Leaders | Revive, don’t repeal

Three steps to fix Obamacare

Republicans must now make the Affordable Care Act work

Jul 22nd 2017

ONLY a madman would build America’s health-care system from scratch. Its mix of private insurance, government-provided care and endless regulations is complicated, expensive and fails many vulnerable Americans. The Affordable Care Act, Barack Obama’s health-care law, is part of the mess. Yet those who passed it knew it was a grubby compromise. In America’s divided government, they reasoned, politicians must build on what already exists.

Following the travails this week of their latest attempts to “repeal and replace” Obamacare, Republicans must come to a similar realisation (see article). They are too divided to sweep away the status quo. Rand Paul, one of four senators who threatened to bring down the Senate bill, compared its continuation of parts of Obamacare to “German national socialism”. He wants to get government out of health markets. Susan Collins, another rebel, thinks the bill cuts Medicaid, government-provided health insurance for the poor, too deeply. These factions are unlikely to agree, however long the Republican leadership tries to find a compromise. One conservative gambit—to repeal Obamacare and worry about replacing it later—is a reckless gamble that would inflict crippling uncertainty on the health industry and those who rely on it.

Get over the name

Republicans have long spoken as if Obamacare is a burning house; those inside must be rescued, even if it means taking an axe to the walls. But it is a fallacious argument designed to provide political cover to a Senate bill that is more about reducing redistribution than rescuing Obamacare’s customers from disaster (see article). The law’s problems are real, but fixable—more like a leaky roof and botched plumbing than a fire. The holes can still be patched up, in three steps.

First, more states should emulate Alaska, Minnesota and Oregon, and start reinsurance programmes to pay the highest medical costs incurred on Obamacare’s insurance exchanges. Because the law forbids discrimination against those with pre-existing health conditions, the exchanges contain many sickly patients. As a result, premiums and deductibles have soared for the 9m buyers who earn too much to receive government subsidies. They foot much of the bill for Obamacare’s generosity. Meanwhile, 155m other Americans enjoy a tax break on the plans they get from their employers, which are often cheaper anyway. Reinsurance programmes would bring premiums down and begin to redress the imbalance. If it can get its act together, Congress could stump up some cash to help.

Second, states should open government contracts for programmes like Medicaid only to insurers that take part in the exchanges. Those insurers are likely to apply because Medicaid is much larger than the market for individuals. Such rules, already in place in New York and Nevada, will help stem the flow of firms abandoning the exchanges, which has left a third of counties with only one insurer.

Finally, the Trump administration must fulfil the federal government’s responsibilities under Obamacare. That means enforcing its rules, such as a fine for those who choose not to buy health insurance. It also means paying the subsidies that underpin the system, something the president has been unwilling to do, thus deepening the problems on the exchanges. And it means seeking congressional approval for them to allay concerns that such payments are unconstitutional.

Without a plausible replacement, killing off Obamacare, by repeal or by neglect, would be grossly irresponsible. Maddening as the system is, Republicans now have a responsibility to make it work.

This article appeared in the Leaders section of the print edition under the headline "Revive, don’t repeal"