Economics, Entitlements

What will Republicans do if the Supreme Court kills Obamacare?

Given the tone and substance of today’s arguments, it looks like there’s a decent chance the Supreme Court will not only toss Obamacare’s individual mandate (a 62% chance according to Intrade), but all of Obamacare as well.

But then what? It seems highly unlikely—to say the least!—that any sort of replacement would pass this year. So now we are talking about 2013, where the issue would get sucked into the swirling nexus of entitlement and tax reform. It’s actually tough to logically separate out healthcare reform from those two issues, as Obamacare more or less attempts to do. Rising U.S. healthcare costs are driven by a market-distorting, third-party payment system where either government (via Medicare and Medicaid) or business (via the health insurance tax exclusion) picks up the tab for individual healthcare spending. You can’t really “fix” healthcare without significant tax and entitlement reform.

Conservatives want to change the system so markets can work their magic. But Republicans have been unclear about what they want to replace Obamacare with, exactly. Rep. Paul Ryan, the GOP’s resident wonk, gave a speech last September where, in addition to advocating block granting Medicaid to the states and transitioning Medicare to a premium support system, he endorsed “replacing the inefficient tax treatment of employer-provided healthcare with a portable, refundable tax credit that you can take with you from job to job, allowing you to hang onto your insurance even during those tough times when a job might be hard to find.”

Mitt Romney, the likely GOP presidential nominee, has a plan, too, though it’s still obviously a work in progress. Interestingly, Romney economic adviser Glenn Hubbard has co-written a book on how to fix the healthcare system. The Hubbard Plan has five elements: 1) allow all Americans to deduct from income taxes all their healthcare expenditures—premiums, employee contributions, out-of-pocket costs, etc.; 2) deregulate insurance markets to foster nationwide, portable health insurance; c) making health information more available; d) control anti-competitive behavior such as hospital mergers; e) malpractice reform.

Combining the Hubbard Plan with the Ryan Plan would make a good starting point for the GOP.

And the Democrats? Given a) liberal disappointment with the lack of a government option in Obamacare, b) the president’s marked shift to the left, c) raging fury over the Supreme Court decision, Dems will likely be in no mood to accept any plan too different from Obamacare. Or, if Romney is president, they will let Republicans take the lead.

But there might be a compromise out there. Look to Switzerland, where there is universal coverage despite no government health insurance programs. Consumers choose among private plans. And the nation spends 40% less than the U.S. on healthcare, as a share of GDP.

Here’s Regina Herzlinger: “Republicans could enact Swiss-style universal coverage by enabling employees to cash out of their employer-sponsored health insurance. (Although many view employer-sponsored health insurance as a” free” benefit, it is money that would otherwise be paid as income.) The substantial sums involved would command attention and gratitude: A 2006 cash out would have yielded $12,000—the average cost of employer-sponsored health insurance—thus raising the income of joint filers who earn less than $73,000 (90 percent of all filers) by at least 16 percent. Employees could remain in with an employer’s plan or use this new income to buy their own health insurance.”

Choice, competition, price transparency, coverage, and innovation should be the building blocks of whatever comes after Obamacare.

35 thoughts on “What will Republicans do if the Supreme Court kills Obamacare?

    • Yes that’s true. Single payer, govt. mandated insurance coverage, but the healthcare providers operate free of govt. administration, like here. We worked there for 3 years and it’s a pretty good, and popular system. Excellent health care with about 1/2 the US cost. (Switzerland has the 2nd highest healthcare cost in the world.)
      They also have the option to upgrade above basic plan on your own — single room, fancier hospital, etc.
      But here’s your problem — no Republican could ever even consider a plan that comes from commie evil socialist godless America-hating Obama-admiring funny talkin very scary enemy from Europe like Switzerland, where they’re all Muslims and foreign born. Them people are foreigners over there and dont even talk English in they homes right, — and shh they allow interracial marriage! Very scary to us Republicans, Romney and Santorum are right, we should hate em all and bomb em soon as possuble, yep thems theres some daym good Repbulicuns! Yep. Love them good Christian Republican candidates, thank you yes let’s all maximize the level of hatred prejudice fear and war in the world just like Jesus told us.

  1. I would love a politician, any politician, to step in front of the cameras and assert:

    “Look, when we try to ‘fix’ the problem, we end up with Obamacare. The American people need to understand, we’re making this crap up as we go. Stop looking to us to fix the same systems we broke. I’m proposing a drastic reduction in federal regulation over the health-insurance industry, to mirror the level of regulation on the car-insurance industry. It is not our responsibility to pay for your health care. You are not our children, and even if you were, it is the obligation of a responsible parent to teach the child to stand on his or her own. It is the obligation of a responsible parent to sometimes say ‘no’.

    “It is your responsibility as an adult in our society to find and purchase insurance plans that meet your needs and your budget. For the vast majority of Americans, those plans are available through your employers. For a small minority, that may mean shopping for insurance the way you shop for cell phones or healthy food. For Americans living at or below the poverty level, I intend to change our currently insolvent welfare programs, and thus strengthen federal assistance to state programs, and ensure that our ‘safety net’ becomes a trampoline instead of a hammock.”

    • I’d also like a politician, any politician, or SCUS Justice Kennedy to step in front of the cameras and assert:
      If the govt has no right to mandate health insurance, then no uninsured person has the right to demand that another pay for his health care.

      That would be more equitable. But I think it would result in Bombay style healthcare – if you’re poor you die on the sidewalk, until Mother Teresa picks up your body. (But in fairness to India, I think they have some coverage now since the time of Teresa, bless her soul.)

      • Yes, I remember how the streets were littered with the bodies of the uninsured prior to Obamacare. Poor people were dropping like flies, much to the amusement of myself and the other robber barons in our towers of literal ivory….

        Seriously, is your goal to insure people who do not currently have insurance? If so, Obamacare fails to address the problem. Is your goal to reduce the price of health insurance so more people can acquire it on their own? If so, Obamacare fails to address the problem. Is your goal to reduce the average per capita cost of health care within the United States? If so, Obamacare fails to address the problem. If your goal is to drastically and fundamentally change the relationship between the federal government and the citizens, by allowing Congress to determine what you must purchase for your own good, then congratulations, that is one area where Obamacare will actually … oh, wait, no, that will fail also.

        Why is it that ONLY government is capable of caring for the poorest or the uninsured? Why is government the FIRST answer instead of the last resort?

  2. I’m pretty conservative but here I would opt for a single payer system. Whatever the costs of healthcare are, we as a nation are currently paying for them. Very inefficiently.

    Single payer system paid for by:
    1. A tax on businesses. Tax should be on revenue and not profit as profits are too easy to hide and fudge. The tax should effectively be a net zero for employers currently providing health insurance for employees since there would no longer be any need for them to provide it and we would eliminate any tax break for doing so.
    2. An increase in Medicare taxes but again this amount should be set as to be a near net zero increase since no longer would the individual have to pay either an insurance premium or co-pays and deductibles.
    3. Eliminate Medicaid completely. With the single payer you would only need a single administrative system thus reducing costs.

    Health insurance companies have proven to be ineffective at managing costs or improving outcomes so they get relegated to bidding on administrative support for the single payer system.

    Any private plans can continue forever but without any tax advantages. No deductibility; if provided by an employer, fully viewed as taxable income.

    • If that’s a conservative approach, what would be the liberal plan? Wasn’t the lack of a single payer system the single biggest reason Obamacare didn’t enjoy more support from the liberal wing?

      Now here is a real conservative approach:

      1 – Increase the supply of medical providers and facilities. Simple economics: more supply, lower prices.

      2 – Institute complete loser-pays in medical malpractice.

      3 – Eliminate laws mandating coverage for conditions and treatments. Make it easier for people to get policies tailored to their liking, especially those seeking only catastrophic coverage.

      4 – Change Medicare and Medicaid so that coverage is determined by the funding of each program (i.e., spending within one’s means).

      5 – Eliminate ability of medical providers to practice price-discrimination (where an insurance company negotiates lower prices than are available to people walking in off the street). The going rate for a procedure is the going rate.

      • Steve…I think you are just about the ONLY poster to note that SUPPLY is crucial. If we are to have 330 Million Americans covered with health insurance the number of medical practitioners will have to increase by a very large number. Otherwise we get (1) shortages; (2) long waits; (3) shoddy service; (4) ever higher costs.

      • Increasing the supply of providers isn’t necessarily a solution, if the cost of that education is graduating with hundreds of thousands of dollars of school loans to pay back. Thirty years ago, it cost perhaps 20k to go thru medical school, now it’s 200k to 300k minimum. Plus interest — not tax deductible — after you pay high taxes on your income…

        A better conservative solution would be to give providers a tax deduction for their unreimbursed charity care. Overnight, clinics everywhere (many who currently provide very limited charity Medicaid care) would be falling over themselves to provide top quality care without the Medicaid red tape. It would have a built in check and balance, you’d have to have income from real paying patients to have something to deduct from.

        Providers, not politicians, provide care. Government is the problem, not solution to these sorts of common sense common decency solutions to health care access.

      • We have to factor in the free market principle that insurance Co’s. exist only to extract maximum profits.
        That’s why our US private health insurance overhead is near 30%, compared to <3% for govt. administered plans. The last thing insurers want is competition; it's terrible for profits. Currently we have a somewhat OPEC-like non-competitive insurance situation. And the insurance Co's have paid plenty of Congressmen to keep it that way — they're not evil, it's their job as defined. You'd have to get real competition, if possible? — until then we keep paying $billions of health dollars into insurance exec pockets.

    • LOL…you propose socialized medicine and a “tax on business revenues” after saying “I’m pretty conservative”? Wow…that’s a stretch of the word “conservative”

    • Are you kidding me?? You are delusional… A government run system will be far more expensive. It is a bold faced lie that Obama sold naive asleep people that insurance companies are raking in the dough! The average profit margin for insurance companies is 4-6% Tell me that the government can run anything on that kind of margin. I want to have the freedom to custom tailor my coverage any way I want. I don’t want to pay for someone’s abortions or drug treatment! That would be like forcing everyone to buy a two seater car… Not everyone wants one of those! If you want single payer healthcare, then move to England and tell me how that works out for you! I hear that even there they are redoing their model because it is such a disaster.

  3. Why should employers have any role in an employees health insurance? It is compensation that should be taxed.

    The average American worker is too stoopid to realize the true cost of their health care (ever hear people complain how expensive COBRA policies are) as employers invisibly pay most of their premiums.

    • On my W-2 there’s $10,900 in box 12 code DD. That’s what my employer paid for my Blue Cross coverage. If that money was handed to me with the provision “Spend it ONLY on medical expenses” there’s no way I could comply. I spend maybe $1,000 to $1,500 on drugs and doctors. That’s it. One year I spent $3,000 for LASIK. $10,900? Every year? What a ripoff. Just give me the money. I’ll buy my own “health” care and take a Princess Cruise every year with the money left over.

      • Russ, ok, that cruise sounds sweet. Real nice for you, because we’ll have to pay if you have a $200k hospital bill.
        You’re like the guy last year who refused to pay the Fire Dept. fee, then demanded they put out his burning house.

        Please, can any Republican anywhere tell us how we’ll pay for the uninsured like Russ after you kill Obamacare? (and yes we’re paying big right now).

    • The burden of 60 million uninsured Americans is huge on those of us who pay into the system. That’s why your bandaid is $25 at the ER, and a bed is $1000 / night. That’s why it would be a huge benefit to current payers, individuals and employers, to get more/most/all Americans insured.

      Can anyone explain please: When we kill Obamacare, who pays for the uninsured?

      As we say here in Carolina, “It’s easy to burn down the outhouse, but hard to install the plumbing.”

  4. He makes a point here that cannot be stressed enough –

    (Although many view employer-sponsored health insurance as a” free” benefit, it is money that would otherwise be paid as income.)

    There is no ‘Free’. Whatever the ‘employer’ pays, either in insurance or Social Security, 401K contributions etc, that is part of the cost of employing an idividual and essentially comes out of their paycheck. I have insurance and am looking for another job. I have successfully negotiated turning down the employers insurance and obtaining the cost as part of my salary.

  5. When Obamacare is overturned the Republicans in congress should immediately (within a few days…but not on a Friday) propose a bill which would vastly expand the types of policies insurance companies can offer, and who they can offer them to. Tie this to Tort Reform (an extremely popular issue). And include block grants to States for Medicaid and Medicare (throw in Social Security while they are at it)…and pay for it by a 100% Freeze on all discretionary spending and tax cuts. The savings from the freeze and the increased revenues from tax cuts will easily pay for the program, and might even allow for a balancing of the budget.

    They could tie Union reforms to it…perhaps a law that makes Union membership 100% optional in states that receive the money, and make it illegal for union dues to be paid for by anyone other than the Union member.

    Of course it would not pass, but they’d be on the record as having proposed a bill that would work and have many popular parts.

  6. Here’s a radical idea. Let’s just go back to where we were 4 years ago, where most were satisfied with their coverage? Why do we have to do anything to begin with?

  7. I am told that MOST Americans have some kind of health insurance and I remember somebody saying “If you like it you can keep it.” How about the government buy an inexpensive plan (high deductible, catastrophic) for the small minority who do not have any kind of health insurance. Couldn’t cost all that much, surely. That way everyone is covered (“Universal!”) and the majority of us can KEEP OUR PLANS as promised.

    • C’mon russ, you know that’s just too simple! But wait a minute – you’re from nc? I’m from tn and down here we love things simple! You’re right on! PS: We’ve got to pool our forces this fall and take down sc!

  8. A small portion of monthly payments into health insurance plans are designated towards your actual healthcare. Most of the money is spent on administrative fees. Maybe if we de-corporatize the medical field we would be much better off. The root cause for high insurance costs are not being addressed.

  9. The more reason to get behind Ryan’s budget. That addresses the Medicare issue. It was co-written with Senate Democrat Ron Wyden. However, the Democrats would rather scream and yell about any proposal that is put out there, instead of following the law (Congressional Budget Act) and doing their jobs.
    Also, please remember that the GOP did offer a healthcare plan after being called on the rug by the President to put up or shut up. (Funny how times have changed!) The bill was released in October 2009. The CBO scored that it would cost $69B and save $63B over 10 years. It would contain tort reform, pre-existing conditions and a free market system, which would extend to Medicare. (This will be like purchasing auto insurance and being reimbursed by the government.) It, however, will not cover as many people as Obama’s law does. The CBO also said that health care costs would decrease by as much as 10% over 10 years.

  10. Not a bad plan, except for d) control anti-competitive behavior such as hospital mergers. Efficiency might come from mergers. State mandates prevent the competition mentioned in #2 so those would have to be addressed.

  11. The big problem with health care (for most Americans) is the increased “insurability” of issues that have no business being insured (i.e., birth control, or sex change operations). A framework that allows individuals and groups to cross state lines would allow different states to give different options. California could require all insurance companies in the state to allow adadictomies, Utah would give a plain Jane (or Joe) health plan. Companies located in Utah would strive, and those Californian’s who want the Jane to Joe plan would actually pay what its worth, and those Californians who bought from Utah would have more focused, cost effective, insurance.

    So, that covers the horror of health care for working Americans. How about the elderly on Medicare? Well, the single payer system, or Obamacare, would take care of those expensive elderly who need dialysis, or who have dementia, by saying “No soup for you!” They would be denied health care, because the system couldn’t afford it. Or they would receive substandard treatment like they do in Britain, where the elderly are left to starve or to waste away, or whatever avoidance mechanism can be found.

    So, how should conservatives deal with this? Dementia is a problem that has been found to be nearly intractable. A lot of private and public (and a lot, I mean in the 100′s of millions – fairly small by the standards of Obama who regularly tosses 10′s of billions at solar) has been spent, but most private concerns have come to the conclusion that research in this area is too costly and is bound to be a money pit. Kidney research is doing a bit better – the same company that is trying to grow kidneys from adult stem cells (thereby eliminating the largest ongoing cost of transplants – a cost that is almost as much as dialysis and that lasts longer due to the fact that the patient now has a functioning kidney) has successfully grown bladders (which the FDA has grudgingly allowed to be used for spin bifida patients – FDA is an organization that will need reorganization under any conservative government). But kidneys are still exceptionally complex, and most corporations blanche at the thought of poring money into such research.

    The answer is similar to the answer chosen near the beginning of the cold war. The national labs have been for 50 years a focus of excellence in physics and in defending the nation. In the beginning, they offered those who joined an unsurpassed opportunity to research and to explore, and were very successful in opening the complexities of high energy physics.

    Recently, they have degraded. That is not their fault. Nuclear weapons are not what they once were. Most people who work there know how to make a Reliable Renewable Warhead – and if given an opportunity could give Obama his wish of less weapons, and allow us still to retain the ability to crank out quickly the number we need. (THis is of course a discussion for another time). But beyond that, they have turned into bureaucratic hellholes.

    But we could use the same model for, say, three bio national labs. Give scholarships to some of the brightest students and give them an opportunity to go there. Set up the labs in desirable (yet lower cost) areas. Offer salaries that are above and beyond what they could get schlepping around a doctors office. And use the proceeds from their efforts to eventually completely fund the labs, and to give huge returns to the workers there. Make them the googles of bio.

    Dementia is responsible for a quarter of medicare costs. Kidney disease (and diabetes) are responsible for 25% (there is some overlap, but not a lot – say the three together represent 40%). Cures in the next decade, as well as the other spinoffs from these bio national labs, could substantially reduce the oncoming medicare cost nightmare. Other bio products would have the capability to change the world like computer systems have done. But there is a need that I think can only be seeded by government. It does not have to remain that way – they will eventually fund themselves – but it is “a third way” out of the conundrum we face.

  12. The libs have successfully maneuvered everyone into arguing over the wrong issue.
    I STILL haven’t seen anyone articulate exactly what section in the Constitution that allows the Federal Govt the authority to steal from one person in order to give to another. And don’t tell me the ‘general welfare clause’ or the ‘interstate commerce clause’ because NEITHER of those arguments is valid, even if the politicians do claim them. The writers of the Constitution put that to rest in the Federalist and the anti-Federalist. Those clauses were NEVER intended to be used in this manner and the writers would most likely have a coronary if they knew that their phrases were being used for such purpose.
    And BTW, “From each according to his ability, to each according to his need.” is NOT in the US Constitution, I don’t care how myopic you are.

  13. How about simply using common sense? First, let’s distinguish between health “care” and health “insurance”. No other type of insurance is used for maintenance or prevention. Then let’s do away with the lawsuit lottery with tort reform. Finally, let’s stimulate competition by allowing people to purchase health insurance from out of state insurers. It’s not really that complicated…politicians like to make it seem complicated.

  14. Pethokoukis is marvelous, as always. There are two things Republicans should do, one of which is being discussed here. But the second thing Republicans should do is ask the question, “HOW IS IT THAT THIS MONSTROSITY EVER PASSED A CONGRESS AND PRESIDENT THAT WERE SWORN TO UPHOLD A CONSTITUTION OF LIMITED GOVERNMENT?

    Obamacare is patently unconstitutional. Even when the individual mandate was being discussed in connection with Hillarycare, a lot of Republicans had concerns with the constitutionality of the proposal, but five minutes of thought by an honest constitutional lawyer (try finding one of those these days) will point out the constitutional infirmities. Not that it can’t be fixed — Congress has broad taxing and spending powers — something we should do something about someday. But Congress can’t force people to spend money directly.

    SO how did a bill that was so patently unconstitutional make it through to become a law? Clearly, it was passed under unusual circumstances. Specter was the switch that they needed, and they got enough votes to break the filibuster. Tragic, and time will tell just how tragic. But even more tragic is that so many Americans don’t recognize the limits of our federal government over our lives.

    As for fixing it, Republicans could do a lot if they don’t try to do a lot. A basic insurance policy that covers catastrophic events and illnesses doesn’t cost that much and could be paid for by the federal government. There is room for spending power; Congress just has to find the revenue to spend. Or let the states decide. But if you want add-ons — elective surgery, private rooms, contraception, dermatological procedures — guess what? Buy a supplemental policy yourself.

    The tragedy is that some people — like Gail Collins in a NYT blog today — don’t care at all about the constitution or the Constitutional issue. Whatever she wants, she thinks the federal government should provide. How have we come so far from the respect for the greatest Constitution and the greatest government ever conceived by humanity?

  15. Going back a few years as I recall it, the whole impetus to the Affordable Care Act was the legitimate concern about the cost of providing healthcare to people without a way to pay for it either through health insurance or personal assets. This was an increasingly heavy burden on our health care system. Everyone — Democrats, Republicans, Independents, you name them — agreed that something had to be done. The Affordable Care Act was a response to that and, as I see it, follows the European Model.

    But, if that is the European Model, what then is the American Model? Let us strengthen and use our charitable organizations! Encourage people, through media and culture, to give generously to the the charities of their choice as they see fit and are able, and the charities can then help those truly in need of medical care. Hospitals and health care providers might want to add a position of charity/care ombudsman to match those needing healthcare with appropriate charitable organizations, but that likely would be the only systemic change needed. No one truly needing medical care would need to go without, and health care providers would not take financial hits for providing it.

    Rich and poor, all people benefit from giving generously to charity. Charities have a long tradition of providing aid to the needy, and they are already in place. They merely need more donations to roar into life. It is the way of small government and a powerful people. It is the American way.

  16. !st: One of the biggest causes of high medical costs is malpractice insurance. Begin by limiting the amount an attorney can earn from a suit. Then put a penalty on frivolous lawsuits. These two items should go a long way toward controlling these costs.

    2nd No healthcare should be free. Even the poor should have to pay a copay, to prevent abuse of the system. Preventive care: colonoscopies, mamograms, etc should also have a copay.

    3rd Extend the life of a drug patent. The current 25 yr pantent includes 12-15 yrs of testing. The high prices represent the attempt to recoup the development and testing costs. Let them spread it out over a longer time. This would also encourage the development of more drugs.

    There are probably other ideas, but the “Affordable Healthcare” program did nothing to make it affordable. These ideas might help.

    • Hi Marilyn. Spot on! As a former hospital administator and married to a PhD prepared RN, and both fiscal conservative, I can safely say you obviously know what you’re talking about and are a breath of fresh air. Will you accept a seat in Romney’s cabinet?!

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