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After Obamacare

The framework for bipartisan reform.

Feb 1, 2010, Vol. 15, No. 19 • By JAMES C. CAPRETTA and YUVAL LEVIN
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Massachusetts is not the only state that has experimented with health care reform. Utah, for instance, has launched a program whereby small-business employees get their insurance through a state-facilitated marketplace for private coverage. Employers make a fixed premium payment on behalf of their workers, and the workers pick from a number of competing options—adding money if they want a more expensive plan, and pocketing the difference if they choose a less expensive one. In Indiana, Republican governor Mitch Daniels has launched a program that provides health savings accounts to the state’s Medicaid recipients and government employees, allowing them to exercise choice and so bring down costs while extending coverage to more people than ever. Other states will try other approaches to lowering costs, improving competition, and insuring more people—each in its own way and in its own time.

These three straightforward approaches would address a great deal of the anxiety Americans feel about health care without creating new anxiety through a massive federal redesign that increases costs and takes away options. 

Meanwhile, for the longer term, conservatives should make a case for changes in the tax law that level the playing field between employer-provided and individually purchased health insurance, with a gradual transformation of the tax exclusion for employer-based coverage into a credit available to all. A consumer-controlled tax credit would also enhance the benefits of risk-pools, tort reform, and state-based reform efforts. 

And they should press the case for real Medicare reform, not to use the program as a pot of cash, as the Democrats tried to do over the past year, but to put it on a sound footing by empowering enrollees rather than bureaucrats to make decisions. The Democrats wanted to use Medicare’s regulatory power to change how medicine is practiced. But new ideas for delivering better care at less cost will come from those providing the services, not Washington bureaucrats. Doctors and hospitals need to be given the freedom to repackage what they offer so that it is less costly and more attractive to Medicare patients. 

These ideas would not yield a sudden transformation of American health care, but a gradual improvement in the areas that matter most—cost-control, greater access for the uninsured, and greater fairness for those with preexisting conditions—while sustaining the quality and innovation that characterize American health care. Constructive policy reform consists not of inventing imaginary worlds, but of building on the best of what we have, offering specific concrete solutions to particular problems, and leaving some room for experimentation to see what works and what does not. 

Whether in negotiations with a newly humbled Democratic majority, or as alternatives offered to voters in this year’s elections, ideas like these would help mark out a constructive conservative health care agenda, and distinguish Republicans from an administration and a Democratic majority that have favored a political power grab over sensible progress.

—James C. Capretta & Yuval Levin

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