It was notable that so many conservative activists and pundits rushed to abandon the Republican Party's promise to “repeal and replace” Obamacare in the wake of Trumpcare's humiliating defeat in the House of Representatives.
Move on to something easy—like corporate tax reform, they said.
Wall Street Journal columnist Peggy Noonan represented the new normal. She lamented the rookie president's ill-fated plunge into the “hopelessly complex” healthcare debate. “It would be no scandal if the president threw in with Democrats and moderate Republicans at the expense of Republican leadership,” she wrote.
One can only hope somebody in the White House was reading. The exchanges need immediate fixes if they are going to function smoothly for 2018. Those fixes include continuing to oppose the House lawsuit challenging cost-sharing subsidies for the poor; meeting the government's obligation to pay risk-adjustment payments to insurers; and promising to enforce the individual and employer mandates, where some adjustments are necessary.
Unfortunately, that doesn't seem to be on House Speaker Paul Ryan's agenda, at least not yet. He is promising to bring back a different healthcare bill, perhaps this spring.
The landscape has shifted, however. Any bill that dramatically increases the ranks of the uninsured or eviscerates Medicaid through poorly funded block grants will go down to defeat. Moderate Republicans in the Senate won't go along, nor will most of the nation's governors.
The ball, temporarily, is in HHS Secretary Tom Price's court. He revealed little during last week's congressional testimony, although he did promise to uphold the law.
Beyond defensive lobbying to shore up the exchanges, where does that leave the major players in the healthcare system? Is there a positive agenda for the current political environment that could unite the organizations representing hospitals, doctors, and insurers, one that could win bipartisan political backing?
When in doubt, think big. What does President Donald Trump want now? Tax reform and a much-needed infrastructure program. Why not include healthcare financing reform as part of tax reform, and do it in a way that enables greater state and local spending on infrastructure?
Medicaid has become the single biggest burden on states. Why not have the federal government take over every state's Medicaid program—or at least the 60% that goes to the disabled and for long-term care for those over 65? Fully federalizing Medicaid would cost the federal government about $250 billion a year.
But it would give a comparable tax break at the state level, which will substantially reduce individuals' and corporations' sales and state income taxes. Plus, it would give state legislators capacity to pay significant matches in a state-driven infrastructure program. It makes far more sense for states to control infrastructure than healthcare.
How can the government pay for this plus lower corporate tax rates? The proposed border adjustment or value-added tax (a disguised sales tax) could be made high enough to raise the money for federalizing Medicaid. The government could also lump into tax reform the federal share of the infrastructure program by increasing fuel taxes (just don't call it a carbon tax).
Here's the final piece of the puzzle, one that dramatically lower costs for employers and providers. Make Medicaid payments in the federalized system the same as Medicare—a national “all payer” program where everyone pays the same rates. It's already in place in Maryland.
This will give employers a huge premium reduction because they will no longer have to make up for the shortfalls in Medicaid payments to providers. It will also reduce provider costs by eliminating the massive overhead associated with complex billing systems.
Single-payer. Public option. The typical nostrums offered by liberals for expanding coverage have no chance on Capitol Hill. Coupling a federalized Medicaid with a universal all-payer approach might.
