How to Compromise on Universal Health Care

Conservatives in Congress have already given quite a bit. For example, even the most hard-line conservatives in the House voted in favor of the federal government providing subsidies to low-income households to help them purchase health insurance.

But congressional Republicans will have to go further. Subsidies for low-income households need to be generous enough to make insurance against catastrophic medical expenses affordable. Republicans shouldn't try to cut taxes as part of health reform. And Republicans should accept that we need a robust health-insurance safety net that covers all citizens living in poverty or living with medical conditions that will make insurance prohibitively expensive.

This will involve accepting a larger role for Medicaid than existed before Obamacare, and adequately funding high-risk pools for individuals with pre-existing medical conditions who won't have access to affordable coverage. It'll also mean making room for regulation requiring that as long as individuals maintain insurance coverage, they can move from employer coverage to the individual market without being charged higher premiums due to medical conditions.

Progressives have to travel further than this. In order to achieve the goals I laid out, they need to accept that catastrophic health-insurance coverage still counts as coverage. The social problem we face occurs when uninsured individuals get seriously sick or injured, and can't afford their treatment. Those costs get passed on to the rest of us. The policy solution, then, should focus on the problem of individuals not being insured against very high medical costs — not on insuring for preventative care, or against your annual sinus infection.

In order to encourage the appropriate levels of innovation and productivity, progressives must accept that health insurance — and the market for medical services generally — is too heavily regulated. Obamacare removes choice and options in the individual health-insurance market by specifying what has to be included in insurance plans. In addition, the law's individual mandate penalizing people who don't buy insurance is too weak to be effective — but a stronger mandate is both politically untenable and undesirable. So progressives should ditch the mandate and accept another way to encourage young and healthy individuals to be covered: auto-enrollment with an opt-out.

In order to put health care costs on a sustainable trajectory, progressives must accept that Medicaid, the current health safety net for the poor, needs to change its financing system — in which the federal government matches a share of state spending. They also must accept that market discipline is needed. Catastrophic events are hard to foresee and hard for households to afford, but households should be more exposed to the actual costs of routine care.

Given the current political atmosphere in Washington, I wouldn't bet on success anytime soon. But these are the right goals, and after the Obama-Trump years, we've learned that a bipartisan effort to define universal coverage sensibly and then put it into effect is needed to ensure long-term stability for health policy.

— Read Some Senate Republicans Open to ACA Subsidy Deal on ThinkAdvisor.