Amid some discussion by Republican leaders to thwart President-Elect Trump from moving to completely repeal Obamacare, it is clear Republicans must have a definitive plan to not just repeal, but replace the current disastrous healthcare law.
And at this point, with millions of middle class Americans facing sky-rocketing premiums, narrow networks, and shoddy benefits, something must be done quickly. Perhaps the most comprehensive plan to address the healthcare system has been offered by House Speaker Paul Ryan. Ryan’s general approach is to loosen the grip of central federal control and return power to the states to improve the flexibility, efficiency, costs, and quality of healthcare for their unique populations.
Unfortunately, many states (including Arizona) expanded their Medicaid rolls to take advantage of federal matching subsidies, and will face an extra layer of complexity following a repeal. Without precedence, this Medicaid expansion was extended to include able-bodied adults who are 138 percent over the federal poverty line (FPL). This represented an additional 63,000 beneficiaries in Arizona alone. Repealing Obamacare poses a significant problem for these states as they will either be left with huge state budget deficits to make up for the loss of federal funding, or potentially be forced to kick tens of thousands of people off the health subsidies.
But there are common sense solutions to address this problem and others.
The current process for states to reform their Medicaid program is to go to the Federal Government on bended knee and apply for a waiver. As expected, these waivers have been granted with mixed approval and endure a lengthy and oftentimes politicized process. In the meantime, states struggle to shoulder increasing costs and face uncertainty whether they will be able to hedge those costs.
A critical component of Ryan’s plan is to reform the waiver process and divest more power in the states. This includes creating a set of predictable parameters, fast tracking requests that meet those parameters, and then not requiring a renewal of such waivers. The plan also requires that Medicaid waivers be federal budget neutral as a way to reduce costs and protect taxpayers from states looking to game the system.
Another key component of reform is to address the issue of able-bodied adults on Medicaid being completely insulated from the true costs of healthcare. It is critical that any reform allow states to charge reasonable premiums, offer more limited benefits, and allow waiting lists and enrollment caps for non-mandatory populations. Additionally, those states that currently have a waiver for managed care that have been previously renewed twice would be grandfathered in and not have to seek another renewal. Obamacare has incentivized able-bodied adults to remain dependent instead of self-sufficient; empowering states to make these common sense and well proven reforms is a step in the right direction.
The last key component is identifying a way to contain the spiraling costs of Medicaid. Currently Medicaid represents 15 percent of all federal healthcare spending and is growing fast. The program is unsustainable, and states must be weaned off this open ended entitlement program. One such proposal is for the federal government to allocate money to states in the form of “block grants.” Going to a block grant would mean that each state would receive a defined amount of funding for a base year and assume the state is transitioning non-mandatory populations into other coverage over time. If states are working toward streamlining costs, any savings realized could remain with the state instead of federal coffers.
Obamacare has come with a great deal of cost and pain for individuals, families, businesses, and state governments alike. It is unlikely that the transition away from it will be painless either. However, not reversing course cannot be an option for Republican leaders in Washington. Now is not the time to get cold feet. After all it should not be impossible to imagine a healthcare system driven by free market principles and individual choice rather than government mandates and punishments.