Saturday, August 10, 2013


Is there a Republican alternative to Obamacare?

there is a serious GOP proposal. It's called the Patients' Choice Act, sponsored by Sen. Tom Coburn (R-Okla.) and Rep. Paul Ryan (R-Wisc.). This is essentially the health reform plan that John McCain proposed when he ran for president in 2008.

What does the Affordable Care Act do about all this? It leaves every single one of those perverse incentives in place and adds new ones! What does the Republican approach do? It eliminates every one of them by offering a fixed-sum, refundable tax credit for the purchase of private health insurance. Every individual and every family would get the same amount of help from government, regardless of where the insurance is purchased -? at the office, in an exchange or in the marketplace.

People would no longer be encouraged to buy employer-specific, non-portable coverage. Because the subsidy is a fixed sum, it would apply only to the core insurance we want everybody to have. Any additional insurance would be purchased with after-tax dollars. People would be discouraged from buying an additional dollar of insurance unless it was more valuable than a dollar spent on other goods and services.

The Republican approach is a defined contribution approach. People are given a sum of money to buy health insurance. They may add funds of their own to this amount. Suppliers of insurance will then be allowed to compete in the private marketplace to see what they can offer for premiums people can afford.

By contrast, ObamaCare takes a defined-benefit approach. The government intends to tell all of us what insurance we must have, whether it is affordable or not. Further, the ObamaCare approach double penalizes people who choose not to insure: failure to claim the credit means they will pay higher taxes and there is a penalty imposed on top of that.

MINIMUM BUREAUCRACY. The Republican bill is only 56 pages long. One suspects that the regulations needed to implement it would fall well short of the 20,000 pages needed to implement ObamaCare. Because the tax credits are the same for everyone, there would be no need for an exchange to verify income or establish that an applicant had not been offered affordable coverage by an employer or link electronically to five or six different government agencies. Uwe Reinhardt has written about the highly complex assignments the ObamaCare exchanges must carry out. So have I. By contrast, EHealth (a private online exchange that has allowed more than 3 million people to obtain health insurance) could handle the entire process under the Republican plan without spending millions of dollars on new technology ? as the Obama administration is doing.

If I could summarize these huge differences in one sentence, it would be this: The Republican approach is focused on getting rid of perverse incentives and treating everyone equitably, while the Democratic approach leaves the current system's perverse incentives and inequities in place and adds new ones.

Northwoods Patriots - Standing up for Faith, Family, Country -

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