Republicans love talking about repealing Obamacare. It’s been one of, if not the most politically lucrative strategies of the last six years. Likewise, Democrats love to chide Republicans for wanting to repeal Obamacare without offering up a plan of their own. It’s a line that not only fires up the liberal base, but draws honest questions in the minds of independent voters.
President Obama used the tactic in a speech last year, saying: “If, despite all of the millions of people benefiting from [Obamacare] you still think this law is a bad idea, then you’ve got to tell us specifically what you would do differently to cut costs and cover more people and make insurance more secure.”
“You can’t just say that the system was working with 41 million people without health insurance.”
Those statements imply that Republicans want to go back to the pre-Obamacare health system rather than offer up a reform plan of their own. Neither of those things is true. Republicans will be the first to admit that the health care system was, and is, broken. That conclusion is inescapable given the fact that costs have been rising at unsustainable levels and quality has fallen below our international peers.
That’s why Republicans have offered up numerous plans to not only repeal Obamacare, but to replace it with a holistic solution that focuses on reducing costs in order to expand coverage. For instance, Paul Ryan offered The Patients’ Choice Act in 2009, a play that would, among other things, create a viable health care market through state-based exchanges and build on the power of Health Savings Accounts. Other reform plans were offered by Rep. Tom Price, Rep. Paul Broun, Rep. Phil Roe, and Sen. Richard Burr.
Now, Burr, along with colleagues Sen. Orrin Hatch and Rep. Fred Upton, is back with a revised proposal that should finally put to bed the Democrats’ notion that Republicans have not offered a good faith plan to replace Obamacare.
The plan is built around the idea that injecting free market incentives, especially price signals, into the health care marketplace will do more to control costs than any intrusion of government bureaucrats.
Obamacare mandates that insurance companies offer certain, often unnecessary, benefits, and then turns around and forces individuals to buy more coverage than they would other need. The Burr-Hatch-Upton plan instead allows consumers to make choices for themselves.
Perhaps most importantly for young adults, this would also mean that Obamacare’s age-rating provision would be repealed and replaced by a ratio that more accurately reflects actuarial reality. Currently, under Obamacare, insurers can charge older Americans no more than three times what they charge younger purchasers, despite the fact that they consume health care at a rate of 5-to-1. That’s one of the primary reasons that health insurance costs for young adults have soared under Obamacare.
Under the plan, individuals would get a means-tested tax credit that they could use to buy a broad range of insurance products that would be allowed to vary in terms of coverage and price.
The cost of those credits would be offset by changing the tax treatment of employer-provided benefits that exceed certain thresholds. Benefits exceeding $12,000 for individuals or $30,000 for families would be treated as normal income. That may not seem like a very conservative idea, but there is widespread, bipartisan agreement that the employer-based model has driven up the price of healthcare by shielding the price from cost-conscious employees and creating a tax incentive for employers to offer generous health insurance packages rather than higher salaries.
By harnessing the power of decentralization and free market competition the Burr-Hatch-Upton plan offers a much-needed contrast to Obamacare’s vision of government-controlled health care.
President Obama called for Republicans to tell him what they would do differently to fix health care. Now they have, in a way that not only expands coverage, but solves the conundrum of how to bend the health care cost curve—something that Obamacare doesn’t do.