Obamacare

Conservative 'Alternative' to Obamacare Misses the Market

It's good to see Republicans put forth health care ideas, but they may need to step back and think some more about first principles.

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Instead of shutting down Obamacare's insurance exchanges, the government should expand them so that they also include patients who now are covered by Medicaid, Medicare, and veterans health programs.

That's the gist of a big new health care policy proposal that's getting a lot of attention.

It's newsworthy in part because it's so counter-intuitive. It comes from a think tank, the Manhattan Institute, that's generally known for conservative, free-market, center-right policy ideas. You'd expect them to be in favor of repealing Obamacare entirely, not expanding it.

The proposal is attracting respectful praise from other conservative voices. Steve Forbes, the former Republican presidential candidate, tweeted a link about the proposal with the words "what true patient-centered, consumer-driven healthcare reform would look like." (The plan's author, Avik Roy, is the opinion editor of Forbes in addition to being a senior fellow at the Manhattan Institute.)

At the conservative web site Townhall.com, Conn Carroll wrote, "Some conservatives will oppose Roy's plan since it does not begin by repealing Obamacare." But he insists, "fetishizing full repeal at the expense of smaller, more popular reforms would be a huge mistake… Progressives did not create the modern welfare state in one fell swoop. They did it by incrementally building it up over time. Conservatives should steal a page from their playbook and begin to cut the size and scope of the federal government whenever they can. If we wait to do at all at once, we may be waiting forever."

Dr. Roy's argument is that repealing the Affordable Care Act entirely is less desirable than his approach because a repeal "would cause a considerable amount of disruption" to the health care arrangements of 36 million Americans who will be getting subsidized insurance through Obamacare by 2017.

Nor is the lack of a full repeal the only aspect of the Roy-Manhattan Institute plan—Avik-Care, some are calling it—that may raise the eyebrows or the hackles of free-market types. The plan proposes "increasing federal funding of graduate medical education by $6 billion a year starting in 2016." So the rest of us are to be taxed to fund the education and professional training of physicians who, once they graduate, will earn six and seven-figure salaries? What about federal funding for graduate business or law education?

Avik-Care also recommends increasing staffing at the Federal Trade Commission, "so that the agency could do more to challenge anticompetitive hospital mergers." Here even Dr. Roy concedes that "expanding staffing at a government agency may seem like a counterintuitive way to increase market competition." Dr. Roy makes much of a measure of market concentration called the "Herfindahl-Hirschmann Index," or "the sum of the squares of the market share of each player in a given market." But he doesn't acknowledge how much the index depends on how you define the "market."

And, the paper says, "The proposal would increase the progressivity of health care-related federal outlays and tax expenditures. It would reduce subsidies for health coverage for high-income employed and retired individuals, but spend more on health insurance for the poor and the uninsured." For those who think the federal tax and spending system is quite progressive enough already, thank you, this will be a bitter pill.

There are some elements of the Roy plan that free-market types will have an easier time embracing. The proposal claims it will reduce the federal deficit by $8 trillion over 30 years. It would repeal the individual mandate and the employer mandate that are part of the Patient Protection and Affordable Care Act. It would repeal many of Obamacare's taxes, though it would leave in place the "Cadillac tax" on high-premium plans. It would increase physician supply by loosening restrictions on immigrant physicians trained abroad. And it recommends reform of the Food and Drug Administration to "give patients early access to innovative new therapies."

The Roy plan would reshape the rules governing the insurance policies available on the exchanges, allowing a larger price differential between premiums for the oldest and youngest customers (a 6 to 1 "age rating band" instead of 3 to 1), higher deductibles (averaging $7,000 an individual and $14,000 a family), and reduced subsidy eligibility (the upper threshold would be 317 percent of the federal poverty line rather than 400 percent). The proposal grandly describes this as "emancipating the ACA exchanges," but it may strike others as tinkering around the edges. And the increases in deductibles or premiums for some participants undercut the argument that the Roy plan is somehow less disruptive than a full Obamacare repeal.

Dr. Roy was a health care policy adviser to Mitt Romney's presidential campaign in 2012.

It's good to see the Republican side of the policy debate putting forth its own ideas for how to improve quality, reduce costs, and tackle the federal budget problems that relate to health care quality. But before they can successfully tackle the policy details—317 percent of the poverty line or 400 percent? A 6 to 1 "age rating band" or  3 to 1?—the politicians and their policy advisers may need to step back and think some more about first principles.

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50 responses to “Conservative 'Alternative' to Obamacare Misses the Market

  1. “It’s newsworthy in part because it’s so counter-intuitive. It comes from a think tank, the Manhattan Institute, that’s generally known for conservative, free-market, center-right policy ideas. You’d expect them to be in favor of repealing Obamacare entirely, not expanding it.”

    Say what? How is an exchange not more market-oriented than single-payer schemes like Medicare and Medicaid?

    1. How about a federally run exchanges are not market oriented. “The man” decides what market worthy. Which is a non-starter right there.

      If some private firm decided to post every single insurance company on its site with all the plans available I would say it was akin to Amazon for insurance.

      The federal & state sites maintain the one to three insurer pre-ACA nonsense that is the problem to begin with. This is doubling down on stupid. We need to stop the nonsense that because you live in Kansas you do not have access to an insurance company offering plans in Missouri or Colorado.

      1. Yeah there is no more an essential enterprise to the stability of commerce than insurance and the government just sticks their dick in it.

      2. you want to buy across state lines
        you’ll have to repeal federal law
        or get promission from the governors

    2. How is an exchange not more market-oriented than single-payer schemes like Medicare and Medicaid?

      They’d still be single payer, plus a new middleman! But “beneficiaries” would have a choice of competing insurance companies. This is Paul Ryan’s baloney to increase competition between insurance companies. Can we control automobile prices with more competition between Allstate and Geico?

      Fact: ACA won by default. Nobody had a credible alternative. Still don’t

      One quick example. We already have max competition in Medicare (like me) I already shop for doctors and COULD shop for major tests, procedures and hospitals, but I have no …. wait for it … no skin in the game!

      If you’re my age, you’ve been talking about “skin in the game” for 40 years. Haven’t heard a peep in the past 7 years. Fiscal conservatives are as bankrupt as the liberals, but the liberals can make more popular promises. We offer nothing.

      Imagine two choices for Medicare/Medicaid. One saves taxpayers 10% per year initially, removing government entirely. The other leaves government where it is for now, but saves 15% per year initially.

      Of those two, which would most libertarians prefer? I hope I’m wrong, but most would chose to get government out entirely. And that’s why we lose and will NEVER have a libertarian moment. We’re now anti-gummint instead of pro-liberty.

      Today, NOBODY is promoting or defending liberty.

      1. If you’re going to complain about libertarians being anti-government, well, hello, Tony.

  2. I said from the beginning that the R’s didn’t dislike the PPACA itself, they just didn’t like it because it was a D program and complaining about it excited their base. I can’t think of a single time the R’s cried unconstitutional when the D’s passed something that they then rescinded when they had the chance, instead they fully embrace the new power that comes with that unconstitutional act and used it for their own purposes. R’s and D’s are flip sides of a counterfeit coin. In the end R’s are really just D’s with bibles.

    1. ACA always felt to me — even despite its Heritage Foundation roots — like an “art of the possible” compromise that worried more about politics than whether it was workable.

  3. There still will be millions uninsured, with the rest of us paying the bill. So where did we get ahead?

    1. it wasn’t about getting ahead
      it was about stopping the health ins
      death spiral, every time premiums
      went up, more and more policyholders dropped out for the ER, left on it’s own,soon ins would be so high not enough could afford it for the ins companies to stay in business

  4. The damn exchanges still aren’t completed, millions are going to lose coverage (barring another waiver/exception) for not (properly?) entering data needed only because this is a government function, and the Bright New Idea is “make them even bigger and more central(ized)”?

    It really is true: the only conceivable response to a failed government project is to make it bigger.

    1. stop watching fox news, goober

  5. I see nothing in the writeup that isn’t an expansion of OCare and government involvement in health care.

    This reads like the game plan for the next incremental step from OCare to full socialization/nationalization.

    1. you mean we’ll actually catch up to the rest of the civilized world when it comes to healthcare?

  6. The Avik Roy plan is DOA.

    A sign up web site isn’t an “exchange.” NASDAQ is an exchange. A key feature of an exchange is bids and asks.

    FIXING OBAMACARE BEFORE IT STARTS; OR IF ONLY OBAMA WERE AS SMART AS I AM

    1. Umm, the website is the MARKETPLACE for exchanges, which then can offer group plans and rates to individuals. But it’s a stucking fupid way to do it.

      Business owners have been using “exchanges” for over 50 years. I started one myself. They aren’t called exchange, but go see how National Federation of Independent Business (NFIB) maintains exchanges for all the states they’re allowed to create polls in. Also on a website.

      Mine was for small businesses and the self-employed in Cleveland. Very small businesses were lumped into a large risk pool. (Ohio did not allow insurance pools for fewer than 100. Self-employed individuals, even unmarried, had access to lower group rates. I had very little choices because my small-business group was smnall, but at the time it was one of openly two option in all of Northern Ohio. Group rates was enough incentive.

      1. By your belief, Costco is an exchange.

        Disparate individuals who form a group for discounts owing to bulk purchases isn’t an exchange.

        Again, an exchange is an open cry market with set rules for bids and asks. Maybe you have heard of the New York Stock Exchange or the Chicago Mercantile Exchange.

        1. By your belief, Costco is an exchange.

          Look again. I never stated a belief. I corrected your usage.

          Disparate individuals who form a group for discounts owing to bulk purchases isn’t an exchange.

          Can you stay within 5 light years of the topic? Might you be confused about Obamacare exchanges?.

          And you’re wrong.

          Again, an exchange is an open cry market with set rules for bids and asks. Maybe you have heard of the New York Stock Exchange or the Chicago Mercantile Exchange.

          I’ll see your Stock Exchange, and raise you one telephone exchange.

          You may have confused a special type of exchange with the general meaning. By your definition, the word “stock” would be redundant, right?

          In seeking definitions for you, I didn’t see a single one with all the bids and ask verbiage, not even investopedia

          http://www.investopedia.com/terms/e/exchange.asp

          —a few genreral ones (I can’t include full links_

          2.A place for conducting trading

          yourdictionary.com

          1 a giving or taking of one thing of value in return for another

          merriam-webster.com

          1. a place or organization where shares, currencies, commodities, etc. are bought and sold:

          dictionary.cambridge.org

          P,.S. Dictionaries are based on usage. If they called the exchanges cucumbers, that definition would eventually be added to “cucumbers.” (You’re beating a dead horse)

  7. The proposal claims it will reduce the federal deficit by $8 trillion over 30 years.

    I could claim to have 10 inch dick. That would be about as true as this claim, but a hell of a lot more believable.

    1. by $8 trillion over 30 years

      So best case scenario is it will add $16TT over 15 years?

      1. But without this painful reforms, it would add $20T. Thus, it cuts the deficit by $4T. See how that works?

        1. Sounds like you’ve got a future as a policy analyst!

        2. But its proponents aren’t saying other parts of the budget can’t be cut too. They’re taking a big chunk out of this sector, not saying others shouldn’t take out big chunks from other sectors. If that were done across the board, the budget would be in surplus.

          1. You beat me too it, Robert. Not to defend the bureaucracy, but we ain’t gonna defeat them if every single proposal eliminates the total deficit.

            The tricky part is, to do it quickly we’d have to cut EVERYTHING, like you say, so that no constituency is paying it all. We have SO many cross-subsidies.

          2. yeah, right, cut 680 bllion dollars out of the economy, then go find a cardboard box to live in under a bridge

  8. higher deductibles (averaging $7,000 an individual and $14,000 a family)

    Why bother paying hundreds of dollars a month for insurance, and then have that high a deductible? That’s basically a catastrophic plan. Might as well sell catastrophic-only plans, put the money into an HSA, and pay for everything non-catastrophic with cash.

    1. That IS a catastrophic plan, and it SEEMS to be mandated! Most Americans cannot afford the lower Obamacare deductibles that we’ve been ridiculing.

    2. “Might as well sell catastrophic-only plans, put the money into an HSA, and pay for everything non-catastrophic with cash.”

      Exactly right. Insurance should be about high cost, low probability events.

      Then we spend our own money on health care.

      And how about in a *free* market for health care, where if I want to buy a service or medicine from you, no one involved has to get permission from the government?

      Crazy talk, I know.

      1. your “free market” got us into this mess, goober

  9. Any decent reform proposal would have to eliminate the exchanges in favor of market websites (i.e. what existed in the private market BEFORE OCare). Eliminate plan requirements altogether, which would open the door for high deductible health plans with no copays where all bills are paid by the patient directly until the deductible is met. If we have to keep subsidies/crony payments, then make them in the form of HSA account deposits and/or tax credits for HSA contributions. Also, simplify HSA accounts to make direct payments easier and faster. If we have to keep the worthless bureacracy, could we at least require less paperwork, please?

    1. Would you mandate all that? Very few Americans would choose high-deductible plans on their own if allowed a choice, as we’ve seen for over 30 years now.

      MUCH smarter to have ZERO deductibles and co-pays, and not cover routine procedures at all. You get cancer, POW, first dollar coverage. THAT is insurance. Do we sell car insurance for oil changes and car washes?

    2. If we could get all the doctors to lower their rates for routine visits, I’d be all for a no-copay mandate. I’d prefer to spend $60 on a doctor visit than the $120 I spend now. And that’s if there’s NO lab work.

      1. Blame the paperwork. You’re probably not on Medicare, but that one screws up everything. But they lose money on Medicare, which is obviously overcharged to the private sector.

        I have a good friend who’s a doctor. He and his wife are those super-sweet Christian types. I say that only to put a picture of her in your mind. First time I visit the home, we get into his wife describing the nightmare of Medicare. He was in a remote retirement community. She has tears pouring down her face, wracked with sobbing, because she spend the entire weekend on Medicare paperwork. She even had to work on Sundays. THIS is the untold scandal of Medicare.

        Long story, but that’s what you’re paying for.

    3. you have no idea what you are talking about, it’s obamacare or single payer, there is no other recourse

  10. Lets jsut roll with it dude.

    http://www.AnonWays.tk

  11. It’s good to see Republicans put forth health care ideas, but they may need to step back and think some more about first principles.

    First principals!? The anonbot above my post sums up the depth of their philosophy on governance.

  12. As late Murray Rothbard said: ” No one goes to the barricades for a 3% property tax reduction.”

    1. Yeah, but nobody goes to the barricades against one, either. Therein lies its strength.

  13. Dr. Roy was a health care policy adviser to Mitt Romney’s presidential campaign in 2012.

    So the guy who wants to expand OCare and push it down the road to full socialized medicine was Romney’s advisor?

    No wonder Mitt kept his yap shut about OCare during the campaign. He loves it, apparently, and could hardly wait to really grow it, but knew better than to say so out loud.

    1. Dude, Romney was all over O’Care during the campaign. He like to point out that the PPACA was modeled on the system he helped put in place in Mass.

      1. The only concession he made here was that he felt that the ‘exchanges’ should be implemented (and designed and put into law) by the states and not by federal fiat.

        1. More than the exchanges, he wanted each state to retain total control of its entire private healthcare. It was a form of federalism argument. He kept trying — and failing — to disconnect Romneycare and Obamacare, citing unique circumstances in each state.

          I watched him choke once, when he was asked to name one factor in Mass that conflicted with Obamacare.

          1. obama hired the same team that put romneycare together to do obamacare

  14. This is not the “Republican Plan”, guys – it’s the Mahattan Institute plan. The GOP, as a political party, is still painfully unable to articulate a counter-idea to O’Care.

    Disappointing to see people who brand themselves as fiscal conservatives, or even just moral people, advocating something like Avik-Care (seriously, need a new brand name for it, for one ). I wonder if they know that they just took off their mask, or if they think it’s still on because everyone else still considers this a “conservatives” approach.

    1. Good point. Libertarians and conservatives have a rather shameful recent history on credible alternatives to Obamacare — which is winning by default.

  15. “what true patient-centered, consumer-driven healthcare reform would look like.”

    What a tool.

    Consumer driven health care would leave us *free* to buy the health care we want, from whom we want, without anyone involved having to get permission from Big Brother first.

    Free. Obviously, that’s just crazy talk, thinking we could be free.

    1. And there would be no regulatory obstacles to a true free healthcare market, put in place by those wishing to maintain their little money-gushing monopolies. No inter-state restrictions, no “certificates of need”, no insane standards for doctors to meet. How many potential doctors are being turned away from medical school because of the sky-high tuition or the marathon of hoops they have to jump through?

      But of course, no one’s gonna do a damn thing about it, because FOR YOUR OWN PROTECTIONZ!!!

    2. or not buy healthcare at all and dump the cost on everyone else

  16. Marvelous. ANOTHER lame healthcare plan as dumb as Ryan’s or, umm, Cato. Obamacare won by default because there was never a credible alternative. it will continue winning by default until market libertarians have something that makes sense. Something more than free-market soundbites and slogans, as we snarl in unison. “git gummint out.”

  17. proposes “increasing federal funding of graduate medical education by $6 billion a year starting in 2016.” So the rest of us are to be taxed to fund the education and professional training of physicians who, once they graduate, will earn six and seven-figure salaries?

    The feds are already paying more than twice that amount and we still have a severe doctors shortage. Most of the funding goes to “teaching hospitals” to offset their costs of hiring and training doctors, internships and the like.

    http://www.healthaffairs.org/h…..rief_id=73

    Would we prefer a 60,000 shortage of doctors, mostly in primary care, so we can jump up and down about waiting times?

    What about federal funding for graduate business or law education?

    How many people will die from a shortage of MBAs?

    I’m not defending yet another lame healthcare reform from the right. But this is the first proposal I’ve seen to address the severe doctor shortage. (Along with broader use of Nurse Practitioners)

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