Avik Roy’s health reform proposal

Avik Roy released a health reform proposal yesterday, published by the Manhattan Institute (full pdf). I am not going to go all post-modern literary critic on this (only deconstruct), in part because a lot of it lines up nicely with things I have been writing about/calling for over the past few years, in search of a political deal that could move the policy ahead. For example, I called for replacing the individual mandate and federalizing the dual eligibles and buying low income persons into exchanges in December of 2010! (these are “cousins” of what Avik proposes). My more fully fleshed out “next step health reform” version came in my book in 2011. Again, it is not hard to imagine a deal between what Avik and I wrote.

Perhaps most importantly is the tone, that acknowledges that policy deals are available. However, politics have been standing in the way.

As Avik puts it:

One of the fundamental flaws in the conservative approach to health care policy is that few—if any—Republican leaders have articulated a vision of what a market-oriented health care system would look like. Hence, Republican proposals on health reform have often been tactical and political—in opposition to whatever Democrats were pitching—instead of strategic and serious.

The biggest question facing Avik’s proposal is not in policy terms or what supporters of the ACA will think, but whether any elected Republicans will be willing and able to shift gears and begin trying to move health reform ahead instead of simply looking for what helps in the next election. My hope (and cautious expectation) is that the answer is yes, after the 2014 election.

Two things I especially want to encourage in reform discussions that overlap with what Avik has proposed and that I have previously proposed as part of a North Carolina-specific reform/waiver approach within the ACA (p. 6-7):

  • Imagine a Medicaid waiver in which the cost of the dual eligible beneficiaries (those covered by Medicare and Medicaid) are federalized to reduce the perverse incentives inherent with two payers of care; state cost savings could be used to expand insurance coverage

  • Pilot a premium support approach to the setting of premiums for Medicare advantage plans in North Carolina, two to three years after we begin a State-run insurance exchange with the Medicaid waiver/BHP expansion I suggest

There is lots of health policy to be banged out in those two points that I have suggested, but the need for LTC reform is a crucial issue that I have written much about. And the current political stalemate in which exchanges are the panacea in the Medicare program, and the worst thing ever in the ACA-and vice versa, is silly.

I will have more detailed comments later, but I commend Avik for offering this plan, and think there is a plenty to like in the proposal itself, as we look for the next step in health reform.

Author: Don Taylor

Don Taylor is an Associate Professor of Public Policy at Duke University, where his teaching and research focuses on health policy, with a focus on Medicare generally, and on hospice and palliative care, specifically. He increasingly works at the intersection of health policy and the federal budget. Past research topics have included health workforce and the economics of smoking. He began blogging in June 2009 and wrote columns on health reform for the Raleigh, (N.C.) News and Observer. He blogged at The Incidental Economist from March 2011 to March 2012. He is the author of a book, Balancing the Budget is a Progressive Priority that will be published by Springer in May 2012.

9 thoughts on “Avik Roy’s health reform proposal”

  1. Richard Mayhew over at Balloon Juice reviewed this (http://www.balloon-juice.com/2014/08/14/reading-the-manhatten-institute-so-you-dont-have-to-part-1/)

    Short version: It's garbage.
    Second take - the Manhattan Institute has a history of garbage.
    Third take - Avik Roy has a history of garbage (if you want, I'll post links).

    Don: "I am not going to go all post-modern literary critic on this (only deconstruct), in part because a lot of it lines up nicely with things I have been writing about/calling for over the past few years, in search of a political deal that could move the policy ahead."

    I'm sorry, but what 'political deal' are you talking about? Something cut with the same GOP which (a) reneged dozens of times and (b) passed dozens of repeal bills?

  2. Don,

    I read the linked document, but see no plan.

    I see a lot of claims about the wonders of what it will accomplish, but aside from some vague references to state-based exchanges (what ACA was intended to have anyway) and insurance regulations there is not much to get a hold of there.

    I'm not actually surprised. Some of Roy's previous writing on health was not exactly accurate.

  3. You have to get half-way through the ES of Roy's plan before you come to the part about sunsetting Medicare by raising the eligibility age by four months each year.

    Avik Roy's problem is to get Republicans interested in actual health care policymaking as opposed to grandstanding against Obamacare. I would guess after their likely 2016 electoral defeat rather than the likely 2014 tie.

    Don's problem is to get Democrats interested in nonexistent bipartisan bargains. The base is more interested in single-payer in Vermont than dismantling Medicaid. The Adullamite refusal by GOP governors to set up state exchanges led to the unintended success of healthgov - a building block of a more, not less, national system.

    I am staggered by Roy's description of the problem to be solved:

    The ACA will reduce the number of Americans without health insurance— an important goal—but it will do so by increasing the cost of U.S. health coverage. Increasing the cost of health coverage, in turn, will worsen two of the nation’s most important policy problems. The first of those problems is the increasing unaffordability of private health insurance, a problem that is straining the budgets of middle-income Americans, and hampering social mobility. The second problem is the nation’s grave long-term fiscal instability, a problem primarily driven by government spending on health insurance and health care.

    It all depends on a pattern of ever-rising costs that is now breaking - led by Medicare, the most socialist part of US health provision apart from the VA. Roy's not unhinged, but he hasn't got his feet on the ground either.

  4. You can't pick the other side's tactics/goals, etc and i don't think it is long run sustainable for health reform to be one party's thing. I realize many on here think I am hopelessly optimistic that we will someday get to a deal, but I think we have to try….in large part because of the problems with the ACA (though it is clear that the health exchanges are fairly stable, certainly as compared to what seemed possible last Thanksgiving).

    1. I agree, the US is much better off if the Republican Party wants to engage in actual governance (which I mean choosing) that solves problems. However, there is only so much liberals can do about an intramural food fight between reactionaries, radicals, liberterians, and a few conservatives who actually want to engage in policy work. I don't think there is much to gain from pre-conceding anything to Roy or anyone else who can't deliver 100 GOP congresscritters and 20 GOP Senators on a policy plank that 150 Dem congresscritters and 35 Dem Senators. Anything before that is masteurbation withot the hope of orgasm.

    2. i don’t think it is long run sustainable for health reform to be one party’s thing.

      Possibly so, but it is what it is. There are two POVs on the issue: one that health coverage needs to be extended to all Americans, and one that feels that it belongs only to a subset of deserving Americans. The latter group votes for the Republicans.

      To be quite honest, this is why we have elections, so that someone can propose an idea, and the public can vote on it.

      In a generation or so, there may be a bigger consensus on the issue, but until then, this matter will break down along party lines. You can’t have both parties believing in the same goal just by different means at this stage.

  5. Here's more from Richard Mayhew (http://www.balloon-juice.com/2014/08/15/reading-the-manhattan-institute-part-2/):

    Money quote: "The biggest thing to remember from Roy’s point of view is that Americans, or at least the class of Americans who have to give a damn about health insurance, have it too damn easy. We have too much coverage, we have too many choices, we don’t have to fear bankruptcy every time we make the decision about whether or not to go get that funny mole checked out, or that sharp, persistant stabbing pain on the left side of your abdoment examined. We don’t value health care enough because we don’t pay enough first dollar expenses. That is his diagnosis of the problem. And his solution set addresses that problem."

  6. Here's the third and final part of the dissection of Avik Roy's 'plan':

    Some quotes:

    "When Medicare was enacted, in 1965, the average life expectancy at birth was 70.2 years. In other words, it was anticipated that Medicare would cover an average person’s health expenditures for the last 5.2 years of his life. In 2010, the average American lived to the age of 78.4;"

    Krugman has covered this, and Richard mentions this - it's not life expectancy at birth, but at the time of labor force entry.

    Avik, on saving money by raising the eligibility age for Medicare: "Over a 30-year period, we estimate that raising the eligibility age for Medicare by four months per year would reduce Medicare spending by $6.6 trillion, with an offsetting increase in exchange-based premium subsidies of $1.5 trillion, for a net spending reduction of $5.1 trillion. These savings would be even larger in future decades."

    Richard: "Of course, it is not difficult to not spend money if the Medicare eligibility age is 75 at the end of the 30 year period. Most people will die off. What I find interesting is the $5.1 trillion dollars in net federal spending reduction. Unless Roy is positing massive increases in medical productivity, a massive decrease in elderly medical service utilization and commercial pricing able to get down to Medicare rates, this sure as hell screams a massive reduction in the acturial value of coverage available to seniors. "

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