Beware the 'Grand Bargain' in health reform

Beyond Showmanship And Spite: Toward A Health Care “Grand Bargain”

By Gregg Bloche & David A. Hyman
Health Affairs Blog, November 20, 2017

Is a deal on health care possible? Conventional wisdom says no.

We’re alarmed. One of us is a Cato Institute-friendly “free-market”eer who wrote a book arguing (tongue in cheek) that Medicare is the work of the Devil. The other helped to develop President Barack Obama’s 2008 campaign health plan and believes that failure to ensure everyone’s access to health care is an assault on human decency. But we’ve come together because we believe that failure to resolve the present impasse will have hugely destructive consequences for millions of Americans’ access to health care.

Designing A Deal

We think a bipartisan “grand bargain” to stabilize the US health care system is feasible — if key decision makers can move beyond showmanship and spite. To this end, we outline a deal that: honors but balances the competing values at stake, steadies both market and public mechanisms of medical care financing, and puts the nation on a path toward sustainability in health spending.

Our grand bargain builds on federalism. Allowing states to sort out controversial matters within broader limits than the ACA now imposes would permit creative policy alternatives to unfold and encourage local buy-in.

The Long Game: Seven Steps Toward a Compromise that Can Work And Endure

1) Moving Beyond Maximalism — Medicaid Rollback And “Medicare for All”

Republicans should end their campaign to roll back the ACA’s Medicaid expansion, and Democrats should stand down on their quest for single payer. Both pursuits inspire true believers but will go nowhere on Capitol Hill for the imaginable future.

2) State Flexibility

Give states more flexibility to design their Medicaid programs and to govern their insurance exchanges. States could also be allowed but not required to offer a public option through their exchanges. Instead of an all-or-none answer to the public plan question, the nation would have a framework for market-driven, state-by-state resolution. Similarly, states should be allowed to decide whether to prohibit, permit, or require enrollment of Medicaid beneficiaries in private plans.

3) Health Savings Accounts That Appeal To Everyone

We propose that every lawful US resident be auto-enrolled in a health savings account (HSA), funded through a refundable tax credit, scaled to income and family size.

4) Repeal The Individual Mandate

Sacrilege, you’re surely thinking, if you’re a Democrat who’s spent seven-plus years defending the mandate, the ACA’s most disliked element. But the mandate isn’t needed to keep healthy people in community-rated risk pools — it’s the intensity of the incentives, whether framed as penalties or subsidies, that matters. Such subsidies could be supplied in conservative-friendly fashion by allowing all who buy coverage on the exchanges to put HSA funds (including the tax credit we urge) toward their premiums.

5) Congressional Authorization Of Funding For Both The ACA’s Cost-Sharing Reductions And CHIP

Congress should guarantee funding for the cost-sharing reductions for a two-year period, with automatic renewal for an additional two years if per capita subsidies rise by no more than the Consumer Price Index (CPI) during the prior two years. Likewise, Congress should renew CHIP’s funding for several years — we urge three as a compromise.

6) The “Long Game” — Reining In Medical Spending

A long-term effort to contain spending growth is essential for US fiscal stability and consumer well-being. The ACA created a framework for doing this. The Independent Payment Advisory Board (IPAB) can limit Medicare spending, subject to congressional veto, if growth exceeds target rates. And the 40 percent “Cadillac tax” on high-cost private health plans will cover a rising share of the private market as medical costs increase. Together, these policies have the potential to contain clinical spending by capping demand.

A grand bargain should follow through on both of these strategies, plus add similar restraints on Medicaid spending and on the amounts spent to subsidize coverage through the exchanges.

7) Pursuing Therapeutic Value

Much more must be done to use health care resources wisely as constraints tighten. Tying financial rewards closely to clinical value via payment practices, market exclusivity policies, and other incentives will be critical — and will require the clearing of legal and regulatory obstacles. Voluntary action must also play a role: The grand bargain we’ve sketched here creates myriad opportunities for providers, patients, and insurers to gain by insisting on value from a sector of the economy that too often fails to deliver it.


Reader Comment:

By Don McCanne, M.D.

This is a "Grand Bargain"? Tweaking our highly dysfunctional, fragmented, administratively inefficient, overpriced, inequitable health care financing system?

This is a call for more of the same. Numerous studies have shown that this is the most expensive model of health care reform and that it falls far short on reform goals of universality, comprehensiveness, access, equity, efficiency, quality, and affordability.

A well designed single payer model would achieve those goals. Just because the current Congress would not enact an improved Medicare for all does not mean that the concept should be abandoned. The current Congress will not enact the tweaks called for in this Grand Bargain either.

We can get the policy right, but we need to change the politics. We need to align ourselves behind reform that works for everyone, not behind measures that enrich the stakeholders while perpetuating mediocrity for the rest of us.

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