Gov. Scott Walker on Tuesday released a healthcare plan that would repeal and replace Obamacare, but in a way that aims to minimize disruption to the law’s current beneficiaries.
In offering his healthcare plan, Walker’s presidential campaign rejected an ideologically purer alternative in favor of a plan that he hopes will prove more politically viable by extending coverage to a wider cross-section of people than rival Republican plans.
This move could signal that Walker will stake out a more pragmatic policy ground in the coming months as his campaign ramps up. But it may also be a broader indication that the politics surrounding Obamacare have shifted now that it’s been the law of the land for over five years.
Walker’s plan, which he will formally announce with a speech later Tuesday, echoes proposals by House Budget Committee Chairman Tom Price as well as the 2017 Project, a DC-based policy group, suggesting a growing momentum for this type of approach.
Under the Walker plan, Obamacare would be repealed, and it would be replaced by a system in which individuals would receive tax credits toward the purchase of insurance that would vary based on age. The value of the credits would range from $900 for those under 17 years old to $3,000 for those between 50 and 64.
The credits would be “refundable,” meaning that individuals would receive the same fixed amount of money regardless of their tax burden. So, if a man in his 50s owes $2,000 in taxes, and claims a $3,000 health insurance credit, he’d effectively receive a $2,000 tax cut, and then another $1,000 in government spending.
Because of this government spending among other reasons, Walker’s rival in the presidential race, Gov. Bobby Jindal, R-La., has attacked similar proposals for being “Obamacare Lite.” Jindal’s own alternative would provide individuals with a standard tax deduction. This would be the purer limited government option, because it would merely reduce people’s taxes to help them purchase insurance, instead of relying on government spending. However, a deduction approach would likely cover fewer people, because it wouldn’t do much for low-income individuals with little or no tax liability against which to deduct.
Though the distinction may seem minor, Walker’s embrace of the tax credit approach over the ideologically purer alternative reveals his judgment is that to be politically viable, a replacement has to offer a lifeline to Obamacare’s beneficiaries and cannot simply wipe away the law and proceed as if it never existed.
When it comes to pre-existing conditions, Walker is also cognizant of changes made by the law. Though his repeal of Obamacare would also undo the provision that guarantees coverage to those with pre-existing conditions, Walker would require insurance companies to continue providing insurance to anybody who maintains continuous coverage, regardless of pre-existing conditions. The plan would additionally provide funding to the states to help cover those with pre-existing conditions.
Walker is also reluctant to disrupt the employer-based insurance market, and as such his plan’s tax credits wouldn’t be available to those who were already offered insurance through their employers. In 2008, Obama successfully ran against a proposal by Republican nominee John McCain to migrate away from the employer-based system, and the GOP has been increasingly reluctant to propose such major changes ever since. That said, Walker does propose capping the amount that businesses are able to deduct for gold-plated employer plans.
Among the free market reforms, Walker’s plan would allow individuals to purchase insurance across state lines and seek to expand the use of health savings accounts, which enable individuals to pay for routine medical expenses with pre-tax money. Under the proposal, anybody who signs up for an HSA would receive a $1,000 tax credit and he would raise the limits on tax-free HSA contributions to $6,250 for individuals and $12,500 for families. These changes, along with the wiping out of regulations and mandates through repeal, are aimed at bringing down costs and making medical care more affordable.
Walker would also reform Medicaid by capping the amount of money that the federal government sends to states and provide them with more flexibility over how to serve the low-income population. The plan would segregate the part of Medicaid that provides care to disabled individuals.
The Medicaid reforms coupled with the revenue raised from capping the employer-based insurance tax exclusion are intended to fully pay for his proposal, though the proposal does not feature a detailed cost breakdown.
When it comes to the immigration issue, Walker hasn’t wanted to take any chances in the Republican primary, and has left very little room to his right. But with his healthcare plan, Walker has left himself open to attacks from rivals such as Jindal that his plan doesn’t go far enough.
The fact that he was willing to take that chance, however, could be a sign that as he releases more policy proposals, Walker will represent the sort of pragmatic reform conservatism that he pursued as governor, when, for instance, he instituted sweeping collective bargaining reforms that nonetheless exempted police and firefighters.
Or, it could be a sign that as Obamacare adds beneficiaries, Republican politicians will be increasingly resistant to alternatives that don’t account for the major changes made by the law.
