Speaker Johnson Sensible About Health Care

Newly-installed House Speaker Mike Johnson, R-La., has a clear vision for the future of America's health sector. It's one that fans of free markets should be pleased with.

Previously, Johnson served as chair of the House Republican Study Committee. During his tenure, the committee released "A Framework for Personalized, Affordable Care" — a detailed, commonsense plan for addressing some of our nation's most daunting health care challenges.

If he makes that plan a legislative priority in the months ahead, he has a chance to make his mark on a healthcare debate that Democrats have dominated for too long.

Take the Framework's approach to reining in Medicaid. Originally created as a health insurer of last resort for truly needy Americans, Medicaid has become the nation's leading source of coverage — largely because of Obamacare.

The health law dramatically relaxed Medicaid's eligibility requirements, funneling an additional 21 million people into the program, according to a 2022 report from the U.S. Department of Health and Human Services.

Today, Medicaid insures more than one in five patients — many of them working-age, able-bodied Americans.

Predictably, this rapid growth in enrollment has put Medicaid on a path to fiscal calamity. Between 2020 and 2021 alone, program spending grew by more than 9%, to $734 billion. According to the latest federal projections, spending will exceed $1 trillion in 2028.

To return Medicaid to something resembling its original purpose, the Framework proposed a new funding formula. Instead of giving states at least one dollar of federal money for every dollar they spend on the program, the feds would provide fixed per-capita block grants to each state.

This would not only give states greater control over their Medicaid dollars. It would encourage them to keep costs under control. After all, they're responsible for every dollar lost to waste and inefficiency.

The Republican Study Committee under Johnson also proposed a number of compelling ideas for expanding health savings accounts.

These savings vehicles enable patients to set aside tax-free dollars for health expenses. Because patients control their dollars, they have a strong incentive to spend them wisely on the best-value care. Providers, meanwhile, have to compete for consumers' health care dollars. That gives them an incentive to keep prices low and quality high.

The Framework proposed allowing people to contribute more to HSAs — up to $9,000 per year for individuals and up to $18,000 per year for families. That's more than double what they can contribute now. And it would make more people eligible to contribute to HSAs — including Medicare beneficiaries.

In addition, the Framework would permit people to pay insurance premiums with pre-tax money from their HSAs. That would help level the tax treatment between people who have gotten tax-free coverage through work for decades and those who shop for coverage on the individual market, who have long had to pay premiums with post-tax money.

Just as encouraging are some of Johnson's ideas for Medicare reform.

The Republican Study Committee's 2020 budget proposal argued for raising Medicare's eligibility age to reflect the increase in life expectancy since the program's inception — a commonsense way of bringing down overall costs.

That budget proposal also made the case for shifting Medicare to a "premium support" model, in which beneficiaries receive direct financial assistance from the government that they can use to purchase their own insurance on a special Medicare exchange. Wealthier seniors would receive less in premium support than those with lower incomes.

This exchange would offer a range of private coverage options as well as traditional Medicare. In this way, it would introduce greater choice and competition into the program — which, over time, would reduce costs and foster innovation.

The GOP has chosen a House speaker who both recognizes the major flaws in our health system and has a detailed plan for correcting them. Those who want to see a more efficient, better-value healthcare system should hope he has the opportunity to advance that plan.