Judd Gregg: How the GOP can win on healthcare

Ted Kennedy must be looking down and chuckling as he watches how the Republicans in the House have headed into a box canyon with their healthcare bill.

The original ObamaCare bill had its genesis in the ideas of the former Democratic senator from Massachusetts, who died in 2009.

{mosads}Although he was not there to write the bill, his staff did — under the tutelage of his close friend and confidant, then-Sen. Chris Dodd (D-Ct.). Their goal was to move healthcare in the United States toward Kennedy’s long-held ambition: a single-payer system. 

ObamaCare was to be a giant leap in that direction. It was built on the theory that because a single-payer, totally nationalized system of healthcare was not politically palatable, a stepping-stone should be designed.

At the time, there were 40 to 45 million Americans who did not have healthcare insurance and thus, at least theoretically, did not have adequate healthcare.

This was not a homogeneous group.

A large percentage of the uninsured were people between the ages of 22 and 35 who simply did not want to spend their discretionary dollars on health insurance because they did not expect to need it.

Another large group was comprised of people who did not qualify for Medicaid but whose employers did not cover their insurance.

Others included older people who had retired early and did not yet qualify for Medicare.

The purpose of ObamaCare was to gather all these people into some type of healthcare coverage and have that coverage be highly subsidized by the rest of the population. 

This was to be accomplished either directly, through subsidies that depended on taxes; or indirectly, through increasing the premiums of those who had insurance.

The outcome would be that most of these 40 to 45 million would have new benefits that they themselves paid little for.

This effort was to be undertaken by creating exchanges, which were actuarially unsound; and by expanding by fifty percent the Medicaid enrollment, which was grossly underfunded.

The creators of ObamaCare knew of the structural failures of the proposed approach. It was their expectation that the financial stress on the insurance industry and the huge tax subsidies needed to pay for the migration from private insurance into exchanges would lead to some sort of reordering of the system.

They knew that states, and especially doctors, could not handle the underfunded addition of millions of patients.

They also understood political reality, in which it is extremely difficult to take back a subsidized benefit once it has been given. This is especially true when it involves millions of people. 

Thus, as ObamaCare crumbled, a single-payer system would be the default position to which the country would turn.

Huge numbers of people would be on some sort of system that was government-dependent, whether Medicare, Medicaid, the ObamaCare exchanges or other government programs such as the VA. And it would be politically impossible to take those benefits away.

Thus, the logical choice would be to simply move to a totally nationalized system. Kennedy’s dream would be realized.

But along came a Republican president, House and Senate.

The irony is that even though this new group in town is insistent on repealing ObamaCare, they cannot repeal the benefits it bestowed.  

Benefits are never taken away, especially when they are highly subsidized so the beneficiaries do not feel the cost.

It will of course not be a nationalized system, as such, that will be set up. But it will be expensive and most likely an underfunded system.  

In fact, the House bill with its tax credits and illusory future Medicaid savings is just that — a giant hole in the federal budget.

It would be better if the Republican Congress and president, who one suspects is not aware of the trap he has walked into, admit that they have been sent up a box canyon by the legacy of Ted Kennedy. 

They should acknowledge that there will be coverage in the future for those who are covered now.  

People who are near-poor will get insurance. People whose employers are not covering them but want coverage will be able to get healthcare. Younger Americans will have access to coverage. People with pre-existing conditions will have real, affordable access to care. 

The politics of reelection will cause this to happen one way or another — and the “another” is replacing members of Congress who stand in the way.

In doing this, one hopes that the Republicans in the Senate will have the good sense to deliver an actuarially sound system that uses the market to drive better healthcare. 

The Senate is right to pledge to start over. It should begin by paying for a system which, whether one likes it or not, has dramatically expanded coverage — and subsidies — to millions of people.

This can be done with one simple adjustment: reduce the deductibility of high-end plans to the mean cost of healthcare plans generally, thus generating approximately one trillion dollars. Then use these funds to fully support a market system for all of Medicaid and give small business the incentive to cover its low-income employees.

This is the escape route from the box canyon Republicans find themselves in.

It is expensive but it is also realistic.

It will also cause those who thought a nationalized system was the inevitable outcome of the failure to ObamaCare to grimace.

Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee.