On the main site, Peter Ferarra has the details of an alternate health care plan being introduced today by four Republicans (Tom Coburn and Richard Burr in the Senate; Paul Ryan and Devin Nunes in the House). It’s worth looking at this development both from a policy and political standpoint.
Let’s start with policy. One central aspect of the plan would end the discriminatation in the tax code against people who don’t obtain their insurance through their employers. The subsidy, which is estimated at $300 billion a year by some, can instead be offered to individuals in the form of $2,300 tax credits (or $5,7000 for families). This is a key step to true health care reform, because it will help to expand coverage, broaden consumer choice, promote competition among insurers, and allow people to take their insurance with them from job to job. When John McCain proposed this during the campaign, it was savaged by the Obama campaign as a new tax on employer-based health care, but since that time both Republicans and Democrats on the Senate Finance Committee have talked about the idea of at least capping the tax subsidy given that it represents such a large amount of money. So, the political environment is much more receptive, or at least less hostile, to the idea than it was last fall.
Writing in the Wall Street Journal, Grace-Marie Turner and Joseph R. Antos describe another feature of the Republican plan:
Low-income Americans would get a supplemental debit card of up to $5,000 to help them purchase insurance and pay out-of-pocket costs. They would have an incentive to spend wisely since up to one-fourth of any unspent money in the accounts could be rolled over to the next year. The combination of the refundable tax credit and debit card gives lower-income Americans a way out of the Medicaid ghetto so they can have the dignity of private insurance.
This would represent a new subsidy, and I’d like to learn more about what levels of income it would be phased in at and how much it would cost. Philosophically speaking, I’m opposed to the idea of subsidizing health care, because I don’t think it’s one of the proper functions of the federal government even before taking into acount the costs involved. And I do believe that you can greatly expand coverage purely by changing the tax code and getting rid of costly mandates requiring insurers to offer certain benefits, because some consumers want higher-deductible policies with less generous benefits but lower monthly premiums. Even if such reforms were implemented, however, it’s undeniable that there would still be millions of low-income Americans who would slip through the cracks and still not be able to afford health care coverage. So, if we’re going to inevitably have some form of subsidies, then this debit card approach, at first blush, seems like a better way to go than some of the other ideas I’ve seen considered. But again, I’d have questions. Yes, maybe the responsible beneficiaries will budget themselves and avoid unneccessary care so that they can roll over money to the next year. But what happens to those people who aren’t as responsible, who blow through money in 6 months? In the face of news accounts of poor Americans who can’t get the health care they need because they already maxed out their debit card for the year, is the government going to say, “Sorry, tough luck”? I think we all know the answer.
Under the bill, each state would set up their own Health Insurance Exchange, where insurers could compete to offer coverage to everyone in the state. All insurance offered on the Exchange would have to provide coverage meeting the same standards as the insurance offered to federal employees and members of Congress under the Federal Employee Health Benefits System. This would ensure comprehensive coverage. But insurers could offer, and consumers could choose to buy, insurance coverage outside the Exchange.
This also makes me skittish, because it envolves the states running exchanges in which only government-regulated policies are offered, and it creates the infastructure for the eventual introduction of a government-run plan within the exchanges. Also, the fact that each state exchange would have to meet federal guidelines anyway, undermines the purpose of having 50 different exchanges throughout the country.
That’s the policy element. Politically, I think this was a masterful move by this group of Republicans. Keep in mind that an alternative never has any chance of being passed, but it’s a statement by the minority party about their approach to an issue. Agree or disagree with the components of the plan, these Republicans have released an undeniably serious health care proposal, and they have done so months before the Democrats have come up with theirs.
The big question now is how many other Republicans will get behind it. In other words, will this simply be a Republican alternative, or will it become the Republican alternative? When I saw Republican Sen. Mike Enzi (the ranking member of the Health, Education, Labor, and Pensions Committee) speak last week, he was dismissive of the idea of presenting a GOP alternative. He argued that such a plan would be voted down easily, and then Republicans would be shut out of the process. It’s better, he said, for Republicans to work with Democrats so they can see some of their ideas reflected in the final legislation that actually has a chance of passage. Other influential Senate Republicans on health care, such as Charles Grassley and Orrin Hatch, have also been speaking about the need for a bipartisan solution. But by releasing this alternative so early in the process, it squeezes those Republicans who are engaged in an ultimately futile effort to bridge differences with Democrats over health care. This offers a way to oppose the Democratic approach to health care while pushing back against charges that the GOP is “the party of no.”