How to Get a Health Care System that Answers to the Patient

OBAMACARE DOESN’T AND CAN’T WORK. It is a rolling disaster that is wreaking havoc on the American economy and health care sector. Americans are experiencing first-hand the damage the law is doing. It is making their health insurance more expensive, driving doctors out of practice, and undermining the goal of improved health care. And the law doesn’t even come close to universal coverage—leaving at least 31 million uninsured, according to estimates by the Congressional Budget Office.

So what should we do to fix the mess? Some conservatives want Republicans to rally around one bill to replace ObamaCare and then take that plan to the voters for the November elections. That approach, however, entails both political and policy risks that can be mitigated with a different strategy. Conservatives should focus first on laying out a vision of true competition and patient choice, gaining a mandate from voters to begin to pass “repeal and replace” bills in the next session of Congress based upon the vision of providing people with access to quality, affordable, innovative health care.

The Conservative Opportunity

The case for conservative reforms should start with this bedrock truth: ObamaCare never could have worked as originally concocted. So far, 42 major changes have been made to the law—16 by Congress, 24 by the administration, and two by the Supreme Court when it declared the individual mandate penalty to be a “tax” and also gave states the option to expand Medicaid. Congress has passed legislation that has been signed into law to, for example, repeal the onerous reporting requirements for small businesses, cut funding for health insurance co-ops, and eliminate a “Ponzi-scheme of the first order”—the long-term care insurance program.

And without legal authority, the administration has delayed the employer and individual mandates; delayed payment cuts to Medicare Advantage plans; allowed individuals to “self attest” their eligibility for subsidies; given congressional staffers, labor unions, and others waivers from the law’s specific requirements; illegally exempted the U.S. territories from ObamaCare; illegally distributed tax credits through the federal exchanges; and more. All of these changes are a taciturn admission that ObamaCare is fundamentally flawed. As The Wall Street Journal observed in an editorial, “Obama repeals ObamaCare.” The law that was enacted on March 23, 2010, is not the one that is being implemented.

Conservatives should see ObamaCare’s disruptive changes as an opportunity to make progress toward a system of true competition and patient choice. However, conservatives need to work through the problem strategically. Trying to pass a major replace bill now would be a trap. That approach would require some tough choices that ObamaCare supporters would deride, just as then-Sen. Barack Obama criticized Sen. John McCain’s reform proposals during the 2008 presidential campaign. The Left would home in on the details, forcing conservatives to get into the weeds of policy before they have had a chance to describe their larger vision of reform. Anyway, such a bill would hit a brick wall in the Senate and go nowhere.

Meanwhile, the policy problem is that replacing ObamaCare in one step risks creating more turmoil in an already roiled marketplace. Millions of people lost their health insurance because the policies they chose and liked didn’t conform to ObamaCare’s rules and mandates. Millions have been forced into the exchanges to get coverage, and 87 percent of those in the exchanges receive generous subsidies from taxpayers. Meanwhile, businesses inside and outside the health care sector have made significant and expensive changes to comply with the law and its tens of thousands of pages of regulations. Conservatives need an approach that minimizes the risk of throwing people out of the coverage they currently have while lifting burdens on businesses so they can focus on creating jobs and rebuilding our economy.

When critics say that we might as well stick with ObamaCare because conservatives don’t have a plan, we can answer: You are right that conservatives don’t have a better idea about how to write their own 2,700-page bill that is filled with mandates on individuals, businesses, physicians, health plans, and states; that creates 20 taxes sucking $1 trillion out of the economy; that cuts Medicare by $716 billion over 10 years; that spends $2.6 trillion over 10 years; and that still leaves 31 million people uninsured.

When candidate Obama ran for president, he offered voters a white paper, not a written health reform bill. Conservatives in Congress should follow that model and develop an outline for reform based on a vision of true competition and patient choice in health care. Many options have already been offered. These include a plan offered in the Senate by Sens. Orrin Hatch (R-Utah), Tom Coburn (R-Okla.), and Richard Burr (R-N.C.); plans offered in the House by Reps. Steve Scalise (R-La.), Phil Roe (R-Tenn.), and Tom Price (R-Ga.); and proposals from think tanks, such as the 2017 Project, Generation Next, and the “Room to Grow” proposal from the YG Network.

Then, if Republicans should win enough seats to take control of the Senate in the November elections, they can send bills to the President’s desk to begin to roll back the law and present their own targeted solutions. The bills would have a much better chance of getting through the Senate than any do in this Congress. They still would still face the president’s veto pen as he tries to protect his signature legislation. However, if the bills have enough support from Democrats, then it will be increasingly difficult for the president to veto legislation that gives relief from the law’s most onerous provisions. Speaker of the House John Boehner has brought more than 50 bills to the floor of the House of Representatives to repeal all or parts of ObamaCare, and most have received significant support from Democrats. The Speaker knows that Republicans can’t repeat the mistake that Democrats made in passing health reform legislation on a strictly partisan basis. Bringing Democrats to the table is an essential part of advancing free-market health reform.

Conservatives Have the New Ideas

When critics say that we might as well stick with ObamaCare because conservatives don’t have a plan, we can answer: You are right that conservatives don’t have a better idea about how to write their own 2,700-page bill that is filled with mandates on individuals, businesses, physicians, health plans, and states; that creates 20 taxes sucking $1 trillion out of the economy; that cuts Medicare by $716 billion over 10 years; that spends $2.6 trillion over 10 years; and that still leaves 31 million people uninsured. They don’t have a better idea for how such a bill could be written.

But we do have many market-friendly health care policy tools ready. Some say there are too many ideas, with more than 200 health care reform bills offered in the House of Representatives. They offer solutions that would allow the health care sector to respond to demands for more affordable choices in health insurance and would create true competition, not the fake choices offered by ObamaCare.

The goal of health reform should be to make sure that people have access to health care from the doctors and hospitals of their choice and that they have the peace of mind of knowing they are protected if they get sick or hurt and need expensive care.

Having seen the failures of ObamaCare, the American people are open to new ideas to give them genuine choice so they can pick their doctors and hospitals and seek out better care and coverage through real competition. We know untold innovations leading to better care and coverage would emerge—if we could get the incentives right.

Conservatives have been arguing since before the HillaryCare battles for properly-structured subsidies to help the uninsured afford health insurance. We also have argued that people should be able to have insurance that is portable so they don’t lose it as they move through life’s changes. And we have argued vociferously that we should give those confined to the Medicaid ghetto the opportunity to have the dignity of private insurance.

Nina Owcharenko and Robert Moffit of The Heritage Foundation set out the challenge in the Spring 2014 issue of The Insider:

We should be ready and able to present the American people with health reform legislation that is competently crafted, meaning it will be free of the glitches and technical deficiencies that often undercut health reform proposals. It must also be consequential, meaning that its enactment will materially improve the lives of millions of Americans by broadening access to health insurance and quality care while controlling costs through the power of the free market. And most importantly, it must be principled, meaning that it is crafted to expand personal liberty and revitalize civil society, giving individuals and families direct control over their health care dollars and decisions. The opportunity is here for conservatives to usher in a renaissance in American health care.

Patient-Centered Health Care

We need targeted solutions built around a new vision for health care reform that puts doctors and patients at the center. Here are some key principles to guide those reforms.

We must start with resetting the incentives to empower individuals to participate more actively in caring for their health and managing their health care decisions. That means giving them more control over—and more responsibility for—their choices and spending.

Incentives Matter. We must start with resetting the incentives to empower individuals to participate more actively in caring for their health and managing their health care decisions. That means giving them more control over—and more responsibility for—their choices and spending. More than four out of five Americans with health coverage today are getting direct or indirect subsidies for their coverage. These subsidies are often invisible, mistargeted, and inflationary; and they are present in private health insurance, in the ObamaCare exchanges, and in Medicare and Medicaid. They create massive market distortions and lead to hundreds of billions of dollars in wasteful spending.?We don’t need to spend more, but we do need to spend more wisely. Conservatives want to address this problem by realigning tax incentives for those with private insurance and restructuring public programs. The goal is to empower people to shop for the plans that work best for them and their families, coverage they can own and keep with them from year to year in a market that responds to their demands for better, more affordable choices. Some reform proposals would offer tax deductions and others tax credits structured in different ways to help the uninsured. And these incentives can work in Medicaid and Medicare, too. Programs like the popular Medicare Advantage program—which the Obama administration is trying to cripple—give seniors the option of picking private plans that are competing to offer different networks, benefits, prices, etc. Some states, like Florida, are having success with similar programs for Medicaid.

Consumers Need Transparency. Empowered consumers need to be informed consumers. The Obama administration recently released data on how much doctors are paid by Medicare. It was a sloppy list and the information was often misleading—not accounting, for example, for practices such as multiple doctors billing through a single physician. But the list was a start. Since governments pay for half of the nation’s $2.7 trillion annual health care expenses, this data could be better mined for more useful information.?States are acting, too. Two organizations, the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute, assessed state efforts at making pricing information accessible to consumers. Massachusetts and Maine got Bs, but almost all of the other states received an F. That report card and earlier ones prompted states such as North Carolina and Arizona to pass legislation requiring hospitals to post a full menu of the prices they’ve negotiated with insurers for a long slate of services. Many other states have taken similar action.?Some may disagree with government-mandated transparency, but historically government regulation to ensure consistent standards and clear information in the marketplace has been considered a legitimate function of government.

ObamaCare puts insurers in a straitjacket by forcing them to offer plans that cover a long list of benefits that it defines as “essential,” ignoring what consumers may prefer and constraining what insurers may charge and how they may offer the plans. Without those restrictions, we would see greater variety in health plans.

Competition Produces More Choices at Lower Prices. In a true market, we would see health insurers and health care providers competing for the consumer’s business by being creative in benefit design and service delivery. The result would be better products at cheaper prices. But government thwarts competition in health care and health insurance.

ObamaCare puts insurers in a straitjacket by forcing them to offer plans that cover a long list of benefits that it defines as “essential,” ignoring what consumers may prefer and constraining what insurers may charge and how they may offer the plans. Without those restrictions, we would see greater variety in health plans.

We could see, for example, five-year plans that reward policyholders for maintaining good health. If a policyholder met certain health markers, then some of the premium would be refunded. Other insurers might offer indemnity policies that pay a fixed sum for certain procedures, such as heart surgery or knee replacements, giving consumers incentives to shop for the best value. Still other insurers might sell plans that combine health savings accounts with catastrophic insurance structured in new ways. The possibilities are endless.

More competition is equally important for improving the delivery of medical services. Private, physician-owned hospitals, for example, provide better care at lower prices than the mega-hospitals. The mega-hospitals, however, succeeded in limiting competition by lobbying for and winning a provision in ObamaCare that outlaws any new private, physician-owned hospitals. Also, new care delivery models could allocate the time of medical professionals more efficiently, such as by allowing para professionals to perform tasks that Medicare requires doctors to do today.

Another benefit of market competition is that once people get used to real choices, they will fight to keep them, even in public programs. Earlier this year, the Obama administration, sticking to its “Washington knows best” strategy, tried to limit the number of drugs and plans available to seniors in Medicare Part D. The huge backlash forced the administration to withdraw the proposed rule.

Reforms Should Protect Those with Pre-Existing Conditions. People who have health insurance should have a guarantee that if they have insurance, they can keep it and not see their premiums soar if they get sick. A few sensible insurance rules could provide that security. Free-market solutions also could give people the chance to buy insurance protection against a Change in Health Status so their premiums don’t soar if they have a major, expensive illness. Also, high-risk pools run by the states can help in creating a safety net for those who have difficulty purchasing coverage in the regular market. The federal government could encourage best practices by showcasing states that have the most successful programs.

Innovation Will Give Us New Treatments—If Government Gets Out of the Way. It is difficult to overstate the importance of continued innovation to transform our health sector. But innovation is being crippled by taxes and regulations that force companies to navigate a bureaucratic maze rather than focus on the discovery of new and better treatments and cures. Right now, our third-party payment system, barriers to entry, protectionist state regulations, expensive and outmoded processes at the Food and Drug Administration, and insider-driven Medicare reimbursement rates strongly favor the costly established incumbents and make it nearly impossible for new entrants to introduce disruptive innovations.

If we could unleash the innovators, we would see an explosion of revolutionary technologies to save lives, ease suffering, and reduce costs. Our health sector could be transformed by 3-D printing to create medical prostheses, drugs individualized to match peoples’ genetic profiles, nanobots to repair malfunctioning genes, and countless other exciting innovations. Further, smarter and more robust use of information, including Real World Data, could improve care delivery, speed the development of new medicines, and allow us to learn which treatments work best for which patients.

Getting from Here to There

Strategically, conservatives can learn from the process of enacting ObamaCare. The public is as strongly opposed to the law today as it was when it was enacted in 2010; however, the business community and other special interests were strong-armed to back the law and often were granted key favors and protections in exchange for their support.

All of these interests must be consulted in the next step of the policy battles. Democratic Senate leaders took the lead in 2009 in holding dozens of round-table meetings with leaders from all sectors of the health care industry—businesses, unions, patient groups, and many others.

So the first step should be holding a series of listening sessions. Questions we should ask include: Where did ObamaCare completely fail? What could have worked if it had been structured differently? Are any parts of the law working? Answers to those questions will help when conservatives move to the writing of reform bills.

Conservatives in Congress also will need to heed the popularity of certain provisions of ObamaCare—the one’s that dominate the talking points of the law’s supporters: coverage for those with pre-existing conditions, allowing 26-year-olds on their parents’ plans, and ending lifetime dollar limits on coverage. They must devise ways to allow those provisions following conservative principles.

Policy Prescriptions for Fixing Health Care

Move to a Patient-Centered Health Care Sector. Reform should offer more choices of health coverage that provides better value and that gives people the security of insurance that can follow them wherever they go. Some key policy prescriptions for reform of the private insurance market:

Tax fairness: Tax benefits should be available to those without access to employer coverage to help with the direct purchase of health insurance. Tax benefits should encourage cost consciousness.

Pre-existing conditions: High-risk pools run by the states will help in creating a strong safety net for those with difficulty purchasing coverage in the regular market because of their personal health status. The federal government could make risk pool funds available to the states to incentivize them to relax health insurance regulations and mandates that make insurance more costly and that impede competition.

Insurance security: People who have health insurance should be able to keep it through guaranteed renewal of health insurance and not see their premiums soar if they get sick.

Fiscal responsibility: Reform must adhere to fiscal responsibility, with no new taxes or increases in net federal spending.

State flexibility: States should have a prominent role in reforming their health insurance markets rather than having health insurance micromanaged by the federal government. States should have the power to create or encourage the creation of programs and purchasing pools to enhance the buying power of patients and small businesses. But the purchasers and consumers of care ultimately should be the final decision makers.

Create Choice of Private Plans in Public Programs. Reform should provide more options for Medicaid recipients, Medicare beneficiaries, and others in public programs to escape the restrictions that inevitably come from price controls and from government micromanaging benefits.

Improving Medicare: Protect and improve the Medicare Advantage program which gives seniors the option of selecting private plans in Medicare offered on a level playing field with regular Medicare. Expand competition and choice, using the competitive Medicare Part D prescription drug benefit program as the model.

Private plan choice in Medicaid: Allow people to escape Medicaid by letting them assign the value of their Medicaid benefit to private coverage of their choice. That step will give them better access to private physicians and the opportunity to use employer contributions, their own funds, or other resources to buy even better coverage.

State flexibility in running Medicaid: Allow states to adjust payment rates to encourage greater physician participation in Medicaid. Also, reform the “Washington knows best” mentality that forces states to plea for changes to their Medicaid programs and allow them instead to implement long-overdue innovations to improve the delivery of care.

The Big Picture

Pollster Daniel Yankelovich is a master at seeing megatrends in society. He says that public opinion progresses through predictable stages, from dawning awareness of a problem, to growing sense of urgency, discovering that tough choices must be made, wishful thinking, and finally to weighing choices and making responsible judgments.

For all of its massive flaws, ObamaCare has put the American people through a searing educational process. People are smarter now. They continue to be frightened about government power over their health care. They now realize that they aren’t going to get their health care for free, and it may even cost them more. They also see that government giving them choices can actually mean fewer of the choices they want.

Compassion Runs Strong

Americans are scared, vulnerable, and even angry about the upheaval in health care, but we can’t ignore the fact that the vein of compassion still is strong. At a recent focus group discussion, a young woman said she had had health insurance for her family through her husband’s job. But because of ObamaCare, their premiums soared. The family policy which had cost $400 per month would more than double to $900. She decided to keep her husband and children on the policy, and she would go without. She’s uninsured because of ObamaCare but said that’s OK if that means a child with cancer now can get treatment who otherwise couldn’t. Other women in the room women nodded agreement.

This moment is an opportunity for conservatives to touch the core values of Americans with new solutions.

Backers of ObamaCare want Americans to think they can get health care only if their deeply flawed law stays in place. In fact, people would get better health care at a lower cost with fewer strings attached if consumers, rather than politicians or government bureaucrats, made their own decisions about the health care and insurance coverage that are right for them.

We are stuck in a 20th century industrial model of health care in a 21st century age of information and innovation. If consumers were empowered to make their own choices with better incentives, transparent prices, and flexibility with benefits, then genuine competition—not ObamaCare’s fake competition—would flourish, giving people countless options we can’t even imagine today. We can have better health care that is more accessible to millions more people if we let the miracle of the free market unleash creative solutions. The future is waiting.

Ms. Turner is Founder and President of the Galen Institute, a think tank devoted to advancing ideas and policies to create a patient-centered health sector.