The Replacement For Obamacare Is Here

(promoted from the diaries by streiff, not as an endorsement — this is not my area of expertise — but as a starting point for discussion.)

Today, healthcare is the primary driver of debt in America, both in households and our governments. All attempts to fix the access problem in the last 50 years have led to higher costs, less transparency, limited choice and bigger government. They have made the original problems worse, while creating new ones.


As political junkies have been swimming the channel of Obamacare repeal/replace the last few weeks, regular Americans are asking what is going to take it’s place if the GOP follows through on their six year/four election cycle promise to eliminate the collapsing government program. The reality is that if we do not do something, our current program, with it’s current users will be in such bad shape, need will not be a factor – people won’t want it.

Dozens of plans have been drafted by Senators and House members, think tanks and interested parties, but getting everyone to agree on something is going to be as big a political achievement as passing the Affordable Care Act was for Democrats.

For years, all 50 states had a patchwork of half-tries, mostly failures. So, progressives have attempted to use the power of Washington, D.C. to implement one-time fix-alls. But, we have a federal government, which means the power is “federated,” or distributed among all 50 states, and at multiple levels of its own. This is an asset, not a liability. Whatever changes D.C. makes, it should do so with the intention of giving the most freedom to individuals, and the states they live in. As a nation, our government’s only role is to guarantee as much free movement as possible, so long as it does not inhibit someone else’s.


So, here we are, with over 30 state governments, the House, the Senate and (presumably) the Presidency in Republican hands for the first extended time in 86 years. What will we do?

Speaker Paul Ryan (R-WI) has the dreadful challenge of herding a box of disjointed, uncoordinated caucuses across the House floor to come up with a tangible replacement for the ACA. Some, like Rand Paul (R-KY), president-elect Donald trump, and others have said a replacement should be passed at the same time, but others see this as a deal-breaker that will keep a repeal plan from passing at the height of Republican hubris and enthusiasm. After a sweeping election that returned them to power in all three branches, the Party cannot risk the public seeing them as making a political point, rather than serving the needs of 20 million Americans. They feel now is the time to strike the program down with a single bill, with delayed repeal, and work on an assembly line of fixes until that change occurs.


The Republican conference has assembled some of their ideas in The Better Way agenda revealed last June, while others have introduced ideas like tax equality, medicare reforms and portability through articles and books. Seven years ago, during the debate over passing the ACA bill, Whole Foods founder and CEO, John Mackey published a short list of fixes he saw as an alternative that was both market-based and a smaller government solution than the ACA. This op-ed contained most of the reforms we should have sought. But of course, Democrats got their bill passed by one vote, and these changes became impossible. Until now.


First, any replacement needs to move the opposite direction of the ACA, and adhere to the constitution. The Supreme Court issued one of its most convoluted, mistaken rulings in allowing the ACA bills to stand in 2012, and again in 2015. The American people responded immediately to the bill’s passage by electing anyone who vowed to repeal it. And now, seven years later, if the GOP fails, it will be generational suicide for the party. Secondly, it should encourage free commerce, not force it. Thirdly, it must allow the market to decide how to best deliver its product, not be managed by policymakers. Too much to ask in D.C., I know.

This is the replacement plan that should be passed sometime in the coming year (state reforms in parentheses):



Require all multi-state health providers itemize their costs and provide publications of those costs to customers. This is simple good-faith business practice, and will lead to true competition. The status quo amounts to antitrust violations, as providers and insurers can hide the majority of costs, and refuse to itemize health care products and services, because of a convoluted system that is more socialist than free market. This problem preceded the ACA, and should have been resolved before simply changing who pays for expensive care. This is not traditionally a constitutional role, but is supported by the 14th amendment, which protects of the right of equal protection in state-based truth-in-selling laws. This reform could also be enacted on the state level, if necessary.



Forcing freedom of movement in a market across state lines is the very definition of “interstate commerce,” as empowered by Article I, Section 8, Clause 3 of the Constitution. We should allow people to buy health plans wherever they reside, usable at any hospital network, anywhere. States can no longer force buyers to comply with arcane laws, forcing them to buy state-only plans. If federal plans pass muster, they can be used anywhere.


Equalize the tax laws, so private, public and employer-provided plans receive the same tax credits and incentives. Ideally, the tax laws should be evened out entirely, and all incentives targeting market patterns removed. But, in the very least, allowing people to purchase health care products, services or insurance should be made a tax deduction on federal taxes. If states can be encouraged to do the same, this will create true balance in the market, and encourage innovation among providers and insurers.


Any federal role in healthcare is unconstitutional, but the runaround this has been federal officials motivating states to alter policy by tying strings around badly-needed revenue to support state medicare/medicaid programs. As a step toward shrinking the size and interference of the federal government, all monies should be block granted to states without conditions. If state medical programs are below the national average, they should be weaned off federal funding altogether, and their federal tax burden lowered accordingly.


50 states have a patchwork of requirements on health insurers, and it leads to some states having cheaper plans than others, despite similar demographics, geography, conditions, etc. While the federal government has no authority to outlaw state mandates, it can require that states allow plans that are assembled the way creative insurers, providers and consumers want them to be. Again, according to the Constitution, the federal government has the power to regulate interstate commerce – that is, to “make regular,” or encourage freedom of movement. Furthermore, the 14th amendment assures that each state must honor contracts, agreements and personal ownership across state lines. Other popular federal mandates, like the 26-and-under child coverage and pre-existing conditions waiver can and should repealed and met by states on their level, and by a radically cheaper market.



Currently, most states outlaw or discourage any creative health provision program, other than the traditional insurance plans we know and hate to love. In 2007, Washington state passed a law encouraging medical practices to foster innovative programs to provide care and services to patients. One company, Qlianc Medical Management initially charged $65/mo for unlimited access to services and personnel. The business model was sound – the average doctor was getting $200-250 per patient, per year, but the membership program guaranteed triple the revenue. North Carolina, and other states have similar direct-pay industries with monthly fees, but most other states have treated such programs as full health insurance plans, with all their regulation, mandates and minimum pricing rules. This kills a free market, and drives cost higher by eliminating innovation and competition. As a result, the closest you can get in some areas of the country are faith-based cost sharing programs like CHM, which spreads the cost of members’ health bills across the network.

But, with the suggestions above, the immense cost saving potential means that states should to be encouraged to promote these businesses. If these companies wish to provide services across state lines, the federal government can encourage this kind of innovation.


The dreaded term brings chills to the spine of lobbyists, and plumes of flame in the eyes of legal associations nationwide. While it’s a major factor in the cost of healthcare, it’s not always seen as the most important. Many authors have furiously devised studies, and articles to broadcast those studies about how tort reform aims for a problem that doesn’t exist. But, those studies are based on false premises, and use convenient numbers that ignore the real factors that affect quality and cost of healthcare. There are just as many studies that use real numbers that effect the cost and experience of consumers. They reveal positive effects of tort reform. One in 14 doctors face medical malpractice lawsuits every year. In higher risk industries, like heart surgery and neurology, the threat is higher.


The average doctor pays $30,000 in malpractice insurance, some as high as $300,000. Each year, malpractice losses cost the industry an average of $20 billion, or an average of 4% of a practice’s revenue. This clearly has an efficiency and cost effect on care. After 10 years in Texas, tort reform resulted in a roughly 50% drop in malpractice lawsuits, and an influx of doctors and medical practices applying to work in the state. Today, malpractice insurance is up to 40% cheaper than it was in 2003. Before 2005, the American Medical Association listed Texas as a “state in crisis,” but removed the designation just two years after tort reform was passed. Furthermore, access has increased as the number of practicing doctors in the state has grown at twice the annual rate of population growth, and the cost of healthcare has grown by only 25% of the national average.

Now, faith-based hospitals have increased their charity care pools by hundreds of millions of dollars in that state, providing care to people who cannot afford even the cheapest plans that result from a truly free market. This is what happens when freedom lives without fear or manipulation.


As these reforms are enacted, a tapered repeal should be implemented that allows current enrollees to retain their coverage for a number of years, depending on their income level, with the goal of eventually motivating all existing members to find cheaper, better access elsewhere as the newer, freer market takes hold. Meanwhile, states will be able to supplement their own healthcare systems with the increased block grants if their rates of privately insured decrease as a result of these changes. Eventually, Obamacare will become a distant memory, because it’s dependents will no longer need it.



Insurers have never been the main problem, but dependency upon them is. Furthermore, neither is profit. Only 18% of hospitals are for-profit. The problem is cost and access. With the lack of transparency, portability, or true competition, the costs of malpractice abuse and over-regulation of the healthcare market have not had the market forces that create savings. Even before the ACA, the industry did not have true competition, accountability, or the efficiency that comes from it, because it was hidden. Critics disparage the “free market” of healthcare, but was it ever truly “free?” Some people want this area of their lives to have no stress – just confidence they’ll always have healthcare, regardless of what that really means in the end. As conservatives, we believe the tradeoff is worth it, if you do it right. No half-measures, somewhat-free markets, or HMOs.


If we enact the reforms above, keep it simple, constitutional, and allow states to do the rest as their people need it, the cost of healthcare will decrease; the providers of healthcare will increase; and everyone, everywhere will be able to find healthcare anywhere they go, and at a cost that is not more than they can bear.

No, healthcare is not a right. Rather, the ability to pursue a happy, healthy life, with liberty and happiness is one. And it’s time the government accepts that it’s only role is to promote liberty, not manage it.







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