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.
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