Speaker Paul Ryan set a very important deadline yesterday: House Republicans will pass legislation to repeal and replace Obamacare by the end of the month. President Trump gave House leaders a much-needed boost by strongly endorsing the basic contours of their replacement plan in his speech before the joint session of Congress.
The next few weeks will be spent hammering out the details of the proposal. Republicans are right to want to replace Obamacare with a new tax credit aimed at maximizing consumer choice. But achieving that goal requires that Congress clears out the regulatory mess Obamacare will leave behind. That mess goes well beyond the individual mandate, as important as it is to repeal it.
Something called the “Byrd rule” has emerged as a key obstacle to better healthcare. Under that rule, it is easier for a majority of the Senate to alter tax and spending than regulations, and especially to alter regulations that by themselves do not have a major effect on spending. And so some on Capitol Hill are leery of trying to repeal many of Obamacare’s regulations.
Regulations are, however, the heart of Obamacare. If Republicans leave them in place they will not have repealed Obamacare or liberated Americans from it. Many leading repeal proposals, unfortunately, leave in place a group of hidden mandates that strip power away from states and consumers and hand it to bureaucrats in Washington. Any plan that seeks to return power to individuals and states, and to foster a competitive marketplace must do away with these hidden mandates.
While Obamacare’s 2,700 pages are chock full of heavy-handed, Washington-knows-best provisions, the following six mandates deserve special attention from conservatives and others who want to create a competitive healthcare market.
Hidden Mandate #1: One-size-fits-all plans
The conceit behind the so-called “Gold,” “Silver,” and “Bronze” plans in the Obamacare exchanges is that American consumers would too easily be confused given too many choices. These benefit plans were designed by Washington bureaucrats who couldn’t possibly know what package of coverage an individual would choose on an open market. People have different healthcare needs, and they should be able to spend their healthcare dollars to get coverage best-suited to their families.
Hidden Mandate #2: Failed exchanges
The federal government also imposed rules about how states must administer these metallic plans. As a result of these rules, states wasted billions of dollars establishing often painfully ineffective state exchanges when the private sector could have done it better and faster. These rules have contributed to soaring premiums, fewer choices, declining enrollment, and ill-served consumers. States should be free to manage their marketplaces in the most efficient and effective ways possible, free of arbitrary federal rules.
Hidden Mandate #3: Arbitrary out-of-pocket limits decided by Washington
This mandate eliminates the possibility that consumers could choose higher deductible plans or catastrophic insurance, forcing many people to buy coverage they don’t want and can’t afford. Again, federal bureaucrats make decisions and issue inviolable edicts about who can purchase what type of coverage.
Hidden Mandate #4: Duplicative, politicized rate review
Health insurance premiums are regulated by the states. But under Obamacare, the federal government has put in place a convoluted process to oversee their work. Federal regulators are in no position to second-guess the decisions made by local officials who are most familiar with the local market and are ultimately responsible for ensuring a stable insurance marketplace. Federal rate review is simply code for a politicized Washington power grab.
Hidden Mandate #5: Washington chooses your doctors and hospitals
One of the most important factors in affordability is how networks of medical providers (doctors, hospitals, etc.) are established. Those networks vary depending on many factors and states are best equipped to judge how those factors relate to their citizens’ needs. Duplicative, top-down federal rules on what constitutes an “adequate” network only serve to drive up healthcare costs and strip power away from states to regulate their own insurance markets and from consumers to choose the plans that work best for them.
Hidden Mandate #6: A risky bet for taxpayers
Finally, Obamacare’s federal risk-adjustment program essentially transfers money from insurers with less risk to insurers with more risk. But decisions about how to calculate risk are technical and dependent on many factors that may vary widely state to state. Centralizing these resources and this power in Washington could lead to corruption and taxpayer bailouts of underperforming insurers on a massive scale. State regulators, who are attuned to local marketplace dynamics, should have the authority to regulate risk among health insurance carriers.
Conservatives should strive for a system that helps create a level playing field upon which competition can take place. These Obamacare mandates subvert that goal. They undermine affordability, choice, and competition in healthcare.
It may be that the administration has latitude to lighten the burden of some of these regulations, or that legislation can use funding restrictions to temporarily block them. Some Republicans seem tempted to use these strategies and leave these mandates on the books. But that’s a risky course, because it means that they can be easily brought back after future elections. Republicans should at least try to eliminate these regulations now, and if they do not succeed immediately they should make it clear that it will remain their goal.
April Ponnuru (@AprilPonnuru) is a contributor to the Washington Examiner’s Beltway Confidential blog. She is a senior adviser at the Conservative Reform Network. Previously she was an adviser to Jeb Bush’s presidential campaign.
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