Repeal to replace: starting this year

Serious political debate in Republican circles over the substance, scope, and scale of what should “replace” the Affordable Care Act (ACA) has been more or less frozen in suspended animation since its enactment in March 2010 for three reasons.

1. Grassroots activists focused on outright repeal as a common unifying goal.
2. Elected GOP officials and other Republican candidates for office scrambling to stay in front of the energetic parade opposing ObamaCare found it much easier to hope that the Supreme Court would do most of their work by ruling the Affordable Care Act unconstitutional and invalid in its entirely.
3. Developing a coherent and popular replacement plan is a much heavier lift, particularly once one tries to move beyond the facile rhetoric and sound bites of past proposals that dodge the difficult policy complexities and political tradeoffs of sustainable health reform.

This short-term equilibrium will end, one way or another, after the Supreme Court announces its decision later this year, most likely in mid- to late-June after three days of oral argument in late March. Whether the Court leaves nothing standing in the ACA, affirms it across the board, or provides a split decision (such as invalidating the individual mandate but leaving portions of the health law in place), the political climate will change. Republican members of the current Congress, let alone the GOP presidential nominee and Republican leaders of the next Congress, will need to outline and articulate their own basic visions of health policy that go beyond “none of the above” or “back to the future.” And they can do better. Repeal of the current health law is a necessary, but not a sufficient, part of fixing our health care system.

A credible “Replace” proposal needs to deal with a number of important issues:

• Restructuring the safety net,
• Protecting vulnerable Americans at risk for serious pre-existing health conditions,
• Refocusing Medicaid to become more accountable, effective, and sustainable,
• Creating a different, competition-based regulatory regime for private health insurance,
• Limiting and re-targeting open-ended taxpayer subsidies for health care services,
• Helping to connect consumers to real health care markets and better health care products,
• Managing the evolution from a dominant employer-based private insurance market toward one based on choice and competition across a more level playing field,
• Developing new pathways to seek and find better value in health care options,
• Preparing the structural underpinnings for long-overdue Medicare reform, and
• Accounting for the challenges of timing and transition in inter-related health policy reforms.

Past Republican proposals on Capitol Hill have hit the above targets only partially at best and far from dead center; mostly because the political marketplace did not yet ask them to do much more. This will change somewhat in the second half of 2012 – particularly during the campaign season, and even more so in the next Congress and presidential administration starting in January 2013.

A real Replacement program does not have to invent new ideas and find imaginary friends. It can build on many policy proposals waiting on the shelf, such as:

• Extending HIPAA incentives for continuous insurance coverage to the individual market;
• Funding robust high-risk pool protection for those facing serious health risks who experience difficulty finding affordable insurance coverage;
• Taking Medicaid off ACA-injected steroids, delegating most of its operational policies to the states (with negotiated standards of accountability for outcomes), and mainstreaming more beneficiaries in the below-65, non-disabled population into private health insurance coverage options;
• Fostering responsible competition in insurance regulation among the states and transitioning to an information-based approach to regulation;
• Moving to defined contribution financing of taxpayer subsidies for health care across all coverage platforms (primarily Medicare, Medicare, and employer-sponsored health insurance);
• Limiting any benefit standards to the most flexible and minimal levels possible
• Assigning state governments the task of ensuring that their reformed insurance markets will guarantee that willing buyers can find willing sellers (e.g. non-“exchange” mechanisms that rely on competition, consumer choice, and enhanced information assistance -- instead of proscriptive regulation);
• Avoiding policy bias between employer-sponsored insurance and individual insurance, without dictating the speed or direction of changes in the mix of coverage;
• Building a necessary information infrastructure for pluralistic competition in provider performance measurement and consumer assessments of health care value;
• Instituting premium support and competitive bidding as structural building blocks for Medicare reform, before determining what level of assistance future taxpayers can and will support; and
• Acknowledging that better incentives, information, choices, competition, responsibilities, and trust in individuals – rather than top-down mandates and arbitrary budgetary formulas – must drive sustainable health care change.

There are many important policy details and implementation options within the above policy reforms, and some of us have examined them in greater depth elsewhere. The political calendar dictates that it’s too soon to legislate a replacement package in 2012 but it will be too late to consider it after 2013. The best way to prepare for this narrow window of opportunity would be for House Republicans to schedule a series of “soft” hearings on replacement concepts that introduce them for substantive criticism, feedback, and refinement. The best surprise in 2013 would be “no last-minute surprises” as Republicans build greater support for a newer approach to health policy that reinforces unifying visions and values.