Incremental Health-Care Reform Is a Smarter Bet than Obamacare Repeal for the GOP

By Alex Muresianu
Wednesday, April 17, 2019

When congressional Republicans rebuffed President Trump’s renewed push to repeal and replace the Affordable Care Act (ACA) on April 2, Trump suggested a plan to pursue another repeal vote after his reelection in 2020. Then, on April 9, the Department of Justice moved to accelerate the appeals process in a court case that it hopes will invalidate the whole ACA as unconstitutional.

This continued focus on repealing Obamacare is a huge mistake for the GOP.

Obamacare repeal was deeply unpopular among voters and hurt Republicans in the 2018 midterm elections. Making it a top reelection priority would only bring the losing issue back into the spotlight. Instead, the GOP would be wise to counter the progressive push for Medicare for All with small, incremental reforms.

To begin with, Medicare for All is only superficially popular. According to a Kaiser poll, 56 percent of the public supports and 42 percent are opposed. But when respondents learn about its downsides, support wanes rapidly: Only 37 percent support Medicare for All when told it would eliminate private insurance or raise their taxes, and only 26 percent support it when told it would lead to delays in medical treatment. (It would do all of these things and more.)

Americans deserve a better alternative.

Recent elections show that the party of the health-care status quo tends to have the political edge. Largely thanks to public opposition to the then-new ACA, Republicans trounced Democrats in the 2010 midterms. On the flip side, opposition to ACA repeal helped the Democrats win 40 House seats in the 2018 midterms. For the GOP, making 2020 about “undoing Obamacare,” instead of about Medicare for All’s radical overhaul of the health-care system, would be foolish. By the same token, Republicans can’t afford to defend the status quo, given that a vast majority of Americans view the existing system as seriously flawed.

Pursuing incremental reforms that improve care and make it affordable without throwing the health-care system into uncertainty and chaos is in the GOP’s best interest and the country’s. Luckily, Republicans have already taken some steps to do just that.

A lack of transparency in health-care pricing is one driver of high health-care costs in the U.S.: Patients rarely know the real price of even routine, non-emergency procedures, which allows hospitals to grossly overcharge them. Studies covering different procedures and geographical areas show that prices vary up to 1,000 percent for the same medical procedure in the same metropolitan area. A recent paper in the American Economic Journal found that easy access to price information would significantly reduce costs by helping patients find more affordable options.

Republicans have wisely started focusing on a push for price transparency. In January, the Trump administration imposed a rule requiring hospitals to post procedure prices online for patients to see. That’s a good start, but it isn’t enough. They should follow through on another administration proposal that would require insurers to disclose the prices they negotiate with providers. These secret contracts hide the real cost of care from consumers, as hospitals collude with insurers to push patients away from lower-cost providers. Making them public would give patients a more comprehensive view of real procedure costs, forcing providers to lower their prices by allowing patients to find less expensive care.

Another way hospitals help suppress competition in health care is through market consolidation. The number of hospitals has shrunk dramatically in recent years thanks to hospital mergers and acquisitions. When a health-care market includes only one provider, prices will rise. A New York Times analysis found that the price of hospital stays increased as much as 54 percent in areas that went from having multiple hospitals to having only one, as opposed to increases of roughly 10 percent in comparable areas with multiple hospitals.

One approach to this issue is to improve anti-trust enforcement. Anti-trust laws have seen a resurgence in support of late among both progressives and conservatives who see them as a way to rein in the power of Big Tech, but monopolies in the health-care industry are much more harmful to consumer welfare. Republicans can back a bill proposed by Representative Jim Banks (R., Ind.) that would strengthen the Federal Trade Commission’s enforcement of anti-consolidation law against hospital mergers and end the ban on the construction of new, physician-owned hospitals, among other pro-competition measures.

Republicans could also roll back certificate-of-need (CON) laws, which restrict the entry of new providers into the market unless they can prove to state and local governments that the area they aim to serve “needs” a new provider. Existing hospitals lobby such governments to bar new, lower-cost providers from forming, and the ensuing lack of competition only increases prices for patients. The federal government incentivized states to adopt CON laws in the 1970s — now, it should incentivize states to repeal them.

It is true that in the long run, Republicans must develop a comprehensive vision of the future of health care. Some conservative thinkers have proposed emulating Switzerland’s universal private-insurance mandate, or Singapore’s universal catastrophic insurance. Both models would bring down costs. But implementing either would require restructuring huge swaths of the current system, which would only be possible with widespread GOP support and control of both houses of Congress (or bipartisan buy-in). Given the failure of Obamacare repeal and current partisanship, that doesn’t seem likely to happen any time soon.

So, at least for now, Republicans should steer clear of massive health-care reforms in favor of piecemeal changes that make the system work better and bring down costs. The alternative is a political-disaster movie we’ve all seen before.