President Trump recently tweeted that GOP tax-writers should include a repeal of the Affordable Care Act’s individual mandate in their tax reform legislation. This is a singularly bad idea that most Republicans are likely to reject. (Senators Tom Cotton and Rand Paul are exceptions, having seconded Trump’s suggestion.) It would be irrational and unproductive at this point to import the fractious political combat associated with health-care reform into tax negotiations that are already loaded with controversies.
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The upside of the failure of the Senate to pass any semblance of repealing and reforming the ACA is that it highlights three structural impediments to achieving not only health care insurance reform, but most of the Trump agenda as well: 1) Congress must realign its interests with voters’ interests; 2) The Senate must eliminate the Senate’s incumbent protection racket, where deliberation on legislation is avoided to spare Senators—of both parties—tough votes; 3) Conservatives must learn how to sell their ideas.
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Middle-class Americans, who have been hardest hit by Obamacare, are desperate for Congress to do something — anything — to lower costs.
Today, health insurance can cost more than a mortgage. The average family of four will face a staggering $22,622 in health insurance and related medical costs this year ($14,300 for premiums with an $8,322 deductible). The average annual cost of a mortgage (principal and interest) is about $18,000 for a $309,000 house.
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The Trump administration and Republican leaders in Congress are pledging to turn their attention toward tax reform after their failure to pass a repeal and replacement of the Affordable Care Act. But Republicans can still improve health care and lower costs if they change the treatment of employer-sponsored health insurance plans in tax reform.
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Much of the public discussion about health care and health insurance reform abounds with misinformation. Medicaid, in particular, has become a political tool, with daily posts and articles about reforms to the program that distort the record for political gain. But there is little mention of the need to empower governors to take ownership of the program.
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The demise of the American Health Care Act (AHCA) was ultimately precipitated by factional opposition to different provisions of the bill. Moderate and conservative members of the Republican conference did not agree on much, except they shared an animus towards the ill-fated legislation.
The future of health-care reform is now highly uncertain. Forging a legislative consensus will continue to be a challenge due to the inherent trade-offs between broad-based coverage and personal freedom, to say nothing of competing views about the respective roles of the market and the state (including different levels of government).
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The Affordable Care Act is in the midst of the death spiral critics have long predicted. Before it enters the final death throes, Republicans must publicize viable market-based alternatives to replace it. That is the only way to avoid the potentially disastrous government-run, single-payer health-care system that would result from Hillary Clinton’s and President Obama’s policy proposals.
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Democratic and Republican governors know that rising health care costs are increasingly restricting spending on other state priorities. Paul Howard, Director of Health Policy at the Manhattan Institute, outlines five strategies that innovative governors can use to help transform state health care markets: 1. Incorporate reference pricing for common procedures and tests into state benefit designs, 2. Ban anti-tiering provisions, 3. Drive price transparency by setting up an all-payer claims database, 4. Expand access to direct primary care, and 5. Repeal regulations that hamstring competition, such as certificate of need laws and prohibitions on the corporate practice of medicine.
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Democratic candidate Bernie Sanders recently released his health-care plan: a government-run single-payer system for the U.S., similar to what many European countries have. Criticism of the plan has so far focused on its lack of political feasibility, but there is an even more important reason to be wary: Accounting for costs and tax increases, it would reduce labor supply by 11.6 million. In a struggling economy, with tepid wage growth, hurting employment should be the last thing on any politician’s agenda.
The plan truly promises everything under the sun. Not only will everyone be able to get any medical treatment needed — with no cost at the point of service — but the plan won’t require a terribly high tax increase.
The Congressional Budget Office (CBO) issued a new budget forecast last week. It should be a wake-up call to policymakers, and to the candidates running for president. It is also a clear indictment of fiscal policy during the Obama presidency.
The forecast shows annual federal budget deficits rising throughout the coming decade, pushing total federal debt to levels well above the historical norm. CBO projects the federal budget deficit will be $544 billion in 2016, or 2.9 percent of GDP. By 2026, the annual deficit will be nearly $1.4 trillion, or 4.9 percent of GDP. Over the period 2016 to 2025, CBO expects the federal government will need to borrow an additional $9.4 trillion, pushing total federal debt up to $23.8 trillion, or 86 percent of GDP.
The deficits projected in CBO’s forecast, and the level of debt they would cause, are almost unprecedented in the nation’s history.