American Interest

Why We Can’t Have Nice Things, Healthcare Edition

Ravenel B. Curry III Distinguished Fellow in Strategy and Statesmanship

The Wall Street Journal highlights a major hurdle facing the GOP as it seeks to unravel the Obamacare Gordian knot: One portion of the law that its own wonks want to keep in some form—a tax disincentive on high cost plans—is deeply unpopular.

The Affordable Care Act’s tax on high-cost employer health plans faced sharp opposition from employers and unions. Now, Republicans are drawing equal fire for proposals to replace the law that those groups say would have some of the same effects. […]

Several Republican plans for replacing the law include their own curb on generous health plans: a cap on how much of employer-provided health benefits could be shielded from taxes. Such a cap could force certain workers to start paying income tax on a portion of the cost of their coverage.

The WSJ data shows that the spiraling cost of health insurance is one reason that wages aren’t rising. Companies are paying higher health insurance costs instead of giving raises, and employees are having to pay more, too. And note that this doesn’t include other, related costs, like rising deductibles and copays.

The trap that made Obamacare so damaging for Democrats is even more dangerous now. The core problem with American health care is that our delivery system is antiquated, horribly regulated, and overpopulated by vested interests who have built sweetheart deals for themselves into the structure of the system. As a result, we pay much more for health care than we should or can. The result is a system that has all kinds of urgent, fix-me-now problems: access for the poor, affordability for the middle class, quality of care, and so on. But these cannot be fixed in the short term. The party that owns the status quo owns a wretched mess that it cannot actually fix no matter what it does.

What we need is the presence of mind to prioritize the long term, unglamorous work of installing incentives and reforms that reduce costs even as we take short term palliative methods to relieve distress. Obamacare was by and large though not totally a failure in this respect; we will see if the Republicans can do better.