Opinion

How Democrats should fix ObamaCare

More government insurance for more people!

The state of ObamaCare is... complicated.

The direct government-run insurance programs expanded by the Affordable Care Act have performed even better than expected. But ObamaCare's private insurance exchanges are tottering in many states.

These exchanges are supposed to work by forcing insurance companies to cover anyone who asks, while legally requiring everyone to get coverage, and subsidizing people who can't afford to pay. The problem is that the subsidies are too skimpy, many of the coverage plans don't cover nearly enough, and the penalties for not buying coverage are minor enough that many young, healthy people are just eating the fine. As a result, only about half as many people are enrolled as were predicted in 2013, and many insurance pools are so shallow that insurers are finding it unprofitable to offer coverage. Some rural locations may have only one provider offering coverage when open enrollment starts in November.

There is palpable frustration about this from liberal wonks like Paul Krugman, who convincingly argues that the ObamaCare exchanges could be patched pretty easily with a reform bill. Unfortunately, there is little chance that Democrats will win the House in November. That puts any reform, no matter how moderate, out of reach for now.

Increasingly sharp political polarization and outright deranged extremism in the Republican Party combine with the poor design of the American Constitution to make routine legislative maintenance all but impossible. That makes ObamaCare's need for regular attention from policymakers a major disadvantage. In a system as congested and gridlocked as ours, Democrats should aim for programs that can run indefinitely on autopilot — because chances are good that they'll only get a brief window every decade or two to fix any problems.

Medicare and Medicaid fit that bill. They aren't perfect, and do need adjustment from time to time, but they are far more stable than the jerry-rigged ObamaCare exchanges. Democratic reformers should work to put a public option on the exchanges that is as close to those single-payer programs as possible — perhaps using Medicare rates or a formal buy-in to Medicare itself. Democratic lawmakers won't be able to do this anytime soon — they'll need the House, the Senate, and the White House to make it happen — but they must be ready to pounce when given the chance.

Remember, the Affordable Care Act's Medicaid expansion has been by far the greatest success of ObamaCare. Something like 16 million more people are on Medicaid and the Children's Health Insurance Program than were projected to be before ObamaCare was passed. The Department of Health and Human Services estimates that about 20 million people have gotten coverage directly due to the reform law, and about 11 million of them through the exchanges. The additional unexpected people on Medicaid are probably explained by the enrollment push rolling up people who were eligible for old-style Medicaid, but didn't realize it.

Still, it could have been far better. Because the Supreme Court made the Medicaid expansion optional, 19 conservative states are still refusing to take the money, leaving 2.9 million people directly without coverage. (Ninety percent of such people are in the South, and 55 percent are nonwhite.)

There is no reason for this to happen. Even though states are only required to pay 10 percent of the expansion cost starting in 2020, the feds might as well have carried the entire thing. Indeed, there's no reason at all for Medicaid to be the goofy state-federal partnership in the first place. Future reform ought to federalize Medicaid altogether, removing individual state governments from the decision about whom to insure. Hey presto, another 3 million more people have coverage.

Finally, there is one obvious, easy step to further expand coverage: Put all children on Medicare — or heck, people up to 26 years old, the ObamaCare cutoff for people staying on their parents' insurance.

Taken together, this presents a fairly clear strategy for future healthcare coverage: Ratchet up Medicaid, ratchet down Medicare, and throw as many people onto government insurance plans as possible. Eventually, just about everyone who doesn't get coverage through their job will be on a reasonably good government plan.

In the heady days after ObamaCare was passed, liberal wonks speculated that it might be so successful that it would begin to erode the employer-based insurance market. This is not happening — not even close. Instead, ObamaCare has demonstrated the fundamental limits of a market-based insurance system in a country with a gridlocked, incompetent legislature. Democrats can still fix it — but doing so will require some big, bold strokes.

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