Congressional Budget Resolutions Shoot for the Sky; Miss Low-Hanging Fruit

By John R. Graham,

The House Budget Committee and the Senate Budget Committee have passed budget resolutions that shoot for the sky with respect to health reform. Their proposals recommit the Republican majorities to patient-centered health reform and show a path forward for the next president. However, they do not harvest some low-hanging fruit offered by President Obama. Failure to do so might doom patient-centered health reform to the forever future.

Obamacare: Both the House and Senate budget resolutions repeal Obamacare. It is important that Congress vote to repeal Obamacare whenever appropriate, so the American people know the so-called Affordable Care Act (still unpopular), will be replaced by the next president. The House budget resolution gets the basics of reforming private health insurance right: “Individuals should be able to own their insurance and have it follow them in and out of jobs throughout their career.”

Medicare: The House budget resolution re-affirms the “premium support” model for Medicare, starting ten years hence. “Premium support” means health plans would compete to offer Medicare benefits. Within a region, Medicare would pay the premium of the average bid. Seniors who want a more expensive plan would pay the difference. One important difference between this and the current Medicare Advantage program is that Fee-For-Service (FFS) Medicare (in which the government fixes payments to doctors and hospitals directly) is not a “competitor” in Medicare Advantage. In the premium support program, if the average premium offered by private plans is lower than what FFS Medicare would pay, seniors who want to stay in FFS Medicare would pay the difference.

It is a very positive reform, which would be significantly improved if the second-lowest bid, not the average bid, were used to determine the premium support. (This was in earlier proposals, circa 2012.)

Medicaid: The House Budget Resolution reforms federal Medicaid funding from open-ended transfers to block grants. This means the federal government transfers a fixed amount of money to each state. The primary reason for the exploding cost of Medicaid is that states have a horribly perverse incentive: For every dollar they spend on this welfare program, the federal government gives them more than one dollar. President Obama has proposed to reduce this incentive another way, which Republicans have not pursued.

Low-Hanging Fruit: The House and Senate budget resolutions recognize President Obama’s budget would return us to the path of out-of-control spending, borrowing and taxation. However, there are a few items in President Obama’s budget Republicans should adopt, buying time over the next couple years until more serious reforms can be pursued. Indeed, some of the president’s sensible proposals go as far back as 2011, when he proposed them to the “Super Committee” in negotiations to relieve the budget sequester.

The Republican majorities’ budget resolutions are very good, which we look forward to seeing in legislation signed by the next president in 2017. Until then, Congress should not ignore the low-hanging fruit dangling in front of it.

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