Conservatives have spent much time in recent years talking about repealing and replacing the Affordable Care Act, otherwise known as Obamacare. Avik Roy, senior fellow at the Manhattan Institute and opinion editor at Forbes, has a different idea. Roy issued a report in 2014 titled “Transcending Obamacare.” During a recent trip to North Carolina, Roy shared themes from that report in a discussion with Mitch Kokai for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Kokai: Why transcending?
Roy: I took that from a speech that Ronald Reagan gave in 1981, at Notre Dame, where he said, “We’re not going to defeat communism. We’re going to transcend communism.” And his point was what we’ve been doing this whole time during the Cold War was containment. Right? Just hope we can prevent the Soviets from taking over the world, and just root for them to fail and maybe try to sabotage things on the margins.
But instead, Reagan’s argument was if we actually focus on our own economy and make our own economy grow at such a clip that the communists can’t keep up, we’ll transcend communism. We’ll leave it behind.
And so my argument is, instead of focusing on repealing Obamacare, we have to look at the entire health care system and all the ways in which the government has been messing it up, and say, let’s liberate as much as we can of the entire health care system and let the private sector innovate and let consumers innovate.
Let consumers control their own health dollars. And if we do that, we can actually show that consumers controlling their own money can do a much better job of taking care of their own health care than the government can.
Kokai: And your plan doesn’t necessarily require repeal of Obamacare?
Roy: Yes, that’s a key point. So it can work as a repeal-and-replace plan; you repeal Obamacare and replace it with a framework that I’ve described. Or you can take the existing gemisch of the health care system as it is and try to change various parts of it to end up with the same place.
The end result would be the same, but without formally repealing the entirety of the ACA. You’d still be repealing big chunks of it. For example, in my plan I repeal almost all the tax increases in Obamacare. I repeal the individual mandate in Obamacare. I repeal the Medicaid expansion in Obamacare.
So there is quite a bit that is repealed, but I don’t necessarily require repealing the whole law. You can take certain parts, and most importantly, the part in which people get tax credits to shop for their own private insurance plans, and use that as a jumping-off point for reforming the entire entitlement system in a way that would actually put all these programs — Medicare, Medicaid, the VA, the whole mess — in a fiscally sustainable path.
Kokai: Your plan is designed to address some issues that even Obamacare supporters want to see.
Roy: Yes, so I think one of the things that both on the left and the right there’s been some confusion about, in my view, is the conflation of universal coverage and single-payer, government-run health care. We tend to think of both of those as synonyms. Right? Universal coverage means government-run health care that’s going to blow our budget even more into debt than it already is.
But actually certain countries, particularly Switzerland and Singapore, have shown that if you actually use consumer-driven, patient-centered health care, give again people control their own dollars through [health savings accounts] — the kinds of things that Ben Carson talks about when Ben Carson says, “You know, we should just take Obamacare, chuck it and give everyone an HSA and let them build on that through the course of their life.” Effectively, that’s what Singapore already does.
And if we could gradually, just gradually migrate our system in that direction, I think we’ll see that same powerful response. There’ll be more innovation, more cost-effectiveness, and more affordability in the health care system than we have today.
Kokai: You mentioned a couple of noteworthy countries that combine universal health coverage and much lower costs.
Roy: Yes. So Switzerland spends 45 percent of what the United States spends in terms of government spending on health care. Singapore spends about one-fifth of what we spend in terms of government spending on health. There’s something that people don’t realize. Before Obamacare, U.S. government spending on health care was the third highest in the world per capita, meaning we like to think we had this free-market health care system and then Obamacare came around and it was this government takeover. It’s not like that.
The government takeover of the health care system happened in 1965 when LBJ passed the Great Society. And what Obamacare does is add, build upon the existing edifice of the Great Society. And so if we really want to have a more market-oriented health care system, a more free and liberated health care system, we’ve got to tackle the Great Society part much more than actually Obamacare, because it’s about 85 percent of the problem.
Obamacare is about 15 percent of the problem. But we tend to forget about it because it’s 50 years old. … So you tend to think about it as part of the baseline, but it’s not the baseline. There was a more market-oriented system before Medicare and Medicaid came along. And if we build upon that old system and actually allow people to choose where they get their health care, we can have a much better system.
Kokai: You’ve developed a 20,000-word, nearly 70-page plan. What’s the key goal?
Roy: I firmly believed, again, in looking at countries like Switzerland and Singapore as models, that we could cover more people than Obamacare but spend a lot less money. And so those were really the core components of what I wanted to do. I wanted to say let’s figure out a way, using market-based exchanges — giving people those tax credits to buy the health insurance plans that people actually want to buy instead of the ones the government is forcing them to buy.
Give people the choice, but use those tax credits that Obamacare contains as a model for how to buy insurance, and then just say, “Let’s give it to everybody. Let’s let the people on Medicaid have those tax credits. Let’s let the people on Medicare have those tax credits.”
And if you give a broad range of people that opportunity, what you find out is that by making health insurance less expensive by expanding the choice and lightening the regulatory load that insurers have to comply with, you make insurance less expensive, more people want to buy it because it’s cheaper, it’s more affordable. So you can actually cover more people by spending less money.
Another thing that we do that’s very important in this country that a lot of people don’t realize, is we spend over $1 trillion a year subsidizing health insurance for rich people. So when Warren Buffets says, “My taxes are too low, we should raise taxes for upper-income people,” what I say to Warren Buffett is, instead of making Americans pay more in taxes, why don’t we first say, “Warren Buffett, why don’t you give up your Medicare?” Why should I pay taxes [so] that Warren Buffett and Mitt Romney have Medicare — government-subsidized, single-payer health care. It doesn’t make a lot of sense.
So if we move to a system where we have a true safety net — Friedrich Hayek talked about the fact that actually conservatives should want there to be a true safety net so that the truly poor or the truly vulnerable have subsidized health coverage. That’s what wealthy countries do.
But then for everyone else, let’s let them choose the plans that are best for them and try to get the government out of the way. And if we migrated to that kind of a system, where we truly helped the needy with private health insurance instead of government-run, Medicaid, single-payer health insurance, they’d have better quality health care, better health outcomes — all the studies show that.
And so you can improve the quality of health care for the poor, reduce the number of people who are without health insurance, and also fix all the debt and deficit problems we have. We can do all those things at the same time by liberating the market from the government-run aspects of the system and giving people more opportunity to spend those dollars themselves through things like health savings accounts.
Kokai: Obamacare relies on expansion of Medicaid. What do you think about that?
Roy: I wrote a whole book called How Medicaid Fails the Poor that goes through all the data of how the Medicaid program fails to achieve health outcomes that are better than those for people who have no insurance at all. And I think that’s one of the things that you hear the left say all the time: “Well, we have to expand Medicaid because there’s all these people who are going to die if they don’t get Medicaid.”
Well, there is no evidence, zero evidence to suggest that Medicaid will actually save lives. What it does do is spend a lot of taxpayer money on a program that doesn’t work for the people it’s intended to benefit.
So what we could do instead is, again, take the money that we spend on Medicaid and instead give that to the patients. Give that to the enrollees, to say, “You know what? We’re going to give you high-deductible insurance plus a subsidy for a health savings account, and use that health savings account to buy a concierge physician, say, or whatever you need to really manage your chronic diseases, your high cholesterol, your high blood pressure.”
Most Medicaid patients, yeah, OK. It’s paid for if they get a stroke or if they have a heart attack or whatever. But getting a doctor to actually see them on a regular basis is impossible because most doctors don’t take Medicaid because it doesn’t pay very well.
But if you give people the money and say, “You know, let me just pay the doc directly from my HSA for my primary care” — most doctors take cash because there’s no paperwork involved. It’s really easy for them.