David Frum

11.17.13

Why It’s Time To Start Talking About Reforming, Not Repealing, Obamacare

No matter who becomes president in 2016, stripping Medicaid coverage for millions of Americans will not be an option. It’s time to start discussing how to reform—not repeal—Obamacare.

Over the past month, as the Obamacare exchanges have bounced and crashed, some 400,000 Americans have enrolled in Medicaid or S-Chip, the children's health program. The architects of the Affordable Care Act expected that about half the people who would gain coverage under the law would do so through Medicaid; about half through the much more publicized exchanges. Website troubles and high prices have depressed exchange sign up. But Medicaid sign-ups are trundling along in half the states. (In 21 others, governors and state legislatures have refused the ACA's Medicaid expansion and the accompanying federal dollars. Four states have not yet decided one way or the other.)

Here's just some of what this means in human terms:

350,000 new Medicaid enrollments in Arizona. 1.4 million new enrollments in California. 342,000 in Illinois. 78,000 in Nevada. 91,500 in West Virginia.

More states may soon follow, with Pennsylvania and Virginia the most likely next in line. If a "repeal ACA" president takes office in 2017, he or she will face a reality in which repeal means stripping millions of people—potentially up to 10 million—of a government benefit they will by then have enjoyed for more than three years. Such a move would be the most radical reduction in social coverage ever seen in a democratic country. Ronald Reagan never tried anything even close to that.

Maybe President Paul Ryan or President Ted Cruz or President Sarah Palin will be bolder than Ronald Reagan. Maybe Republicans in Congress can face the heat on a scale never dared in 1995 or 2011. Maybe. But much more likely … no. No, they won't.

The irony of course is that Medicaid is a poorly structured program that delivers notoriously disappointing results. It follows the Medicare fee-for-service model, but typically pays for services at such very low rates that Medicaid clients discover they have health care access only in theory, not in fact.

Former Mitt Romney health adviser Avik Roy has just published a withering analysis of Medicaid's operations, How Medicaid Fails the Poor. Among other things, he cites a study that showed no improvement in health outcomes when formerly uninsured people gained insurance through Medicaid. Roy offers a creative alternative to Medicaid as we know it:

Let’s build a new health program for low-income Americans, one that pays primary care physicians $150 a month to see each patient, whether they are healthy or sick. That’s what so-called “concierge doctors” charge, and it would give Medicaid patients what they really need: first-class primary care physicians to manage their chronic cardiovascular and metabolic conditions. Then throw on top of that a $2,000-a-year catastrophic plan to protect the poor against financial ruin. The total annual cost of such a program would be $3,800 per person, 37 percent less than what Obamacare’s Medicaid expansion costs.

That's one plausible idea. Other ideas include expansions of state and local clinic systems or even potentially dispensing with the distinction between the Medicaid and exchange populations and instead offering more sharply means-tested subsidies to the poorer uninsured.

Whatever action is taken, however, will require a new law that does more than simply annul Obamacare. I've been pounding this drum for a long time, and it needs to be pounded some more. Obamacare is a fact— a malfunctioning fact, like so much of the rest of the American healthcare system, yet a fact all the same. Its beneficiaries are rapidly coalescing into a vested interest, as the pharmaceutical companies and hospital insurance corporations and other providers are vested interests. Policy cannot realistically be made by dismissing such interests. They have gained something they will think is worth protecting. They will have the votes to protect it. If reform is needed, and it is, they will have to be offered something better.

Repeal is a fantasy. Reform is the task ahead.