On Wednesday evening, the new Republican majority in the House of Representatives turned that body’s proceedings into what was effectively a massive campaign commercial. The repeal of the recently passed health care law is doomed to fail in the Democratic-controlled Senate and is certain to face a presidential veto. While it may have been politically necessary to pass a symbolic repeal in order to appease the GOP base, Republicans should now dedicate themselves to the real work of making changes to the Patient Protection and Affordable Care Act (PPACA) that both improve the law and stand a reasonable chance of passing. One major problem with the law provides at least one opportunity to do so.
This problem concerns the much-maligned individual mandate to buy health insurance. While the right has been criticizing this provision as an infringement of autonomy, there is also a more concrete problem with the mandate as currently designed: It cannot accomplish its main goal. This feature of PPACA was necessary because the law also bans insurance companies from refusing to cover people with pre-existing health problems. Without a requirement that people have coverage, there would be an incentive for people to wait until they get sick to buy insurance, and insurance companies would soon go out of business because they would not take in enough revenue from premiums to pay claims. However, the fine that will be levied on those who do not comply with the mandate falls below $700 a year—it is thus much smaller than the several thousand dollars that a typical family pays annually in premiums. Even many of PPACA’s most ardent supporters, like Ezra Klein of the Washington Post, have argued that the mandate needs to be strengthened. The existence of a flaw that even those sympathetic to the bill wants to fix gives Republicans an opportunity—they can offer their support for efforts to strengthen the requirement in exchange for other changes in the bill that they want.
One major improvement that they should seek concerns insurance regulation. PPACA imposes various requirements that insurance companies must meet in order to sell insurance in the health exchanges, government-organized markets where those without employer-provided health insurance can compare policies and get subsidies to help pay for them. Two features of this provision should strike the GOP as especially objectionable. First, the law places stringent restrictions on companies’ ability to sell policies that require out-of-pocket spending. It thereby exacerbates one of the main factors driving up health care costs: the way that the comprehensive coverage offered by many employer- and state-provided insurance policies makes consumers less price-sensitive, since they pay for their care indirectly through premiums or taxes and therefore are never billed for the full cost of any one treatment. Second, PPACA gives the Secretary of Health and Human Services the authority to add new requirements without consulting Congress. This feature of the law parallels similar policies at the state level, which have typically increased costs by enabling doctors and medical-device manufacturers to lobby for the inclusion of treatments of dubious medical value; the fact that the person deciding is not directly elected makes it hard for citizens to fight back. Republicans should therefore tie their support for strengthening the mandate to a loosening of the restrictions on out-of-pocket spending and the creation of some form of Congressional review of new insurance regulations.
Supporters of the restrictions on out-of-pocket spending might claim that removing them will make health care unaffordable for less well-off Americans. Republicans should respond to this concern by also urging changes to the subsidies that PPACA gives to those who cannot afford insurance. Since an insurance plan that offers less coverage will not cost as much, some of the funds allocated for these subsidies should be turned into government-provided health-savings accounts (HSAs). These would be designed to help low-income Americans pay out-of-pocket, as required by their insurance policies. People with HSAs could draw on them to pay out-of-pocket costs, and any funds left over in a given year would roll over to the next. The last feature is very important, since it gives poorer citizens an incentive to shop wisely.
In addition to its substantive benefits, adopting this proposal could yield significant political benefits for a Republican Party that has not fully recovered from its rout in 2008. It would allow the GOP to stake out a position that is not opposed to all efforts by government to help the needy, but strives to make those efforts less costly and combine them with market forces. Such an approach should appeal to voters who are more worried about public debt and wasteful spending than ever but also have economic anxieties that lead them to look to the state for help. And in a period where both sets of problems really are increasingly severe, a worldview that is sensitive to both may be just what the country needs.
Ajay Ravichandran is a third-year in the College majoring in Philosophy.
