How to Repeal and Replace Obamacare

From Fee.org (Dec. 8):

Vice President-elect Mike Pence recently described Price to Fox News as “someone who literally, for the last half a dozen years, has been in the forefront of efforts, not only to repeal Obamacare, but put forward common sense, free-market solutions that will lower the cost of health insurance, without growing the size of government.”

Jason Miller, Communications Director for the Trump transition team, told the San Francisco Gate that replacing the ACA is "one of the things he's going to lead the charge on as secretary of HHS."

Lowering the Cost of Care

Evidence is scant that Obamacare did anything to help with the biggest problem facing the American healthcare system: the cost of care. According to Consumer Reports, health care spending is at $3 trillion, making it alone the world’s fifth-largest economy. In the US, health care costs nearly double what the rest of the developed world is paying per person.

One reason healthcare in America is so expensive is that there are no more actual health insurance companies in this country. Instead, insurance companies have become cost-pools.

Consumer Reports sums it up nicely: “If you have health insurance, you may think [the cost of care] doesn’t matter because someone else is paying the bill.”

Health care works nothing like other market transactions. As a consumer, you are a bystander to the real action, which takes place between providers—hospitals, doctors, labs, drug companies, and device manufacturers—and the private and governmental entities that pay them. Those same providers are also pushing Americans into newer and more expensive treatments, even when there’s no evidence they’re any better.

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“What currently passes for health insurance in America is really just prepaid health care — on a kind of all-you-can-consume buffet card,” San Jose State University Economics instructor Warren C. Gibson wrote. “There is no price transparency. The resulting overconsumption makes premiums skyrocket, and health resources get misallocated relative to genuine wants and needs.”

“There is no such thing as a legitimate price for anything in healthcare,” according to George Halvorson, former chairman of Kaiser Permanente, the giant health maintenance organization based in California. “Prices are made up depending on who the payer is.”

1. Separating employment and health insurance. By killing the requirement that larger employers provide health insurance, the Empowering Patients First Act helps to sever the tie between employment and health insurance. Another method for severing that tie in the bill is a provision that limits how much tax-free health insurance coverage businesses can offer their employees. Individual employee could only get $8,000 worth of tax-free health insurance, and families $20,000, adjusted for inflation.
2. Incentivizing smart choices. Up to 30% of Americans’ medical care is unnecessary, according to the Congressional Budget Office. This is a natural result of the fee-for-service payment model. It means that a doctor who innovates a way to do with one CT scan what used to require three, is discouraged from implementing the new practice because it means the hospital loses money.
3. Re-legalizing low-cost catastrophic care plans. The ACA outlawed catastrophic care plans. By forcing insurers to cover a variety of treatments and procedures of varying necessity, the ACA made low-cost plans illegal.

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It’s a good start to get rid of the Unaffordable No-Care Act. President-elect Trump should have a look at it if he hasn’t already.