I wrote the essence of what is below on October 31 at my home blog but forgot to post it here due to sugar haze. Since then, a few bubbles of a supposed shift toward the GOP wanting to tweak the ACA instead of arguing for a repeal that will never come. I agree that it seems unlikely that Republicans will actually vote for something of substance based on past experiences, but of course I have been prattling away about health reform deals for quite a while, the eternal optimist and all that (actually I just think eventually reality will intervene).
Here is simple deal that could provide Republicans with some political gains (we got rid of the individual mandate!) and help the ACA’s risk pooling ability in policy terms, which should be the biggest short, medium and long term policy goal for the Democrats; successful policy should pay political dividends for them down the road as well. A starter deal could also get Republicans rolling on laying out and fixing specific problems with the ACA, saving them from having to “start over” after a repeal that is not likely to ever come…..and eventually the ACA could become the entire nation’s health reform law.
–For 2014, make some amount of the premium paid by individuals buying coverage in the exchanges who are above 400% of poverty (and thus get no tax credit) tax deductible. This will then give everyone with insurance some federal subsidy (Medicare and Medicaid directly, those with employer sponsored health insurance lots via the tax exclusion of the amount paid by an employer, those receiving exchange subsidies directly, based on their income, and then those buying who are above 400% of poverty getting some benefit from the deduction). Long run we need to reduce tax preferenced spending, so maybe the “pay for” could be bringing forward the cadillac tax or more directly capping the tax exclusion….and slowly turning down the very high tax subsidy of cadillac ESI and searching for the “goldilocks” level of subsidy at some point in the future. A slow “boil the frog a little at the time” approach is likely the only way out of what Paul Starr calls “the policy trap” of many liking their insurance and especially the subsidy they get via employer sponsored coverage; the political difficulty of ending/limiting the tax preference of ESI-the essence of all conservative notions of health reform-is what Ramesh Ponnuru is worrying about here.
–For 2015, replace the individual mandate with the auto-enroll provisions envisioned by Rep. Paul Ryan’s Patients’ Choice Act. Strong auto-enroll policies enacted while allowing an opt out (presumably with some consequences, correct Libertarians?) could actually pool risk better than the weak individual mandate we now have. We will also have to develop a default insurance option to make auto-enroll work, which is the one thing I would add to the ACA if I could do just one thing.
There are also stories about the administration touting a fix to address the “you can keep it” thing, but it is unclear to me what could be done. Work with me people.
[Cross-posted at The Reality-Based Community]