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A trojan horse for killing Obamacare in 2011

 

There is no doubt in my mind that repeal of the monstrosity known as Obamacare is a necessity for preserving our Republic in a recognizable state.  If Obamacare were to survive through to its full implementation, the balance between the private and public sectors would forever be out alignment.  Moreover, it would become harder and harder to repeal or even fix as people allowed themselves to become dependent on the system and our health care marketplace lost its economic dynamism.  In other words, we would be taking a giant step and maybe an irreversible step towards socialism.

In discussing the killing of this statutory and regulatory monstrosity, the options are typically characterized as one or more of the following:

(1) Symbolic votes.  Vote to repeal healthcare on day 1 in the House, even though nothing can come of it.  In other words, the Senate won’t be able to pass repeal, and if it did, Obama would just veto it anyway.  I am not against this option, but I do believe there are things we could also do that would start to really dismantle Obamacare in 2011—see below.

(2) Tinker with the Stink.  Some, but not many, say that we should try to fix what is wrong with Obamacare.  Since it’s far easier to trash to the entire thing and start over, this is hardly an acceptable option.  Besides, you play with pigs in the mud for half a minute, and you will look and smell like the pigs.

(3) Pray for a Stay.  Challenging Obamacare in the courts is worth doing.  I am definitely not against pressing forward with all the lawsuits, but does anyone believe that the judicial system is likely to be a big help on this issue?  Do conservatives really want to give courts the first real crack and bringing down Obamacare?  Isn’t that like relying on the French army to stop the Nazi’s in WWII?  I mean they may help slow things down, and they might help clean up at the end, but does anyone feel comfortable that a Supreme Court that upheld much of McCain-Feingold is going to do our work for us?

(4) Repeal and Replace.  This is really just a variation of tinker with the stink.  I haven’t seen any realistic “replacements” and who wants to replace a foul odor anyway?

(5) Defunding.  The defund Obamacare sounds like a nice option in theory, but in practice, it’s really just a government shutdown option.  The only way to specifically defund Obamacare is to put riders in the appropriation bills, which are no easier to pass or harder to veto than a bill repealing Obamacare.  Given the importance of putting a wood stake in the heart of Obamacare, I am willing to go with this option.  However, there is a smarter option I believe we should try first.

(6) Trojan Horse Repeal. One of the brilliant aspects of Obamacare is how it will totally discredit free market activity in health care.  The system is designed to make it impossible for a for-profit insurance companies to function.  Ultimately even non-for-profits will shut down, and only the government will be left.  Obamacare is really an attempt to discredit capitalism by placing sufficiently impossible and contradictory obligations onto insurance companies that they all cry uncle.  I say beat the bastards at their own game with our own Trojan horse.

Health Savings Accounts coupled with high-deductible health-insurance could be a fatal Trojan horse for Obamacare.  Conservatives could push for some concrete steps that would enhance HSAs, helping Americans deal with health care issues while at the same time jabbing some knives into Obamacare.

While there are many disturbing tentacles to Obamacare, the worst provision at its core is the ability of the HHS to define what is “acceptable” insurance coverage and what is “not acceptable.”  From Heritage:  

“But the worst news for those using HSAs is the provision requiring all policies to cover at least 60 percent of the actuarial value of the benefits offered.  What’s the actual value?  No one really knows—not until the Health and Human Services Department issues regulations on how to calculate it.”

HSAs are the most American way to deal with increasing health care costs because HSAs put consumers, not government and not insurance companies in the driver seat.

More from Heritage:

Why is there so much excessive—indeed, downright wasteful—spending in health care? One reason is the disconnection between patients’ wallets and their health care bills.

Most Americans get health insurance through their employers. They neither witness nor control the flow of their dollars from employer to insurer to health care provider. Yes, those health care dollars are their compensation, just like wages. But with no visible “skin in the game,” they have little incentive to limit spending.

Engaging patients in the cost of their own care is one way to motivate them to seek better value for the health-care dollar–good quality health care at a reasonable price. And consumer-driven health plans, such as health savings account (HSA) plans, do just that.

As America’s Health Insurance Plans (AHIP) explains, HSAs “give consumers incentives to manage their own health care costs by coupling a tax-favored savings account used to pay medical expenses with a high-deductible health plan (HDHP) that meets certain requirements for deductibles and out-of-pocket expense limits. Most HDHPs cover preventive care services (e.g., routine medical exams, immunizations, well-baby visits) without requiring enrollees to first meet the deductible. The funds in the HSA are owned by the individual and may be rolled over from year to year.”

Increasing numbers of Americans are finding value in these plans. AHIP reports that 10 million Americans were enrolled in HSA/HDHP plans at the start of this year. That’s a 25% increase over January 2009 levels and a 64% jump in the last two years. Today, more than one of every 10 newly purchased health plans are HSA/HDHP plans.

Unfortunately, Obamacare threatens to render HSA/HDHP plans a thing of the past. It’s a regulatory thing. It all depends on how the Department of Health and Human Services decides to calculate the actuarial value of HDHPs. According to Roy Ramthun of HSA Consulting, if HHS opts not to “count” contributions to HSAs as part of the actuarial value, then “HDHPs, many of which have actuarial values below 60 percent (or whatever the final standard becomes) based on the insurance coverage alone, could no longer be sold.”

 

The growth of HSA plans and the market realities of cost control would have eventually driven the insurance marketplace to rely primarily on HSAs.  Obamacare came in the nick of time for leftists wanting government medicine.  GOP.gov provides some additional data points on how Obamacare and HSA plans are mutually exclusive and thus can’t really coexist in the same regulatory framework.  So, either Obamacare will die or HSAs will die.  This is of course another reason to support HSAs.

 

HSAs also provide some tactical advantages to our side.  HHS has already granted a variety of wavers to delay the negative PR that would result from certain Obamacare  provisons. President Obama is clearly willing to do some short terms things to Obamacare in order to preserve what he perceives to be its long term viability.  I think we should take advantage of that fact to push for certain HSA enhancing legislative changes.  These could be done all at once or piece by piece:

 

 

1. Resolve issues in the how “actuarial value” and “medical loss ratio” are defined via statute.  Take this stuff out of the hands of HHS and have Congress define these requirements so that HSAs are protected.  I think Obama might sign it, particularly since people would not otherwise be able to keep their existing insurance coverage.  I realize that this might be construed as a “fix” but I would characterize it as removing HSAs from the scope of Obamacare in a clandestine way.

2. Undue the tax increases on HSA plans that go into effect January 1, 2011. Obama even took out the “hardship” exception to the early withdraw penalty.  Forcing Obama to face the fact that is language doesn’t recognize economic hardship as a basis for accessing a person’s own money has to a be a great way to improve policy and politically shame the President.

3. Change the tax code so that any can purchase high deductible insurance and deduct it from their taxes.  The fact that employers deduct such expenses, but employees cannot is truly stupid.  This is something you could even limit to people making $250k or less.  Anything to get the ball rolling in facilitating real markets.

4. Offer HSA versions Medicaid and Medicare.  Yeah, I realize that these are probably as unlikely as a straightforward repeal of Obamacare.  However, we are talking about giving people choices, so again, its an argument that only makes the Republicans look good.

5. A federal option . . . a federal charter option: . 

Under this charter, let’s permit insurers to design their policies free of ObamaCare’s mandated benefit levels and free of state regulation. Let’s let these policies be purchasable with pre-tax dollars and allow them to satisfy ObamaCare’s mandate requiring individuals to have insurance and employers to provide it.

This idea is really a combination of ideas 1, 2,  and 3 above with a “purchase insurance across state lines” feature.  Love the idea, and its something that I’ll bet could get through the Senate.

The beauty of this idea is that it cuts off Obamacare at the knees.  It kills the weed now, making it far easier to pull out of the ground later.  Moreover, it will drive insurance into a more free-market based form and people will vote with their feet to enter in the anti-Obamacare coverage.  Two systems, side by side for everyone to compare and contrast. 

What’s the first thing the new nationally-chartered insurers would do? Rush out cheap, high-deductible policies, allaying some of the resentment that the mandate provokes among the young, healthy and footloose affluent. At the same time, these policies would quickly re-revolutionize ObamaCare from within. Here’s why:

First, these folks could buy the minimalist coverage that (for various reasons) actually makes sense for them. They wouldn’t be forced to buy gold-plated coverage they don’t need so the money can subsidize the old and sick (the hidden tax logic of ObamaCare).

Secondly, this relatively healthy cohort would be covered for a rare major injury or illness. The rest of us wouldn’t have to pick up the tab.

Thirdly, and when paired with a health savings account—as would happen as employers large and small rush to take advantage of a better option than ObamaCare now affords them—it would provide a much-needed kick of consumer discipline to the medical complex’s pants, which has always been the conservative alternative to a creeping government takeover of medicine.

There’s already a base of sensible Democrats who’ve championed exactly such reforms. And because it can be sold as expanding the options under ObamaCare and lessening the burden of an unpopular mandate, a lot of other Democrats (who can read the election returns) might vote for it too. Even more so when they realize it would allow backing off the unaffordable subsidies required to make ObamaCare’s individual mandate go down with the public.

And the president? The truth is that Mr. Obama is a go-along-to-get-along guy. He did not (like Sarah Palin) rise by bucking his party’s establishment. His one attempt at doing so—his run for Chicago Rep. Bobby Rush’s House seat in 2000—ended in the only personal electoral defeat he’s ever experienced.I like the idea of planting some markers in the midst of territory spoilt by Obamacare.  It’s not repair and replace, its discredit, supplant, and kill.  All the while, making market based healthcare look good.

 

 

 

I think this approach could result in further weakening Obamacare while strengthening a conservative solution at the same time. Moreover, I think its possible that Obama would actually sign on to some of this stuff.  I am all for ending Obamacare, but I think this may be a way to do it with cooperation from the Democrats.  In fact, I think they might even welcome the opportunity.

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