken situation. Without clearly articulated alternatives and growing popular support, we'll be stuck in that status quo for a long time.

So what to do? First, aspiring reformers simply need to read. Then they need to formulate how to say in simple terms what they have read. Then they need to popularize their message by getting out in front of the cameras.

Here's a good place to start: an article that Paul Howard and Stephen Parente wrote in National Affairs earlier this year. As they point out, many of the best ideas for reforming healthcare were already formulated in the Bush administration, but they were never sold well or were introduced too late to work. 

There are five main components that Howard and Parente either address or touch on, which any Republican wanting to take up the mantle of reform should start assembling data on and talking about:

1. Make it legal for insurance plans in different states to compete for our business. Currently, every state has to have its own plans according to its own laws. It's time to have health insurance made for the 21st century (as opposed to the current 19th-century-looking framework).
2. Get rid of Obamacare subsidies and go with one defined voucher or credit that allows people to buy insurance. If the first reform takes place, shopping around for insurance will start to bring costs under control. Reformers need to embrace the idea that ending the current tax treatment of employer-provided insurance will help make insurance cheaper and more accessible to more people.
3. Make it possible for people to form large insurance pools so they get the same "economy of scale" advantage as, say, federal employees. Again, if we take care of the first reform, this becomes easier. The fact that families and small businesses can't do this already is a grave injustice.
4. End Medicaid's open-ended entitlement and start treating beneficiaries like American citizens rather than wards of the state. Make the competitive advantage of private insurance available to them through vouchers, and leave the open-ended entitlement for disabled individuals and those with serious chronic illnesses.
5. Move Medicare in the "Paul Ryan Roadmap" direction by defining the contributions people will get, rather than just paying out their benefits, and means-test the program so those who need help the most have it. Medicare is practically an animal unto itself and needs to be part of a deficit-reducing entitlement reform plan, but it helps for health care reformers to talk about it in an informed way.

Only with reforms such as these will we find a health care system in America that complements growth, and even encourages, growth. Without them, even if Obamacare is repealed, our health care system will continue to be a downward drag on job creation.

Comments

[PerryM]

Big fat government needs to get out of the health care insurance game - they will fail just like everything Big fat government gets it's hands on.

But Libs and the GOP seem to want our health care insurance system to become another welfare system which enslaves citizens to poor quality service and boot on the throat regulations.

[jay1]

Another requirement for health care reform:

All individuals must pay, out of their own pocket, some significant percentage of the service they purchase. The Medicare supplement that seniors purchase has severely inflated the demand for services. Once a senior has this policy in place they have no concern about cost relative to benefit. Same situation occurs in some private plans, particularly for medications. Example: 5 dollar copay for a prescription no matter what the prescription costs.

[Gary]

What you call Obamacare is not. It is Romneycare. Obama dropped his public option plan in favor of expansion of private insurance because Republicans forced it and promised to support it, which they in the end did not thereby rejecting their own plan which was modeled after the plan Mitt Romney put in place in his home state and later adopted in Hawaii...and was under consideration in many other states.

And your component #1 above was intentionally rejected because it would allow insurance carriers to grow by only covering younger people in other states. And try to drop older people in their current state. And #3 is part of the plan that kicks in 3yrs.

[Bill K]

I'm just a Liberal here on visit and caught Mr. Streeter's article. Can't say that I agree with many of the points made but was surprised that the writer did not give more consideration to the high cost of prescription drugs. Unless we confront this problem, average folks will continue their slide downward. Americans get soaked while our canadian and european counterparts buy the same drugs for 50% of the cost we pay for the same drugs.

[ConHome]

Bill K - thanks for your note, which is timely. Check back tomorrow for Roger Bate's article, which addresses the very issue you raise about the high cost of prescription drugs compared to our Canadian and European friends. You're right. It's an issue that needs more attention. Our focus here is on trying to get some of the mega-cost drivers under control. But the drugs issue needs to be addressed.

[Steve Ettinger]

The emphasis on "job creation" is really a diversion, in the same way as Pelosi saying that the proposed energy bill was about "jobs, jobs, jobs." The essential questions are how to control health costs while maintaining quality and improving access for the poor. Of course, competition is generally a great driver of cost reduction, but that has not worked so well with health insurance, for reasons that you don't touch upon (adverse selection, information asymmetry, and product complexity). And, of course, both political parties made so many promises to seniors during the Obamacare debate and the election, that serious efforts to control costs may be politically impossible.

[Rob .]

Bill K. Another point that is interesting about the healthcare discussion is that fact (Drug costs) were essentially swept under the rug during the rhetoric coming from both sides earlier this year. The number 4 profitable industry back around March/April of this year was drug companies. Their profit margin was around 19%. The insurance companies were down in the 20's at around 5%. Yet they are constantly demonized? Seems to me they both should have been....