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Thursday, February 18, 2010

Some Advice to Republicans at the Blair House Meeting on Health Care by Douglas O. Walker

President Obama has convened a half-day bipartisan health care session, tentatively set for 25 February at the Blair House, to be televised live to the nation. The meeting provides the President with an opportunity to regain momentum on his health care proposals and for the Republicans to interact with and question the President on this issue. It is unclear, however, how any compromise, unlikely as it might be, would affect the existing bills in Congress or the help define the process toward eventual Congressional approval. Given the disarray in Democratic ranks over the question of health care reform and the very different priorities of the Republicans, the most likely outcome of the meeting is that it will effectively end any further debate on comprehensive health care reform for the foreseeable future.

One lesson to take away from experience of the last year is that health care is such a complex and interdependent issue, involving so many actors and special interests, that it simply is not possible to reform this huge sector of the economy in one giant and grand attempt. More than this, at this time the economy remains in trouble, the financial system under strain, and the budget in unprecedented deficit. This is simply not the time to introduce major changes in the economy and a new entitlement program in the government budget. One wonders why the Administration does not understand this.

There have been many suggestions as to how the Republicans might respond to the President's invitation to discuss health care reform. In the main, more for reasons of political appearance than advancing a discussion of reforms to the health care sector, this advice has emphasized the need for the Republicans to discuss the current legislative proposals put forward by the Democrats. I suppose this is good politics and the appearance of participating constructively by discussing the Democratic ideas looks good to the country.

But the Democratic bills now before the Congress radically change the delivery of health care and create an extremely expensive new entitlement at a time when we know that existing entitlement programs are not financially viable. Under the proposed legislation, many decisions regarding the costs and benefits of various medical procedures would be shifted to the government, which has little experience in this area, and the bills are encumbered by special interest provisions such as "the Louisiana Purchase", "the Nebraska Health Care Deal", and exemptions and carve-outs for unions and Blue Cross/Blue Shield plans. Simply stated, the Democratic bills focus on huge untested and expensive changes to the health care sector. This is not an acceptable basis for the country to proceed with health care reform, and the Republicans should say so at the Blair House meeting.

Granted, the health care sector does need reform and improvements. Rather than discussing revisions to the present bills, the Republicans should tell the President and the Democrats that a different approach must be followed. Instead of this one-time comprehensive overhaul of the entire health care sector, reform should be carried out step-by-step over a period of years and then only after careful consideration of objectives and goals and ways and means of achieving them. A key question should be how the government might contribute to improving the performance of the private sector in this area and how it might improve a private-based health care system in a financially viable way. Any steps taken in this direction should involve modest and involve steady changes clearly integrated into strategy for re-structuring the health care sector so that it is vibrant and cost-effective and serves all the American people better than it does today.

Here are some ideas that the Republicans might wish to consider as they formulate policy on health care and respond to the President's challenge to propose reforms to health care in the United States:
  1. Move from the comprehensive care approach of Medicare and Medicaid to a government-supported system that provides catastrophic health care insurance for all citizens. The catastrophic care insurance provided by the government would cover very high cost, very long-term and narrowly-defined medical needs beyond the ability of the individual to finance. Because it is limited to severe medical conditions that are truly life-threatening or family-destroying, its costs to the government would be much lower than the much more comprehensive coverage presently provided by Medicare and Medicaid.
  2. Focus on strengthening private major medical health insurance plans and slowly and steadily discourage the use of the comprehensive health insurance packages that entail large volumes of expensive paperwork to pay relatively minor medical care services and procedures. Eliminate government mandates to cover relatively minor medical expenses and procedures that many individuals do not want covered by their insurance and would prefer to pay out-of-pocket. Encourage people to pay for the normal and regular health expenses directly at the time they are provided or through high deductable major medical plans.
  3. Do not use government regulations and mandates on health insurance companies in an attempt to widen insurance coverage to the poor. This only results in cost-shifting and greater administrative expenses. Rather, any new subsidies intended to cover the poor should be in the form of health care vouchers financed out of general revenues, and not linked only to wages. Eventually eliminate Medicaid by substituting health care vouchers.
  4. Encourage charity care in the area of health care through tax policy and cooperative endeavors.
  5. All savings garnered from efficiency gains in Medicare should be used to shore up Medicare during the transition to universal catastrophic coverage. No savings in Medicare should be used to fund new health care insurance subsidies or any expansion of current entitlements. Raise the age of eligibility and level of deductibles for Medicare during the transition.
  6. Step-by-step introduce the following kinds of private health insurance reforms:
    - Allow interstate competition in health insurance.
    - Remove the preferential tax treatment of employer-provided health insurance.
    - Remove restrictions on the portability of health care insurance.
     - Allow individuals to waive extraordinary litigation claims in return for lower premiums, with an option to capping them at no more than $1,000,000.
    - Move to widen the kinds of procedures nurses and other medical staff can undertake to weaken the doctor’s monopoly on the provision of skilled medical care.
  7. Increase the supply of medical care providers by:
    - Increasing the number of medical schools, nursing schools and technical schools providing training in medical specialties.
    - Allow medical professionals with licenses in one state to practice in another state.

Because it is too late to introduce new health care legislation this Congress, the Republicans should tell the President they plan to introduce in the next Congress elements such as those above in an entirely new approach to health care reform. They should also note that many of the reforms suggested above would not cost a dime and if considered separately from more controversial ideas could be passed unto law relatively quickly.

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