When critics point out what’s wrong with Obamacare—for example, that forcing people to buy more expensive insurance isn’t a way to control health care spending—the law’s defenders invariably charge that the critics are just sniping, hoping the law will fail so that we can all go back to the previous system. “What’s your alternative?” they ask, as if conservatives just started talking about health care only after Obamacare was proposed. [Christopher J. Conover reviews the making of this myth: “Seriously? The Republicans Have No Health Plan,” Forbes, August 28]
Liberals of course, haven’t been paying attention. Conservatives have been talking about the maladies of the U.S. health care system many years before Barack Obama first ran for public office. In particular they’ve been pointing out that the health care system we had before Obamacare was not really a free market system, and that more competition and less regulation would give health care consumers more options at lower prices.
Before Obamacare came along, conservatives wanted to increase competition in health insurance by ending state laws that prevented consumers from buying health insurance from out-of-state insurers. See, for example, J. Patrick Rooney and Dan Perrin’s “For Better Health Insurance, Let Consumers Buy Across State Lines,” in The Insider, Summer 2008.
A related argument made by conservatives was that state regulations requiring health insurance to include coverage for specific services made health insurance more expensive, and that ending those coverage mandates would give consumers more economical options. See, for example, “The Effect of State Regulations on Health Insurance Premiums: A Revised Analysis,” by Michael J. New, published by The Heritage Foundation, July 25, 2006.
Even before Obamacare, the chief problem with the U.S. health care system was that most people most of the time were spending other people’s money. No wonder we spent too much. Health savings accounts are one way of fixing that problem. Some conservatives spent decades building the case for Health Savings Accounts. See for example, “A Brief History of Health Savings Accounts,” published by the National Center for Policy Analysis, August 11, 2004; and John Goodman and Gerald Musgrave’s book, Patient Power: Solving America’s Health Care Crisis, published by the Cato Institute in 1992.
The incentive to spend too much on health care as well as to organize the delivery of health insurance through the workplace comes from the tax code’s exclusion of employer-provided health insurance, as Milton Friedman explained in a 1996 Wall Street Journal article, “A Way Out of Soviet-Style Health Care.” Friedman proposed extending the exemption “to all expenditures on medical care, whether made by the patient directly or by employers, to establish a level playing field.” That idea would let consumers own their own plans that they could take with them from job to job.
Other conservatives have seconded this notion, while adding that the exclusion should be limited, since the tax preference makes health care seem relatively more valuable than non-health care spending. The exclusion also makes health plans offering first-dollar coverage appear attractive relative to plans that actually function as insurance. The proliferation of those plans, which were essentially pre-payment plans, drove health care spending up. See for example, “Health Care Reform: Changing the Tax Treatment of Health Insurance,” by Greg D’Angelo and Robert E. Moffit, published by The Heritage Foundation, March 16, 2009; and Letter to the President’s Advisory Panel on Federal Tax Reform, by Grace-Marie Turner of the Galen Institute and Dan Mitchell of The Heritage Foundation, June 27, 2005.
The foregoing annotated bibliography, of course, is but a few drops in the ocean of conservative literature on health care policy. We spent about 30 minutes digging that stuff up. Imagine if liberals had spent that much time looking into it. But now they don’t have to take even that much trouble. In August, the American Enterprise Institute released a plan that incorporates many of those free market reform ideas. It’s called “Best of Both Worlds: Uniting Universal Coverage and Personal Choice in Health Care.”
And now this week, the Heritage Foundation has released a statement of principles on health care reform: “After Repeal of Obamacare: Moving to Patient-Centered, Market-Based Health Care.” The Heritage principles include support for many of the ideas mentioned above, such as equalizing tax treatment of different kinds of insurance as well as capping the tax benefit, allowing cross-state purchase of health insurance, ending coverage mandates, and bolstering Health Savings Accounts which have already helped reduce health care expenditures. The Heritage plan also calls for reforming Medicaid with a premium assistance plan that would give Medicaid beneficiaries more choices, fighting Medicaid and Medicare fraud more aggressively, letting states pursue tort reform, and reforming state licensure laws that restrict the supply of doctors and certificate-of-need laws that restrict the supply of hospitals.
The key thing to remember is that conservatives are not and have never been in favor of the status quo ante. Getting to a real free market system requires doing more than just repealing Obamacare, and conservatives have spelled out what those other steps are.