Obamacare Replacement Made Easy

They're finally doing it.  Six years after promising to "repeal and replace" Obamacare, House Republicans are finally getting serious about proposing a plan to replace the Democrats' controversial health care law.

House Speaker Paul Ryan has announced he'll bring a bill to the floor sometime before the 2016 elections.

This announcement came at about the same time that the House put the first full-fledged Obamacare repeal bill on Mr. Obama's desk.  He vetoed it, of course.

Admittedly, any "replace" bill is unlikely to make it past the Senate, where Democrats are well positioned to block the measure.  But Ryan and his colleagues want to move a "replace" bill anyway, if only to give voters a clear picture of what an all-GOP government would do to reform health care in 2017.

They're right to try.  The time has arrived for Republicans to give voters some real specifics about the "replace" half of the familiar mantra.  The $64-billion question is, replace it with what?

There's no dearth of ideas to choose from on the political right, from new tax credits and deductions to optional block grants and expanded Health Savings Accounts (HSAs).  The real challenge will be resisting the temptation to choose "all of the above."

Republicans should ask four basic questions about each health care reform idea: Is it constitutional?  Is it necessary?  Is it affordable?  Will it work?  That is, will it reduce health care costs and thus the number of uninsured Americans?  Only proposals with a "yes" next to all four questions should make the cut.

In addition, I would also suggest some specific dos and don'ts:


1. Don't pass a 2,000-page bill no one has read.

Instead, follow regular order.  Move multiple bills.  Permit lots of time to read them.  Allow plenty of amendments.  Legislate.

2. Don't focus on covering the uninsured.  

Focus instead on reducing health care costs.  Trying to "get more people covered" usually leads to proposals to expand Medicaid, a broken program that often ill serves the poor.

3. Don't disrupt the employer-based system.  

While the tax code needs to be changed to make health insurance more affordable and portable, we need to be careful.  Half the U.S. population gets its health benefits through the workplace, thanks to generous federal tax subsidies created in the 1940s.  Those subsidies are wasteful, distortive, and redistributive, but because most American are more or less satisfied with their existing arrangements, it's risky to mess with them – especially now, when many Democrats, led by presidential candidate Sen. Bernie Sanders, D-Vt., are pushing for a true government-run system ("Medicare for all").  

Cap the existing tax subsidies, if you must, but do not – repeat, do not – eliminate them, unless you are also getting rid of the entire tax code.

4. Don't create Obamacare Lite.  

"Obamacare Lite" means a modified government-run system with three basic features: 1) subsidies to help individuals purchase health insurance, 2) mandates on individuals to purchase health insurance, and 3) mandates on insurers that prevent market pricing of health insurance (e.g., guaranteed issue and community rating).

Unfortunately, some right-of-center think-tanks favor Obamacare Lite, including the Heritage Foundation and the American Enterprise Institute, as well as such leading Republicans as Sen.  Orrin Hatch, R-Utah.  Let's just say no.

5. Don't increase the deficit.

Our national debt is nearly $20 trillion. 'Nuff said.


1. Do follow the Constitution.

Because the Tenth Amendment leaves health insurance regulation to the states, Republicans should resist such popular but unconstitutional ideas as forcing health insurance to be sold "across state lines" and imposing federal medical malpractice reforms on the states.  

2. Do make health insurance voluntary.  

Whatever else it does, Congress should repeal Obamacare's infamous mandate to buy health insurance and Medicare's draconian penalty for refusing to enroll in Medicare.  In America, health insurance should be voluntary.

3. Do promote HSAs.

Health savings accounts, created in 2003 and today enjoyed by 17 million Americans, are the best available tool for promoting patient-driven health care.  Expand them aggressively.

4. Do create optional block-grants.  

I saved the best for last.

Congress should make an offer to the states:

"You can remain under Obamacare, with all of its enormous costs and problems, or you can opt out of Obamacare and receive your state's share of its subsidies (including the Medicaid expansion money) in the form of a large, flexible block grant.  You would use the grant to help your poor and sick citizens afford health care, however you deem best.  If you want, you can even fold your entire traditional Medicaid program into the block grant, to give yourself even more flexibility and control."

That's a sweet deal for the states.  Most would certainly take the block grant over the status quo.  And as a result, we'd probably cover more people than Obamacare does (thanks to having cut out federal waste and overhead).

And because everything about the proposal is optional, it would be very hard to oppose.  

Poof! – Obamacare would be voted out of existence, without a single Republican losing his or her political scalp.

Dean F.  Clancy, a former senior White House and congressional aide, writes on U.S. health care, budget, and constitutional issues.  Follow him at DeanClancy.com or on Twitter @DeanClancy.