Continue Moving Forward on the Affordable Care Act Path

For more than 30 years, Stuart Butler has been one of a small band of market-oriented health policy analysts advocating for a universal health care system in the United States. In our deeply divided country, health reform is unlikely to progress without engagement from such committed conservative thinkers. Butler’s enduring vision, a coherent program grounded in health economics, calls for replacement of the current tax exclusion for employer-sponsored insurance premium payments with a sliding-scale tax credit; a marketplace of competing private insurers selling plans covering a federally prescribed basic set of benefits; and a mandate requiring all individuals to purchase health insurance.^1,2 It has been strikingly influential; many of its core elements are—or were—reflected in features of the Affordable Care Act (ACA).

In his editorial (p. 610), Butler lays out a proposal that similarly has as its centerpiece the replacement of the current tax exclusion with progressive subsidies for a system of competing private insurers purchased by individuals—Medicare Advantage for All. It’s not a radical idea—in many respects, this plan comports with universal health insurance systems that operate quite effectively in Germany, Israel, the Netherlands, and Switzerland. But in its singular focus on dismantling the US employer-based health insurance system, it misses today’s mark.

Rather than auguring an end to our current coverage system, the COVID-19 experience has, surprisingly, highlighted the sturdiness of our current framework of employment-based coverage supplemented by the ACA’s Medicaid expansion and marketplaces. Despite massive layoffs and job losses, employer-sponsored insurance declined only about 1.5% through September 2020, and enrollment in Medicaid and the marketplaces has replaced most if not all of that lost coverage.³ The principal policy challenge today is not the disappearance of job-based coverage, but that both in the marketplaces and in employment-based coverage, premiums and cost sharing are too high. Incremental steps—increasing the generosity of subsidies in the marketplaces, offering marketplace coverage to a larger share of those with costly employer-based coverage, and promoting expansion of Medicaid in the 12 states that have not yet done so, all of which are components of the Biden health plan—would go a long way toward addressing these immediate concerns.⁴

Fundamentally, however, these problems stem from the fact that US health care costs are excessive, and a growing consensus finds they are excessive because prices in our health care system are excessive.⁵ Liberal health policy analysts suggest that some form of direct government intervention in pricing is needed—either in the form of establishing backstop prices, as the Medicare fee-for-service program does for Medicare Advantage; through direct regulation or negotiation, as in other countries with market-based systems; or through public health insurance programs. If conservative policy analysts are to have real influence today, they too need to offer solutions to this problem.

Both liberal and conservative options are needed because, as the odyssey of Butler’s earlier efforts suggests, containing costs in any manner will be a tough lift for Congress. In its original incarnation, the ACA took a significant step in the direction of Butler’s proposal to eliminate the tax exclusion for health insurance; its Cadillac tax repurposed billions toward income-related subsidies for the purchase of marketplace plans. But in 2019, large, bipartisan majorities in the House and Senate, with support from the president, eliminated the measure altogether. The individual mandate penalty, a linchpin of Butler’s individual-based insurance system, was similarly eliminated by Republican lawmakers in 2017.

Unlike Butler’s vision, the ACA’s many strands may not make up a unified plan. But it has proven robust. What we need now are both liberal and conservative solutions to the politically complex challenges that remain.