Dan Calabrese

It’s no small trick for Republicans, after President Obama thoroughly lost the nation’s confidence on health care policy, to go ahead and lose it even bigger. But they seem to be doing so, in large part because their own history of “reform” proposals doesn’t make a whole lot more sense than Obama’s.

The larger problem is that almost no one in the governmental/political realm gets health care right, because they all buy the premise that the primary objective should be insurance coverage – the more all-encompassing, the better – for everyone. And Republicans are finding it difficult to maintain the advantage Obama handed them on the issue because, until very recently, they believed and touted much of the same thinking that led to ObamaCare.

We all know that Mitt Romney’s biggest problem in the 2012 presidential race is the policy known as MassCare, which was implemented during his term as governor of Massachusetts. The lynchpin of MassCare is the very thing ObamaCare opponents are now challenging in federal courts – the mandate that everyone purchase health insurance.

But if MassCare’s insurance mandate is unlikely to derail Romney’s path to the nomination, that is due in no small part to the fact that Romney is hardly alone in his recent love of insurance mandates. Yesterday, ObamaCare supporters were gleefully sending around a video of Newt Gingrich, speaking in 2008, on why we needed a federal mandate for everyone to purchase health insurance – coupled with some sort of fee for those who did not.

In other words, the very same policy Obama signed into law, which Gingrich now claims to oppose.

And of course, the right’s embrace of a federal insurance mandate has a bit of a history, going all the way back to the early 1990s, when the Heritage Foundation touted such a plan as an alternative to HillaryCare.

The problem here is twofold, and it’s both political and substantive. The political problem is that Democrats have long been the more assertive party when it comes to health care reform. They’ve always wanted health care to be as government-run as they could possibly get it, which is a terrible idea, but at least they’ve had the virtue of knowing what they wanted. Republicans, who know the health care system doesn’t work all that well but aren’t really sure why, have been content to simply respond to the Democratic position. So if the Democrats want government health care, the Republican answer is more access to private insurance, selling insurance across state lines and so forth. At least it’s a private-sector answer, and that seems more Republican, so that’s what they propose.

The substantive problem is that everyone is afraid to attack the real cost-driver in health care, which is insurance itself. Health insurance doesn’t work like any other kind of insurance, which is designed to protect you from an unforeseen situation – your home burns down, your car is totaled – that you can’t possibly afford to pay for. Insurance works in these situations because most of those who are in the risk pool never file a claim, so premiums remain reasonable and money is available for those who do file claims.

In health insurance, everyone files claims, not for the unforeseen, but for the easily foreseen. You know you’re going to go to the doctor for a checkup. You know you’re going to pick up a prescription. Those who have dental are going to go twice a year. Those who have vision are going to get their annual checkup. You expect your insurance to pay for these things, and if you do have an unforeseen, catastrophic situation, you expect it to pay for that too.

The way health insurance works in America, it’s not really insurance at all. It’s welfare. Republicans don’t object too strenuously because it’s run by the private sector, but it’s still welfare.

The policy objective with health care should be a) protecting people against financial ruin that results from unforeseen, catastrophic costs; and b) simplifying the nature of normal day-to-day health care so people can pay for these things out of their own pockets.

Conservatives won’t like this, but it is probably necessary to impose some kind of mandate or tax so you can create a universal risk pool only for major, catastrophic health care needs. The best way to do this is at the state level, probably in a manner similar to how states handle auto insurance. Let each state decide how to do it, but it probably involves some sort of annual fee that either goes to a state agency or a private insurer, which would then be protected by a reinsurer that pays for the most expensive, long-term cases.

Liberals won’t like this, but aside from catastrophic costs, government should do nothing to facilitate or encourage the use of health insurance to cover anything (let alone have government itself pay the bills). The tax deduction that covers employer-paid health insurance should be eliminated.

I’m not willing to say that government should ban health insurance for first-dollar coverage, because my capitalist sensibilities won’t allow me to go that far. But if you separate day-to-day health care from catastrophic, I suspect the market dynamic would be such that most people would find it more affordable to just pay the doctor bills themselves. That would bring costs way down, because people would once again become price-conscious shoppers, and there would be no need to jack up prices to cover the cost of health insurance bureaucrats who do nothing but a) approve reimbursements and cut checks; or b) challenge reimbursements and hold things up.

This approach still leaves the need to address escalating costs in Medicare and Medicaid, which are the methods by which we provide care to the elderly and the poor, respectively. But at least it separates everyone else’s health care from these two, and wrings major costs out of health care in the process, thus making it easier to reform the entitlements.

This sort of approach is what Republicans should have been advocating all along. Instead, they’ve been pimping for reliance on private-sector health welfare because they didn’t understand the real problem in health care finance, and for the most part still don’t. That’s why, when ObamaCare defenders ask them how they would replace the president’s boondoggle, they really don’t know what to say.

And that’s why, even though Obama lost this argument long ago, Republicans aren’t winning it. As a result, even if we do get rid of ObamaCare (which we should), we probably won’t get a health care finance system that makes sense any time soon.

© 2011 North Star Writers Group

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