Given the tone and substance of today’s arguments, it looks like there’s a decent chance the Supreme Court will not only toss Obamacare’s individual mandate (a 62% chance according to Intrade), but all of Obamacare as well.
But then what? It seems highly unlikely—to say the least!—that any sort of replacement would pass this year. So now we are talking about 2013, where the issue would get sucked into the swirling nexus of entitlement and tax reform. It’s actually tough to logically separate out healthcare reform from those two issues, as Obamacare more or less attempts to do. Rising U.S. healthcare costs are driven by a market-distorting, third-party payment system where either government (via Medicare and Medicaid) or business (via the health insurance tax exclusion) picks up the tab for individual healthcare spending. You can’t really “fix” healthcare without significant tax and entitlement reform.
Conservatives want to change the system so markets can work their magic. But Republicans have been unclear about what they want to replace Obamacare with, exactly. Rep. Paul Ryan, the GOP’s resident wonk, gave a speech last September where, in addition to advocating block granting Medicaid to the states and transitioning Medicare to a premium support system, he endorsed “replacing the inefficient tax treatment of employer-provided healthcare with a portable, refundable tax credit that you can take with you from job to job, allowing you to hang onto your insurance even during those tough times when a job might be hard to find.”
Mitt Romney, the likely GOP presidential nominee, has a plan, too, though it’s still obviously a work in progress. Interestingly, Romney economic adviser Glenn Hubbard has co-written a book on how to fix the healthcare system. The Hubbard Plan has five elements: 1) allow all Americans to deduct from income taxes all their healthcare expenditures—premiums, employee contributions, out-of-pocket costs, etc.; 2) deregulate insurance markets to foster nationwide, portable health insurance; c) making health information more available; d) control anti-competitive behavior such as hospital mergers; e) malpractice reform.
Combining the Hubbard Plan with the Ryan Plan would make a good starting point for the GOP.
And the Democrats? Given a) liberal disappointment with the lack of a government option in Obamacare, b) the president’s marked shift to the left, c) raging fury over the Supreme Court decision, Dems will likely be in no mood to accept any plan too different from Obamacare. Or, if Romney is president, they will let Republicans take the lead.
But there might be a compromise out there. Look to Switzerland, where there is universal coverage despite no government health insurance programs. Consumers choose among private plans. And the nation spends 40% less than the U.S. on healthcare, as a share of GDP.
Here’s Regina Herzlinger: “Republicans could enact Swiss-style universal coverage by enabling employees to cash out of their employer-sponsored health insurance. (Although many view employer-sponsored health insurance as a” free” benefit, it is money that would otherwise be paid as income.) The substantial sums involved would command attention and gratitude: A 2006 cash out would have yielded $12,000—the average cost of employer-sponsored health insurance—thus raising the income of joint filers who earn less than $73,000 (90 percent of all filers) by at least 16 percent. Employees could remain in with an employer’s plan or use this new income to buy their own health insurance.”
Choice, competition, price transparency, coverage, and innovation should be the building blocks of whatever comes after Obamacare.