Almost before the ink was dry on my last post, Republicans have responded with a new ObamaCare proposal should the government lose in King v. Burwell.
In my last post, Polls Say Republicans Must Respond to King Victory, I discussed the need for an alternative to allow people to afford health insurance. With a King victory, the subsidies currently being granted on the federal exchanges will be declared illegal.
Now, a group of three prominent Republicans in the House of Representatives have proposed a solution. In an Op-Ed published in The Wall Street Journal, Republicans John Kline, Paul Ryan, and Fred Upton put forth “An Off-Ramp From ObamaCare.” These key members of the House are respectively the Chairmen of the House committees on Education and Workforce, Ways and Means, and Energy and Commerce.
The Republican Off-Ramp
They propose a two-part solution that will be available for any state that chooses this alternative to ObamaCare. This solution will eliminate the burdensome mandates that have made health insurance so much more expensive under ObamaCare.
First – make health insurance more affordable. By eliminating the mandates, people will have the freedom to choose the health care coverage they want at more affordable prices. Insurance premiums will come down if people are not forced to purchase coverage they don’t need – like contraception for nuns or maternity benefits for men.
Insurers will also be forced to compete for your business by allowing people to purchase insurance across state lines. Frivolous lawsuits will be discouraged through medical-liability reforms. Small businesses will be able to get better pricing through collective bargaining.
Popular portions of ObamaCare will be retained such as coverage of pre-existing conditions and allowing children to remain on their parents’ policy until age 26. Insurers will also be prohibited from imposing lifetime limits on benefits. People will also be guaranteed renewability if they are enrolled in a plan.
Second – help people buy coverage. Their proposal will level the playing field for the tax consequences of purchasing health insurance for those who purchase individual policies. Right now, those receiving employer-provided insurance receive a tax exemption for their insurance that makes it much cheaper.
To compensate for this disparity, the Republican plan will provide tax credits for those who purchase their own insurance. These tax credits will be “advanceable” – you get it when you need it rather than at tax season; they will also be “refundable” – meaning you get it regardless of whether or not you pay taxes; and they will adjust for age – not for income. Older Americans will get a larger tax credit because their insurance will be more expensive.
This proposal closely follows the 2017 Project plan, which I have previously discussed in Alternatives to Replace, Not “Fix”, ObamaCare. This plan provides tax credits that are not means-tested. That means they are not based on income. By providing tax credits to everyone who needs to purchase individual policies, this plan eliminates disincentives to work more – as currently exist in ObamaCare. Furthermore, this eliminates the complexity of determining eligibility for tax credits and therefore greatly simplifies the enrollment process on the exchanges.
This timely Republican response will meet the need for a solution to the elimination of tax subsidies on the federal exchange should the Supreme Court throw out the Obama administration interpretation of the law. The Republican chairmen summarize the beauty of this response:
“Under ObamaCare, government controls your choices. Under our proposal, you will. You’ll get to pick a plan that works for you. We look forward to building upon these ideas and working with our colleagues in the House and Senate, health-care experts and, most important, the American people, to put high-quality, affordable coverage within closer reach for all. And we’ll do it by putting Americans, not Washington, in the driver’s seat.”