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A GOP playbook for the Blair House summit

With President Obama’s invitation to join him and Democratic leaders at a White House health care summit on Feb. 25, Republicans have the opportunity to engage in a competition of ideas on health care reform.

Will the GOP grab this chance or will they resort to tired old ideas and rhetoric? If they grab the opportunity they can distinguish themselves from President Obama and Democrats on health care. If they engage in the same old political debate, Democrats will continue to hold the high ground with the public.

What would distinguish Republicans? What health care ideas would transform our system, address the challenges facing us and lead us into the 21st century?

Recently I had the opportunity to poise those questions to some top Republican health care thinkers: former Ways and Means Chairman Bill Thomas, former Centers for Medicare and Medicaid Services administrator and Food and Drug Administration Commissioner Mark McClellan, former CMS administrator Tom Scully and former Health and Human Services Secretary Tommy G. Thompson. The ideas they shared had similar elements, common themes and similar objectives.

Of this there is no doubt: Our health care system must be fixed. It has run its course and no longer serves Americans well.

If you have employer-based insurance, you can still get good health insurance, but it is getting more costly. If you work for a small employer, your odds of getting insurance are diminishing, and the price is skyrocketing. It you are self-employed or otherwise have to purchase insurance in the individual market, it’s a crap shoot as to whether you can afford it, and what you can buy is variable and not up to par with large group insurance. Even seniors are in a bind. While the Medicare Advantage program was designed to take Medicare into the 21st century, Democrats seem determined to dismantle it and return the program to the 19th century world of fee-for-service, which is the most expensive, inefficient, low-quality health care delivery system that exists. Medicaid is the worst of all government programs. And of course we all know about the uninsured and their high and rising numbers. They have no options.

One thing is clear; our health care system has enough money in it. We don’t need to spend more money. We also have the best quality health care in the world.

What a reform plan must do then is spend the money more efficiently and provide quality care more evenly throughout the country. If we do this we can have universal coverage that provides high quality health care for all.

What are the elements of such a plan?

  • Decouple health insurance from employers: As is well known, employer based health insurance is an anomaly from the WWII-era wage and price freeze. The government did not make a conscious choice to incentivize employers to provide health insurance. It just happened. As a result it can unhappen. Employers would provide their employees higher wages reflecting the cost of what they paid for their employees health insurance. To ease the transition, do it over 5-10 years.
  • Create a standard benefit: It can’t be a specific benefit. If we allow this to happen it will be loaded up like a Christmas tree. Instead create an actuarial standard benefit for individuals and families. This way, insurers could provide a variety of plans that would reflect different needs including HSAs and MSAs. As innovation advances the standard benefit would reflect these advances.
  • Create tax credits and deductions: For persons with lower incomes provide a credit, for higher-income earners provide a deduction to cover the cost of the standard benefit. The funding would come from increased income taxes collected as wages increase as the employer tax deductibility is phased out. If individuals wanted to pay for more health care or an enhanced benefit they could, but it wouldn’t be deductible nor would the credit cover it. This would give, as the saying goes, people some “skin in the game.” Instead of first-dollar third-party coverage, this would create price and cost sensitivity.
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