Covering the Uninsured Without Obamacare

What everyone needs to recognize before the Health Care Summit later today is that the uninsured can be covered at modest additional net cost without the government takeover of health care, government health care rationing, 100 new health control bureaucracies and programs, and trillion dollars in new taxes and spending (woefully underestimated) involved in Obamacare.

The lack of a clear safety net for the uninsured is what gives Democrats the political lift to keep coming back for socialized medicine. Republicans should advance the modest reforms necessary to establish a true safety net that will ensure that no one will be denied essential health care. Only that will permanently protect the health care of the American people from government takeover and control. Republicans should trumpet this point at the health care summit tomorrow.

Reform should start with Medicaid, which already spends over $400 billion a year providing substandard coverage for 50 million poor Americans. Congress should transform Medicaid to provide assistance to purchase private health insurance for all who otherwise could not afford coverage, ideally with health insurance vouchers.

This one step would enormously benefit the poor already on Medicaid. The program today pays doctors and hospitals only 60% of costs for their health care services for the poor. As a result, 40% of doctors and hospitals won’t take Medicaid patients. This is already a form of rationing, as Medicaid patients find obtaining health care increasingly difficult, and studies show they suffer worse health outcomes as a result. Health insurance vouchers would free the poor from this Medicaid ghetto, enabling them to obtain the same health care as the middle class, because they would be able to buy the same health insurance in the market.

Ideally this would be done by changing Medicaid financing to provide the federal assistance to the states for the program through finite block grants, which would not vary to match increased state Medicaid spending as today. States that innovate to reduce costs can then keep the savings. States that operate programs with continued runaway costs would pay those additional costs themselves. Such reforms worked spectacularly in stopping the runaway costs of the old AFDC program when Congress adopted welfare reform in 1996.

The block grants should provide states with increased federal funding sufficient, counting state Medicaid funds, to give assistance to all who truly cannot afford health insurance. The voters of each state can then decide how much assistance for the purchase of health insurance to provide families at different income levels. This would rightly vary with the different income and cost levels of each state.

Done right, this would ensure that no one would lack health insurance because they can’t afford it. But to ensure a complete safety net, federal funding should also be provided for each state to set up an uninsurable risk pool. Those uninsured who become too sick to purchase health insurance in the market for the first time, perhaps because they have cancer or heart disease, would be assured of guaranteed coverage through the risk pool. They would be charged a premium based on their ability to pay. Federal and state funding would cover remaining costs.

Such risk pools already exist in over 30 states, and they work well at relatively little cost to the taxpayers because few people actually become truly uninsurable. This works far better than forcing insurers to cover everyone regardless of pre-existing conditions, or regulations such as guaranteed issue (requiring insurers to cover everyone who applies regardless of health condition) or community rating (requiring insurers to charge everyone the same regardless of health condition). Such regulation naturally causes health insurance premiums to soar. That is because it is like requiring insurers to provide fire insurance for houses that are already on fire. With the above reforms, such cost increases would be avoided, while ensuring that everyone has somewhere to go to get essential coverage and care.

The law already provides that insurers cannot cut off existing policyholders, or impose discriminatory rate increases, because they become sick while covered. That would be like allowing fire insurers to cut off coverage for houses once they catch on fire. If this law needs to be modernized, it should be.

With these reforms, those who have insurance can keep it, those who can’t afford it are given help to buy it, and those who nevertheless remain uninsured and then become too sick to buy it have a back up safety net in the risk pools.

This completely solves the problem of the uninsured without any individual or employer mandates, which are burdensome, unnecessary gateways to enormous trouble. There is also no need whatsoever for any new health care bureaucracy. Also not needed is any sort of health care rationing, such as fixed health care budgets, accountable care organizations, pay for performance, comparative effectiveness dictates, or “cost effectiveness” regulations. Republicans should vociferously object to all of this unnecessary socialized medicine baggage at the summit tomorrow.

President Obama and the Democrats are using the uninsured as a foil for the massive expansion of government power and control over health care involved in socialized medicine. Solving the problem of the uninsured through the above means takes away that foil.