Obamacare replacement: More covered, fewer pained
For five years, President Obama has ridiculed Republicans for not having “a meaningful alternative” to Obamacare. The tables are turning.
Republicans announced a plan on February 4, just weeks before the Supreme Court will hear a second challenge to the health law. If the president loses in court, he will have to deal with this GOP blueprint, not dismiss it. Gone are the major features of the Affordable Care Act, including mandates on individuals and employers, numerous taxes, and the Independent Payment Advisory Board. Instead, the blueprint offers tax credits for low-income citizens, more consumer choice, regulatory relief for employers and medical malpractice reform.
Right now, it’s pie in the sky. The president would veto it. But when a crisis occurs, “the politically impossible becomes the politically inevitable,” explained economist Milton Friedman. Whatever idea is ready to go becomes the course of action.
On March 4, the Supreme Court will hear a challenge to Obamacare subsidies offered in 36 states where consumers use healthcare.gov. The court will announce its ruling in June. The letter of the law permits subsidies only in the 14 states that set up their own exchanges, not in the other 36. If the president loses, 6.5 million people in those 36 states would have to pay the true cost of their “affordable” plans, in some cases quadruple. Only the sickest would keep paying, and Obamacare would “death spiral” with premiums soaring and enrollment crashing.
On Wednesday, Health and Human Services Secretary Sylvia Burwell refused to say whether the administration has a backup plan.
That same day, Republicans announced they do. Their “blueprint” — not a bill yet — is sponsored by powerhouse Republican Sens. Orrin G. Hatch (Utah) and Richard M. Burr (N.C.) and Michigan Rep. Fred Upton. Other Republicans have ideas, but this blueprint has political heft and momentum.
The blueprint adopts some popular Obamacare features: covering kids on parents’ plans until age 26, outlawing lifetime limits, guaranteeing coverage for people with pre-existing conditions in almost all circumstances, and subsidizing coverage via tax credits for citizens earning up to $35,000 a year and families up to about $58,000 a year. That takes care of most people with Obamacare subsidies.
Where Obamacare dictates, the blueprint allows choices. Obamacare requires you to have a one-size-fits-all “Washington knows best” benefits package. That’s like a law saying the only car you can buy is a fully loaded sedan — no hatchbacks, no convertibles. The Republican blueprint lets you decide whether to buy insurance and what kind — everything from a high deductible to a low-cost “mini-med.”
Obama didn’t invent mandates. New York lawmakers piled them on for years, forcing consumers here to pay exorbitant premiums. The blueprint removes federal barriers to people buying or selling plans across state lines. Good for New Yorkers.
Employers would have more choices, too. Obamacare forces them to provide expensive mandated benefits. The Congressional Budget Office warns that many will stop offering insurance, hurting 9 to 10 million people. Only Washington, D.C., could design an employer mandate that makes you lose your coverage at work.
Eliminating the mandate on employers with 50 or more full-time workers also halts the incentive to trim their workforce to under 50 or cut workers to part time.
The GOP blueprint changes the tax treatment of insurance. It’s deductible up to $12,000 per person or $30,000 for families. People with generous on-the-job plans may have to pay tax on part of them for the first time. Even so, it’s better than Obamacare’s 40 percent “Cadillac tax” on generous health benefits, scheduled to hit in 2018 and already roiling labor negotiations.
The GOP blueprint funds Medicaid with block grants so states have flexibility to improve programs. And in every state, anyone eligible for Medicaid could apply the cash value of their benefit toward private coverage instead — like a school voucher. As Friedman said, “Free to choose.”
Obamacare supporters are shrieking that millions will lose coverage if the court rules against the administration. In truth, more people will be harmed –including some 9 to 10 million currently covered by employers — if the law drags on as is. The alternative “blueprint” released Wednesday shows that the party in charge of Congress is preparing better options and will not leave those currently covered by Obamacare to fend for themselves.
Betsy McCaughey is a senior fellow at the London Center for Policy Research and author of “Beating Obamacare 2014.”