Obamacare was supposed to be the crown jewel in President Obama’s legacy. Instead, it’s a tarnished law, relegated to the dusty back-half of a sleep-inducing State of the Union. Even then, Obama seemed a reluctant salesman of his own law. He waited almost two-thirds of the speech to even begin discussing his signature domestic achievement and then only spent 7 percent of the speech discussing it.
Sadly, that 7 percent was not even well used. A large block of that time was spent uncomfortably chastising Republicans for not offering any health care ideas of their own and awkwardly exhorting them to offer up a plan.
“[T]he American people aren’t interested in refighting old battles. So again, if you have specific plans to cut costs, cover more people and increase choice – tell America what you’d do differently,” Obama said. “We owe it to the American people to say what we’re for, not just what we’re against.”
We say “uncomfortable” and “awkward” because it was clear that President Obama’s speechwriting team drafted the text before Senate Republicans introduced their alternative to Obamacare.
The legislation, spearheaded by Senators Richard Burr, Tom Coburn and Orrin Hatch, would repeal Obamacare and replace it with a reform plan focused on injecting free market incentives into the health care market.
It accomplishes this primarily by granting a generous measure of choice to consumers. Unlike Obamacare, which mandates that insurance companies offer certain, often unnecessary, benefits, and then turns around and forces individual to buy more coverage than they otherwise may need, the Burr-Coburn-Hatch plan allows consumes to make the choice for themselves. The proposed bill would return the role of regulating insurance products back to the states, which would allow insurers the ability to offer varying degrees of coverage at different price points.
Perhaps most importantly for young adults, this would also mean that Obamacare’s age-rating provision would be repealed and replaced by a ratio that more accurately reflects actuarial reality.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 and it would be dramatically reduced under the GOP bill.
That’s not to say that everything in Obamacare was terrible. For one thing it stopped insurers from discriminating against people with preexisting conditions, an achievement that won’t be undone in the Senate Republican plan. To prevent insurers from cherry-picking healthy consumers the bill ensures continuous access to coverage regardless of health history so long as people remain continuously insured. This encourages people to get coverage in a less penalizing way than fining them for not purchasing an Obamacare-approved healthcare plan.
The most significant change the bill makes is limiting the tax exclusion available to employers offering health insurance to 65 percent of the average insurance plan. Currently, federal tax incentives create market distortions by making it cheaper to “pay” employees by offering generous health insurance incentives rather than higher salaries. That scheme is not only regressive, but it distances consumers from the impact of their health care choices, which is one of the main reasons for soaring health costs.
By limiting that exclusion workers should see their salaries rise and the federal government should see more money in its coffers. The GOP-plan proposes to use those savings to maintain some of the tax credits that Obamacare introduced. In the Burr-Coburn-Hatch bill, the subsidies are set along a sliding scale based on income and age, up to 300 percent of the federal poverty level.
Given the utterly disastrous rollout of Obamacare, liberal defenders have been left with one argument – that Republicans have no credible alternative. With the introduction of this bill Republicans will have offered a superior health care plan, one that reduces costs, empowers consumers and bends the health care cost curve. In his State of the Union Obama demanded his critics offer what they are for, not just what they’re against. Republicans have laid down that marker, now what does Obama have against it?