Senator Cassidy’s Response to King v. Burwell a Winner

 

With the clock ticking, Congress is once again working. Even as the White House has admitted they have “no Plan B”, the Republicans are putting forth numerous responses in anticipation of a King victory.

As the time approaches for a Supreme Court decision on King v. Burwell, expected at the end of June, Senator Bill Cassidy (R – LA) has introduced the Patient Freedom Act. This is another proposed response should SCOTUS eliminate the tax subsidies currently being granted by the IRS in 37 states that did not set up their own state exchanges.

Previous proposals for such a decision by SCOTUS have been introduced by Senator Ron Johnson (R – WI), Senator Ben Sasse (R – NE), Congressmen Paul Ryan (R – WI), John Kline (R- MN), and Fred Upton (R – MI), Senators Orrin Hatch (R –UT) and Richard Burr (R – NC), and Senators Lamar Alexander (R –TN) and John Barrasso (R – WY) with Senator Hatch.

Cassidy’s proposal restores federal funding to states that will lose tax credits, but frees them from ObamaCare. If a state wants to restore the ObamaCare tax credits, it would be free to do so by establishing a state-based exchange. However, they would also have the option to receive the federal dollars and use them in a way that empowers patients, rather than the federal government.

John Graham, writing in Forbes, explains the two options states would have then:

  • Individual tax credits deposited in patients’ Heath Savings Accounts (HSAs) – or
  • Per Capita block grants

 

The first option leaves the state largely out of the picture since the IRS would process the tax credits. The second option would allow a states’ healthcare agency to process the grants to individuals and keep more control over safety-net funding.

Graham lists the advantages of Cassidy’s proposal:

  • First – It eliminates ObamaCare’s damaging effect on the labor market. The ObamaCare tax credits are linked to income and decline with increasing income. This creates high marginal tax burdens that discourage workers from earning more. The CBO has predicted this would lead to 2.5 million fewer full-time equivalent jobs. So states that take advantage of Cassidy’s proposal would be more likely to attract workers and businesses.
  • Second – It eliminates ObamaCare’s expensive mandates that increase the cost of health insurance. By allowing insurers to return to the actuarial cost of treatment, rates will go down, especially for the young and healthy. Instead of the current 3:1 ratio of premium rates being used in ObamaCare, the industry would return to the 5:1 ratio. One study has estimated a 44 % drop in premiums for individuals in their twenties.

 

There is much to like about Senator Cassidy’s proposal. It seems the more Republicans work at alternatives to ObamaCare, the more refined and suitable these become. Now, if they can just agree on one proposal that will quickly gain approval in both houses of Congress, we may actually get worthwhile healthcare reform.

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