Repeal and Replace?

Speaker of the House Paul Ryan and the GOP leadership in the US Congress have made it clear that they are intent on following through with their campaign promise to “repeal and replace Obamacare.” Framing the debate as a rescue mission to bring relief to those burdened by this law, they claim that their “goal is a patient-centered system that gives every American access to quality, affordable health care.”

Great! We have a place of agreement to start from – let’s ensure everyone has access to the health care they need and deserve as part of our great American family.

Now let’s see how we can direct our elected officials to deliver on this promise, using our knowledge of modern currencies.

What’s the Real Problem?

Criticism of the Affordable Care Act (ACA) has focused on: 1) the rising costs of premiums for both individuals and businesses, 2) higher deductibles which shift cost burden from insurers to those needing care and 3) the failure of market exchanges to deliver on the promise of more choice and lower cost.

In other words – the problem is all about cost of health care and who pays – not about the expanded access to care or the quality of service. The problem is not actually that those with preexisting conditions can now receive coverage, or that children can stay covered longer under their parent’s plans, or that millions of people have received care that they were previously not able to receive.

I am largely in agreement with this critique. It was a political choice, not an economic necessity, to structure the ACA in a way that increased costs to businesses and individuals while doing very little to address the structural problems that keep driving up costs – and still not providing care to every American.

The US has by far the highest health costs per capita in the developed world, while failing to rank among the top 30 countries in health care according to the World Health Organization. We can all agree that the US can do much better.

What are the Real Constraints?

If our collective goal is that all Americans get access to affordable health care, then this can be the common ground we all stand on no matter what our political affiliations. Any system we choose to replace or improve upon the ACA must result in sufficient facilities and staff that are in proximity to all Americans, irrespective of the funding source.

All Americans – rural and urban – should be able to make personal health decisions that are in reach of their daily lives and budgets.

The big constraint to meet our goal is first and foremost about real resources, not money.

  • Are the right kind of facilities, equipment and services in the right locations?
  • Are there adequately trained health professionals to provide the care in all locations?
  • Are educational institutions keeping pace with the demand for medical staff?
  • Are they training the right numbers of each specialized care provider?
  • Do we have enough researchers and laboratories working to maximize our ability to cure critical diseases and discover new medical breakthroughs?
  • Can we produce enough of the supplies and medicines needed?

This is the real challenge of complete, quality national health care coverage.

Is Money a Real Constraint?

In 1971, our nation finally stopped promising to convert our sovereign currency, the US dollar, into gold and implemented a fully floating, non-convertible currency. The problem is that we still think about fiscal policy as though we are still under the limits of a gold standard.

As the sole manufacturer of the U.S. dollar, our government has no financial constraint on its ability to afford things offered for sale in U.S. dollars.

  • Federal taxes are obsolete as a source of funds for the government;
  • Since the US government can always pay its bills, the idea of sustainability is nonsensical in financial terms;
  • While private insurers may enter a death spiral, there’s no such threat for the federal government.

Of course, this does not mean that the government should spend without limit, nor that federal funding is always the right answer, nor that its spending is without consequences. It does mean that the limits are the availability of real resources for sale in its currency, not the availability of revenues or borrowing capacity.

The debate over health care is a prime example of the problems that arise when this basic understanding of our monetary system is not understood by the US Congress or the public. We have limited our options for how to achieve the stated goals. Instead of debating how to best deploy the necessary real resources to meet the need, we’re stuck on first base arguing over where the money will come from.

What Could We Do Differently?

Understanding our monetary system is a non-partisan matter. These principles can be applied from the perspective of any political persuasion. Federal funding is not incompatible with market-based solutions. Once we all recognize that the excuse of affordability is just that – an excuse – we can focus our debate on how we can best provide world-class healthcare to all.

I suggest that any honest assessment of the challenge of a “patient-centered system that gives every American access to quality, affordable health care” would quickly recognize that at least some portion must be solved by federal funding to establish and maintain quality care in underserved and low-income areas.

Possible solutions*

Republicans have a stated preference for a more market-based approach. They believe consumer choice and control over health spending will help drive down health costs while reducing the burden of health costs on individuals and businesses.

Perhaps they could authorize federal funding for a market-based, consumer-driven health care system along the following lines:

  • Federally fund Health Savings Accounts for every American, with a Medicare-type option for those with costly needs. Consumers then get to choose and pay for their own primary health needs;
  • At the same time, lower taxes on businesses and workers by a full repeal of payroll taxes. By removing health care as a marginal cost of production, US businesses would become more competitive – see economist, Warren Mosler’s proposal for an example along these lines; and
  • Private insurers can still offer premium services for those who want them.

Democrats may counter that a Medicare-for-all approach is a better ACA replacement as proposed here, or perhaps some other derivation that provides basic health services in every community as proposed here, with a Medicare-type backstop for critical care.

You see, what really needs to be repealed and replaced is our nation’s understanding of fiscal policy. Let’s challenge President Donald Trump and the US Congress to stop limiting our nation’s living standards with their false fears over debt and deficits and start leading boldly to address our public service needs.

* I am not personally endorsing any particular policy. These are provided to broaden our thinking on the topic.



Geoff Coventry is a founding member and owner of Tradewind Energy, Inc. Prior to this position, Geoff was a co-founder and vice president of NetSales, Inc. Additional postings by Geoff can be found on his blog “It’s The People’s Money.”

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