States should drive health reform

When the Democratic Congress and the Obama administration enacted the Affordable Care Act a decade ago, the part that got the most attention was a set of insurance exchanges where Americans could enroll in private health plans with varying degrees of subsidy.

It made headlines when most states chose to use the federal insurance exchange rather than setting up their own. It made more headlines when the federal-exchange website initially crashed.

Meanwhile, because the plans would be highly regulated, and thus highly expensive, the ACA’s framers believed it necessary to compel relatively young, relatively healthy people to buy the overpriced plans in order to keep the insurance pools from imploding. So despite candidate Barack Obama’s opposition to a federal insurance mandate, President Obama signed one into law.

Lawsuits ensued, producing still more headlines. A majority of justices of the U.S. Supreme Court concluded that the mandate was unconstitutional, but Chief Justice John Roberts preserved it by redefining it retroactively as a tax. Later, a Republican Congress rescinded the tax.

It’s not hard to see why many Americans still consider “Obamacare” to be primarily about government-subsidized private plans. But it never was. From the start, the Affordable Care Act was mostly about expanding Medicaid. That’s where most of the increase in health-plan enrollment was intended to occur.

For most progressives, the ACA is merely a waystation. They believe America ought to adopt a single-payer, government-run system. Some explicitly advocate Medicare for All. Others are pursuing a gradualist approach — get all states to Medicaid expansion, then expand Medicare to near-retirees, etc. — but with the same ultimate goal.

Most conservatives reject this goal, fully and fiercely. Most Americans do, too, when they come to understand the full implications of the idea. Rightly or wrongly, they think of Medicare as a retiree health benefit for which they pay throughout their working lives. They don’t see it as welfare. And during their working lives, most are satisfied with their private health-care arrangements.

They suspect that if the federal government had full control over the financing of medical services, the quality and availability of those services would suffer. They are right.

Among other worthy objections to a single-payer system, I am partial to the federalist one. Why should America have a single approach to financing health care? In addition to its dubious constitutionality, such a policy prevents different states from pursuing different strategies in response to different circumstances and the preferences of their citizens. After all, “Europe” has no single-payer plan. Separate European countries, most with populations comparable to American states, have adopted their own systems. Some have, indeed, set up government monopolies. Others use a mix of public and private providers.

As a conservative, I see a great deal of merit in letting states go their own way here, both with regard to financing care and to regulating providers. The problem has always been how to get from here to there. As the North Carolina General Assembly contends with yet another push to embrace Medicaid expansion, I think it wise not just to say what we are against — putting hundreds of thousands of additional North Carolinians on welfare — but to say what we are for.

A good place to start is a proposal from the Health Care Consensus Group, a network of market-oriented health reformers from across the country. It would convert federal funds for Medicaid, health exchanges, and other programs into consolidated grants. State governments could use the grant funds in a variety of ways, including traditional Medicaid, premium support for private plans, insurance pools for high-need patients, health savings accounts, direct primary care, and public clinics. State legislators and governors who want to go all the way to single-payer could do so but they’d have to enact the additional taxes and expenditures required themselves — and defend their choices in state elections.

Democrats and Republicans have been debating health care reform for decades in Washington. It’s the wrong location. And which national plan to adopt is the wrong question.

John Hood (@JohnHoodNC) is chairman of the John Locke Foundation and appears on “NC SPIN,” broadcast statewide Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.