Can Donald Trump Cut A Deal With Democrats On Health Care? Maybe.

US President Donald Trump leaves after delivering a statement on healthcare at the White House in Washington on July 24, 2017. / AFP PHOTO / YURI GRIPAS (Photo credit should read YURI GRIPAS/AFP/Getty Images)

Originally posted at Forbes, October 2017.

On the surface, it would seem that Republicans and Democrats are so far apart that agreement on health policy is virtually impossible. Scratch the surface and you will find another reality.

Here are three inescapable facts: (1) the status quo is unacceptable to everyone, (2) since neither party can go it alone, the two parties need each other to change anything, and (3) philosophically there is a lot less distance between the two parties than meets the eye.

During the election, Donald Trump promised to repeal and replace Obamacare – a pledge he has repeated quite a few times since he became president. On the other side, the Senate Democratic leader, Sen. Chuck Schumer, has said there can be no health care reform as long as “repeal and replace” is on the table. Impossible impasse? Not necessarily.

Roll back the clock eight years to the 2008 election. Barack Obama was running against John McCain. Each side had a health plan. Each side trashed the plan offered by the other. But when Obama got to the White House, some of his top advisors urged him to adopt the McCain approach to health reform. Had that happened, the world would be very different today.

It could still happen. But let’s first look at the obstacles in the way.

The Democrats’ Dilemma. During the last presidential election, Bill Clinton – campaigning for his wife – made a verbal blunder. He said, “people who are out there busting it, sometimes 60 hours a week, … wind up with their premiums doubled and their coverage cut in half and it’s the craziest thing in the world.”

What he said was obviously true. But Clinton said something that almost no other Democrat has been willing to say. It’s very hard to find solutions if you can’t first admit there is a problem.

A recent CNN town hall debate on health care pitted Sen. Bernie Sanders (D-VT) and Sen. Amy Klobuchar (D-MN) against Lindsey Graham (R-SC) and Bill Cassidy (R-LA). The Democrats spent most of their time attacking the Republican proposal and almost no time proposing a realistic alternative. Sanders, of course, advocates Medicare for all. But as I explained in a previous post, turning Obamacare over to Medicare doesn’t solve any problems. It merely transfers what has become a big mess from one part of government to another.

[Heath economist Chris Conover has had a series of posts analyzing why single-payer health insurance is a bad idea at the federal level and Linda Gorman and Ihave explained why the idea was defeated two-to-one in a Colorado referendum.]

For her part, Amy Klobuchar offered no ideas other than the hope that a bipartisan “fix’ would emerge out of the Senate Committee on Health, Education, Labor and Pensions.

Meanwhile, Sen. Chuck Schumer pointed out after the 2014 election that 95% of people who vote have health insurance. Through Obamacare, he noted, Democrats were spending a great deal of money on people who don’t vote. And they made angry quite a few people who do vote.

So, the Democrats’ dilemma is: (1) they are not getting any electoral advantage from Obamacare, (2) they can’t afford to criticize it for fear of upsetting their base and (3) they don’t have an acceptable solution in any event.

The Republicans’ Dilemma. You would think that a Republican alternative to Obamacare would be easy. Think about how many problems there are. Pick up a newspaper just about any day of the week and you will find some. Yet Republicans have done a miserable job of explaining how they are going to make anyone’s life better.

In the CNN debate, I thought Graham and Cassidy prevailed. But their message was: return power to the states and let them decide what to do. That isn’t necessarily a bad idea, but it doesn’t tell voters how their problems are ultimately going to be solved.

On the whole, Republicans have been obsessed with repeal and have given very little thought to reform.

The John McCain Solution. Zeke Emanuel is the White House doctor who helped give us Obamacare. After leaving government he made an amazing revelation. Upon arriving at the White House, Emanuel and other key advisors urged the Obama administration to adopt the McCain approach to health reform. Since Obama’s ideas on health care were sort of murky and not well defined anyway and since the Republicans had been defending McCain’s health plan throughout the 2008 election, that would have been politically brilliant. The plan might have passed Congress with a huge bipartisan majority.

As it turns out, that brilliant idea was not to be. But could we resurrect it again today?

The McCain idea was simple. Take all the government spending and tax subsidies for private health insurance, divide it up and give every American an equal share. (Medicare and Medicaid and other government program enrollees are excluded.) People could only use the money to pay premiums and make deposits to Health Savings Accounts. They and their employers could add additional money, but without any tax subsidy. Health insurers would be free to compete for these funds by offering insurance that people want to buy, not what government regulators think they should have.

One reason this idea appealed to Emanuel and other Democrats is that it is far more progressive than the current system. Families in the top 20% of the income distribution get six times the benefit from tax subsidies for employer-provided health insurance as families in the bottom 20% under the current system. Under the McCain proposal, everyone would get the same number of dollars, regardless of income.

The proposal appeals to many Republicans because individual insurance and group insurance would be treated the same under the tax law. That means people would not be trapped in an employer plan unless they choose to be there. Also, the proposal makes it easy for employers to help employees obtain insurance that is personal and portable – traveling from job to job.

A contemporary version of the McCain approach is the Sessions/Cassidy health reform, which is summarized at my website and at the Health Affairs Blog.

If Donald Trump and Chuck Schumer want to make progress on health reform, that would be a good place to start.

This article was originally published at Forbes on October 9, 2017. (