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January 20, 2014

Beware Conservatives Floating Big Government Healthcare Plans

Avik Roy is considered one of the right's leading healthcare policy experts. Unfortunately, his current plan isn't exactly conservative.

His latest idea does away with Medicaid & Medicare as we know it. A laudable goal to be sure but there are a few catches.

To credibly advance this approach, conservatives must make one change to their stance: They have to agree that universal coverage is a morally worthy goal.

Color me cynical but if your "conservative" plan relies on first redefining conservative principles to make what you want to do fit the definition of conservative, it's not actually...conservative.

So what approach is Roy advancing?

First, we’d deregulate the Obamacare exchanges and modify the law’s subsidies to broaden Americans’ coverage choices and encourage adoption of health savings accounts and catastrophic coverage.

Second, we’d raise Medicare’s retirement age by three to four months per year forever. Since people below the Medicare retirement age would be in the means-tested exchanges, this would gradually replace the fully subsidized Medicare program. For example, over 15 years the retirement age would be roughly 70, meaning that individuals aged 65 to 69 would get their health insurance through the exchanges.

Third, we’d transform the Medicaid program by folding its acute-care population into the deregulated exchanges, while returning its long-term care and disabled populations fully back to the states, free of federal interference.

Let's unpack that a bit.

First, we're keeping and reforming the ObamaCare exchanges, not doing away with them.

Given that conservatives have campaigned on repealing Obamacare for nearly four years, it’s jarring to consider a reform plan that does not formally scrap the law. But such a plan has several advantages.

Say it with me...we all hate ObamaCare equally. Even those of us who want to keep parts of it or implement it at the state level.

Second, his plan basically requires the privatization of Medicare and Medicaid. Is there anyone who has half a clue about American politics who thinks that's anything but a fantasy?


What will happen is big government conservatives will have forced the right to concede the liberal goal of "universal coverage" as a worthy and legitimate government endeavor. They will then do what they always do...cobble together some gigantic program that keeps the worst elements of all the plans which then doesn't do exactly or even remotely do what it's most ardent supporters claimed it would. That will naturally lead to calls to “fix” the unforeseen problems with more government intervention in the market place.

What Roy suggests, catastrophic plans paired with Health Savings Accounts (HSAs), is a good plan. It was an option available before ObamaCare came along. But there's no reason to make it universal. Aside from the fact that some people may chose other options because it's simply their right to do so, you can have a system like this as an option by...simply repealing ObamaCare and returning to where we were in the dark days of 2009.

Would it be nice to turn Medicare and Medicaid into this type of program? Sure. But aside from it being a political fantasy that has some glaring holes (like how exactly are Medicaid patients going to fund their HSAs?), there's no reason to force the rest of the country into this model.


Roy will say including everyone in this type of system is the only way to control the overall cost of healthcare in this country. Again, this ignores some major historical realities. When the government tries to control the overall cost of a product/good while at the same time acting as the major provider of funding for that product/good, two things will happen.

1. If the government says "here's a pile of money" people will find ways to spend that money. Think of the college loan system and the higher education bubble. Once almost everyone could afford college thanks to government subsidies, grants and loans (whether they were suited to going or not), colleges found ways to spend all that "free" money.

The healthcare industry will do that too.

2. Once costs do start rising because of all this money flowing the only option (other than “spend even more!”) will be to directly control prices and/or limit access. This is just the fact of how government works when it interferes in the marketplace.

Yes, Roy points to similar plans in Switzerland and Singapore but those tiny, homogeneous countries have nothing in common with a diverse, continental nation like the United States.

Of course Roy is right that the big drivers of government healthcare spending are Medicaid and Medicare. But the way to control those costs is not adding another huge entitlement to coverage. Find ways to reform those programs and minimize the government’s role in the private healthcare/insurance sector.

Big government conservatives like Roy are the flip side to die hard lefties...they ignore history and insist that their big government idea will work because none of the ones that came before were done the right way.

We've been trying big government ideas and promises like universal coverage for close to a century. How about we try something completely different for a while? Like letting people make and live with their own choices. It's so crazy it just might work.

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posted by DrewM. at 12:13 PM

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