he House GOP’s emerging megabill includes significant changes to health care, some of which are long overdue, such as tighter restrictions on the provider taxes which states use to shift Medicaid costs onto the federal budget. But the legislation’s effect on the number of uninsured individuals is likely to get the most attention. Projections showing there will be a sizeable increase are causing internal divisions and creating political risks.

The basic problem for the party remains as it was in 2017 during the failed attempt to repeal and replace the Affordable Care Act (ACA), which is that there is no agreement among its leaders on an overall direction to guide the changes they advance. It is probably too late to develop such a plan for this year’s legislative debate, but it remains necessary if GOP officeholders ever want to have more lasting influence on the workings of the overall system.

The Democratic party has long rallied around an organizing principle for the changes it seeks. The ultimate goal is a universal public utility model with everyone covered. There are differences among leading party members over the specific routes to this destination but not on the direction of travel. The party wants to strongly regulate the entire sector, including insurance and the providers of services, and most especially with respect to the prices they charge. The suppliers would be entirely dependent on government-set rates for their revenue. In return, they would get paid just enough to stay open and face less pressure to compete based on efficiency. A single-payer plan is consistent with the party’s goals, but so too would be an extension of Medicare’s fees to the commercial market.

Republicans have nothing similar to rally around. In the megabill, the goal is to slow the growth of public subsidization of insurance enrollment and promote work, with the savings devoted to a lower level of taxation. It is a fiscal exercise and not a plan to reform American health care.

It also leaves the party exposed to criticism. If the federal government pulls back support without bringing down total costs, then someone else has to pay for the care provided to patients, or else some care might have to be curtailed. Predictably, as analyses emerge showing the GOP bill will produce these effects, the political blowback has been building.

The alternative to a public utility model is a system that is disciplined by market incentives instead of regulations but which still embraces population-wide insurance enrollment. The megabill includes important improvements to Health Savings Accounts (HSAs) that point in this direction, but they are too marginal to substantially alter incentives in the entire sector.

Republicans should consider what can be done to bring down costs across-the-board so that all purchasers get financial relief. There are several targets available.

• Stronger Price Competition.
• The first Trump administration pushed for transparent pricing in health care, which was an important step. However, for the market to work, consumers need to be far more engaged and incentivized to opt for lower-priced options. To promote stronger competition, the federal government should require providers of high-volume services to disclose their prices based on standardized bundles, and then also require insurers to let consumers migrate to lower-priced suppliers and keep the savings.
• Competitive Bidding.
• In Medicare and Medicaid, there is too much reliance on regulated rates and not enough on competitive bidding. Both programs should use bidding to establish the rates that the government will pay for services whenever that is a possibility. For instance, Medicare could require competitive bidding for high-volume services such as laboratory testing and imaging, and then use the submitted prices to build a preferred network of providers. Further, competitive bidding should be used to set rates for Medicare Advantage plans and, in time, to establish a level playing field of competition with the traditional program. Some of the savings from these reforms could be used to provide catastrophic insurance protection as a feature of the entire program, and not just in MA.
• More Enrollment in Job-Based Insurance.
• Republicans should drop their ambivalence toward insurance enrollment. The balance of the empirical evidence backs the importance of staying in coverage to a person’s health status. Moreover, the public does not want large numbers of uninsured again. To lessen the burden on Medicaid and to promote work, Republicans should look to help low-wage workers secure employer-sponsored insurance (ESI). Redirecting a portion of the tax subsidy for this insurance from high-wage to low-wage workers could induce some individuals out of Medicaid and Affordable Care Act plans and into ESI.

The GOP is right that surging costs for Medicare and Medicaid are a fiscal threat, but if their solutions push more financial risk onto individual consumers and patients, the backlash might hasten changes that Democrats have long sought.