Four years ago, I asked Paul Ryan when Republicans were going to release a plan to replace Obamacare.
“I don’t think we’re gonna settle specifically on one bill because there are a lot of people who have different ideas on how to do this,” Ryan told me. “I think the nominee will have a lot to say about that, but I think what we will aspire to do is put out a vision on what a patient-centered healthcare system looks like. And that vision is the replace side of repeal, which is what we want to execute in 2013.”
Now, 2017 is the new 2013, and Ryan, who since became House speaker, has released an alternative, called “A Better Way.”
Since Ryan made those remarks, Obamacare was upheld by the Supreme Court and began doling out benefits to millions of Americans, as well as imposing new costs and burdens on individuals and businesses. On the one hand, the reality of those beneficiaries makes repeal more daunting, but on the other hand, the rising premiums and billions in losses from participating insurers makes some sort of changes to the program almost inevitable.
The healthcare plan released by House Republicans, on the surface, suggests that the GOP has finally coalesced around a vision for healthcare. The plan shares features with several prominent plans released by Republican lawmakers as well as conservative policy analysts in the past several years. Those include tax credits for individuals to purchase insurance, the expansion of health savings accounts, and Medicare and Medicaid reform.
At the same time, the fact that Republicans released a “vision” document for healthcare rather than legislation that they intend to pass is a sign that many of the differences that Ryan alluded to when we spoke four years ago still remain.
Should Republicans actually find themselves in a position to pass a replacement next year, the big intraparty debate will boil down to how much to really uproot Obamacare given the changes it has already made to the nation’s healthcare system.
Though Ryan’s plan calls for fully repealing Obamacare, it makes several nods to the law that would rankle conservative lawmakers once they got down to the brass tacks of crafting actual legislation.
For one, Republicans have yet to litigate differences, including whether to offer individuals a standard tax deduction or tax credits toward the purchase of insurance.
Though it seems like a minor technical disagreement, it actually gets to the heart of the small government vs. bigger government debate within the party.
A deduction, by reducing the amount individuals owe in taxes to the government when they purchase health insurance, would essentially be equivalent to a tax cut. The critique of this approach is that it doesn’t offer as much help to lower-income individuals with little or no tax liability against which to deduct, meaning it’s likely to cover fewer people.
That’s why most of the leading Republican plans released over the past few years have gravitated toward a refundable tax credit, offered at a fixed amount (adjusted by age, in the Ryan proposal), so that people can gain benefits regardless of how much they pay in taxes. This makes it possible to cover more people, thus in theory creating fewer headlines of people losing coverage they obtained under Obamacare. However, to the extent that the tax credit exceeds the amount of taxes individuals owe, it in effect is no different than government spending. So, from a free market perspective, this represents a concession to Obamacare.
Since the credit-based approach requires government spending, it’s led a number of critics, including former Louisiana Gov. Bobby Jindal, to call it Obamacare-lite. His own proposal, which relied on the deduction-based approach, argued that offering the credits effectively meant spending Obamacare money, and thus fell short of full repeal.
A senior GOP House leadership aide told me that leadership was confident that the plan would reduce the deficit when taken together, but that the precise details would have to be spelled out by the relevant committees next year. “The plan does not call for spending above pre-Obamacare numbers, but it does not preclude that either,” the aide said.
For what it’s worth, presumptive Republican nominee Donald Trump’s bare bones healthcare proposal calls for a deduction.
In addition to the spending side, the House GOP proposal makes a number of nods to Obamacare when it comes to regulations. Though it would, relative to Obamacare, loosen regulations, it also attempts to maintain to some degree restrictions on denying coverage those with pre-existing conditions as well as caps on how much insurers can charge older individuals relative to younger ones. Those are the most costly of all Obamacare regulations.
The positive news is that Republican leadership has finally taken the issue of healthcare seriously enough to get behind a proposal. But the question is whether it’s too little, too late, especially considering many details and difference still need to be hashed out.
