Before the American Health Care Act (AHCA) even passed the House of Representatives, both conservative and moderate Republican senators were rejecting its policies and seeking an alternative. If the goal is improving American health-care outcomes, that alternative should be based on free-market solutions.
For example, the Senate legislation should put price information in patients’ hands before they ever get services or see a bill. Insurance companies should be required to provide customers with the prices they have negotiated for basic services (doctor’s office visit, lab tests, etc.) at each hospital and clinic in the customer’s county or metro area. Hospitals and clinics should be required to give patients upfront, binding price quotes for major procedures and treatments. These measures will empower patients to shop around for health services, creating market pressures for health providers to increase quality and decrease costs.
Let’s Talk about Reforming Medicaid
On Medicaid, both fiscal sanity and low-income Americans’ need for a sustainable safety net suggest the Senate should keep the AHCA’s per-enrollee funding caps and the work requirements. However, senators should also transform Medicaid into a program that puts enrollees into health insurance and health care markets, instead of acting as substandard government insurance.
States should be given maximum flexibility in how to get Medicaid enrollees the ability to choose the same insurance everyone else has, but the days of Medicaid insurance cards should be over in favor of a program that subsidizes commercial insurance for Medicaid enrollees. The work requirement provision will then ensure that Medicaid helps move Americans up the income ladder, rather than locking them into poverty through fear of losing health coverage.
As for Pre-Existing Conditions
As the House learned, protecting the 2.2 million people in the individual insurance market with pre-existing conditions is an incredibly tough issue to resolve. However, free-market approaches remain a viable possibility for the Senate. For instance, the Senate plan could adopt the AHCA’s so-called “invisible” high-risk pools, which allow people with pre-existing conditions to purchase the same coverage available to anyone else while limiting the premium-increasing effects this would typically have on healthier insurance customers.
Alternatively, the Senate plan could offer these individuals subsidized, commercial high-deductible health plans (HDHPs) and health savings accounts (HSAs). Taking advantage of these plans’ maximum annual out-of-pocket costs, the subsidies could be structured to limit a patient’s total annual health costs, including premiums, deductible, and co-insurance, to a reasonable amount ($4,000-6,000) and protect taxpayers from unending medical bills.
However, based on premium estimates, typical out-of-pocket maximums and the number of people that must be covered, this approach is likely to cost taxpayers several times more over a decade than the AHCA approach. However, since the Congressional Budget Office projects the latter will reduce the federal deficit by more than $300 billion, senators should be able to craft an HDHP/HSA approach that still reduces federal deficits over time.
As the Senate majority undertakes the task of finding an approach to health care that is superior to the AHCA, they should recognize the power of reforms that encourage market forces in the health insurance and health care industries. Only such free-market reforms are likely to simultaneously offer Americans improved health, affordable coverage, accessible health care, and fiscal responsibility. Just as important, the free-market approach will fulfill Republicans’ promise of a new direction on American health care through repealing Obamacare’s government-centered approach.