Watching national health reform debates reminds me of a night at the movies. On the one hand, there are true-life stories like “Apollo 13,” that profile actual people and the problems they face. And then there are the fantasies, like “Star Wars,” in which magical things happen and the rules of normal life don’t apply. As I view the world of “Campaign Wars,” I have developed the uneasy impression that Republican health care proposals exist only in a fantasy universe.
Insurance coverage is a central part of accessing the medical care system. On this criterion, the Affordable Care Act (ACA) is a huge success: More than 16 million people have gained coverage because of the ACA. Past evidence suggests there will be positive changes in health as a result.
In the world of the Republican candidates, in contrast, the ACA is an affront to “liberty.” All of them have proposed repealing it. What would happen to health insurance for the 16 million who will lose coverage, and the millions more who still do not have it?
One of the frontrunners for the Republican nomination, businessman Donald Trump, has promised a health plan that will cover everyone (and added that “the government’s gonna pay for it.”). However, he has released no details about how he would do it, how much it would cost, or how the government would get the money—other than implying that hospitals would be paid less. The other leading candidate, retired neurosurgeon Ben Carson, has suggested that everyone ought to be given $2000 per year for a medical savings account. Given that per capita medical spending is nearly $10 000 per year and federal health spending per capita is at least $4000 per year, it is unclear whether a $2000 credit would buy any reasonable coverage. In any case, Carson has backed away from the idea that his plan would be universal.
Perhaps Carson and Trump are fumbling with the issue because they are new to politics. But even the Republican establishment feels no need to grapple with it. Sen Marco Rubio (R, Fla) and former Florida Gov Jeb Bush, from the establishment wing of the party, have each proposed a tax credit for health insurance, but both have declined to say how generous the credit would be or how many people it would cover. In addition, both have also proposed reducing the generosity of private insurance, Medicare, and Medicaid, actions that would likely increase the number of uninsured.
Least specific of all is Tea Party favorite Sen Ted Cruz (R, Texas), who has said nothing about coverage other than saying that Obamacare needs to be entirely repealed. I suspect the truest expression of Republican views about health care comes from former candidate Gov Bobby Jindal of Louisiana, who said “… universal coverage is a liberal pipe-dream that costs too much money and takes too much freedom.”
In the real world, physicians, businesses, and governments also struggle with how to reduce the cost of care. Reducing spending is difficult, because it is hard to differentiate wasteful from valuable care. But evidence is increasingly pointing to successful policies. As a result of payment and delivery system reforms, Massachusetts has gone from a state whose cost growth exceeded the national average for 10 years in a row to one whose cost growth is below the national average. A recent study of Maryland showed that that state’s new cost control plan has led to spending increases of only 1.5% annually, well below the target of 3.6%. And Oregon is having good success in its promise to improve quality while reducing cost growth in Medicaid.
In Campaign Wars, none of these experiences matters. Cost savings in the Republican plans are as simple as waving a magic wand (or perhaps a lightsaber). Almost all of the Republicans are in favor of allowing people to purchase insurance across state lines. Unfortunately, that policy has not led to a single new insurance entrant in the states where it has been tried.
Carson, Rubio, and Bush are also in favor of having people pay more out of pocket for care. Higher cost sharing would certainly reduce medical spending and could even provide funds for large tax credits to the poor, though more detail on this latter point would be welcome. None of the candidates talks about modernizing the payment system in Medicare. This is unfortunate, given the success that Medicare and the states noted above are having in payment system design.
Perhaps the most interesting omission from the Republican proposals is the lack of attention to medical malpractice. In the past few political cycles, malpractice reform was the magic elixir that was going to cure all that ails medical care. None of the proposals released so far even mentions the word “malpractice.”
As in a true sci-fi adventure, even the rules of arithmetic do not apply in the candidates’ proposals. Suppose you believe that the rich should pay lower taxes, but that the federal budget should be balanced. How do you make both of these occur? In the real world, you propose large reductions in Medicare and Medicaid, which you argue can be sustained because of the increased efficiencies that your policies will generate. In the Republican primary debate, however, the candidates simply assume that their policies will generate sufficient economic growth to produce a tidal wave of federal revenues. Thus, Jeb Bush has asserted that economic growth will double because of his tax cuts, and Donald Trump argues that growth will triple under his. Of course, evidence shows that these assumptions are unrealistic.
At one level, this chicanery doesn’t matter. Many commentators have noted that political outsiders are popular partly because people do not believe the promises of politicians. But unrealistic promises have a way of coming back to hurt people in the real world. Gov Sam Brownback (R, Kan) was elected on the promise of large tax cuts, which he argued would lead to a boom in jobs and revenue. Kansas enacted the tax cuts, but neither jobs nor revenue has boomed. As a result, Kansas is now cutting spending for the disabled, poor, and sick and figuring out what other taxes to raise. One recent poll found that Gov Brownback was the least popular governor in the country.
Health care could play out the same way. In Kentucky, for example, Republican Governor-elect Matt Bevin promised in his campaign to eliminate Kynect, the state’s insurance marketplace, and repeal Kentucky’s Medicaid expansion. The latter policy would lead one in every 10 people in the state to lose coverage. What would happen to physicians and patients if Bevin carries out his promise? What about the patients who need medicines for chronic illnesses or those in the middle of cancer treatment?
At the end of Alice in Wonderland, Alice wakes from her dream to confront the real world. At some point, Republicans will have to do the same. What will they do? In fantasy movies, there is generally a happy ending. In the real world, I am not so sure.
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David Cutler, PhD David Cutler, PhD, is the Otto Eckstein Professor of Applied Economics in the Department of Economics and holds secondary appointments at the Kennedy School of Government and the School of Public Health at Harvard University...