GOP Pledge Falls Short

First, we can breath a sigh of relief: The GOP leadership in the House of Representatives has pledged to repeal ObamaCare “immediately” (see page 27 of the Pledge), which means it will be the first legislative order of business on Monday, January 3, 2011, if the GOP takes the House.  If it doesn’t get through the Senate, that’s fine. If the president vetoes it, that’s fine too. However, the GOP will never gain credibility on repeal unless they do this right out of the starting gate.  If the repeal does not pass immediately, then they can attack bits and pieces of it.  The important thing is that they will have shown that they are serious about repeal.

When it comes to “replace,” however, the Republican alternative is still significantly malformed. Indeed, there’s more than a whiff of Big Government Republican in it. It completely ignores the single most important reform to private health insurance: Amending the tax code to give individuals, instead of our employers, ownership of our non-taxable health dollars. The Pledge expands Health Savings Accounts, which is good, but avoids this big challenge.

The other reforms are part of an unofficial conservative canon. They are nevertheless questionable, because they increase federal power over health care instead of decreasing it.

Medical-liability reform is necessary and beneficial, but it’s not Congress’s job to legislate torts or professional liability. It’s a job for state legislatures, as Lawrence J. McQuillan, Benjamin Zycher, and I have written elsewhere. (It’s Congress’s job to make sure that taxpayers in states with effective medical-malpractice laws don’t subsidize those with expensive ones, which it can do by voucherizing Medicare and Medicaid.)

With respect to purchasing health insurance across state lines, it is surely a perfectly good idea, but states can also do it on their own. That, or Congress can make clear that states can enter into a compact to facilitate this, as they have for life insurance and other types of insurance. Congress never passed a law attacking state sovereignty over auto or homeowner’s insurance, yet the states figured out how to handle these problems decades ago without federal interference.  Again, the key obstacle is the fact the American people do not own their health insurance: Their employers do.

The Pledge goes downhill from there, with proposed health-insurance regulations that reflect an inexcusable lack of understanding the economics of insurance. Making it illegal to “deny coverage to someone on the basis of a pre-existing condition” without mandatory coverage means people can wait until they become sick to apply for health insurance. The only way to mitigate this is through mandating continuous coverage, which the Republicans and President Clinton did in 1996. However, that did not address the fundamental problem that the government gives our employers monopolistic control over our non-taxable health dollars. “Preventing insurers from dropping your coverage just because you get sick” is redundant because it was also in the 1996 law, and because state laws have the same provisions. (But it’s not more disingenuous than when the White House says the same thing.)

With respect to funding state high-risk pools, I’m still struggling to understand how giving more federal money to states somehow reduces federal power over peoples choices about medical care. However, this is what scholars including Thomas P. Miller and James C. Capretta have consistently recommended, so it’s understandable that the GOP has picked it up. Nevertheless, this funding can only makes sense as a one-time subsidy to help people who fall through the cracks when Congress changes the tax code to make health insurance personal property instead of an employer-based benefit. After this reform, people will only buy health insurance if carriers guarantee that their premiums will not jump up after a catastrophic illness (as described by professors Mark Pauly or John H. Cochrane).

Unless the GOP gets its head around these issues quickly, repealing ObamaCare will only be a short-term win, because ObamaCare 2.0 will come right around the corner if the GOP fails to execute real reform once they get their chance.

Nevertheless, House Republicans deserve congratulations on their commitment to introduce a repeal bill next January 3.

Comments (7)

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  1. Tom H. says:

    John, I agree with you. The pledge is tepid.

  2. Ken says:

    It’s designed not to offend so as to not lose a single vote!! How clever.

  3. Joe S. says:

    I agree with the criticisms, but consider that the Democrats won’t even vote on the extension of the Bush tax cuts. So The Republicans may be cowards, but the Democrats at the moment are worse.

  4. Paul H. says:

    On health care it’s way too weak. Republicans have to be willing to take on the tax treatment of health care, or you can forget any chance of real reform.

  5. says:

    Marco Rubio is running on the 10 magic words – An individual deduction for the purchase of Individual Health Insurance.

    That alone will unravel the heart of the beast.

    The Beast = Blue Cross

  6. Erik Ramirez says:

    The GOP pledge is the same as their last budget. It leans in the direction of corporate america, and the numbers don’t add up.

  7. Bart Ingles says:

    John, thank you for this post. I generally agree with about 80% of what I read here, but this time I think you nailed it in both content and emphasis.

    I agree that reforming the tax code in order to get employers out of the way is a prerequisite to other meaningful reforms. But that will never happen until we learn to separate two intertwined concepts: (a) tax breaks for employers, and (b) tax breaks for insurance that follows ERISA/HIPAA regulations regarding guaranteed issue and non-discriminatory pricing.

    In order to have any chance at separating heath coverage from employment, we need to address (a) while preserving (b). Failure to do the latter would obviously lead to collapse of employer-sponsored coverage as we know it, making such a change a political impossibility. And if the GOP now advocates guaranteed issue, then arguments to the contrary are already moot.