The Astonishing Breadth of Republican Obamacare Options

1/05/2017 12:17:00 PM

At the moment, there's no Republican plan to repeal and/or replace Obamacare. There are, however, a bunch of different options that various republicans and conservative think tanks have proposed. One might think that all of the options follow similar principles--like how Clinton's and Obama's health reform plans converged over the course of the 2008 primary. But the reality could not be more the opposite: republican proposals range from near-complete destruction of the individual market to massive expansion of entitlements.

Destruction of the individual market

I've been talking about this for a while, and the Urban institute has followed up with numbers: if republicans try to repeal the ACA through reconciliation alone, the result would not merely take us back to the pre-ACA market but actually destroy both the ACA and pre-ACA market. That's because community rating and guaranteed issue regulations can't be repealed through reconciliation, so without subsidies and without a mandate, there'd be considerably more adverse selection than we had before the ACA, with higher premiums and even fewer people covered than we had before the ACA.

Expansion of entitlements

At the opposite extreme, there's a republican proposal to create a new tax credit for health insurance. Hear me out. The only difference between a tax credit and an entitlement is whether the poor are eligible: people not rich enough to owe taxes are excluded from eligibility for tax credits, but are eligible to receive entitlement benefits. The Paul Ryan plan is already most of the way to entitlement, making the tax credit "universal advanceable, refundable," paid out monthly. But consider the political math:

Without legislating the fixed tax credit now, Condeluci said, Republicans "may never get Democrats to be supportive of a fixed tax credit that varies by age. And maybe Republicans know that a fixed credit is not going to be enough for a low income person. They know that at some point they're likely to put into law some kind of income-based subsidy for low income folks. Are they maybe going to hold that negotiating piece as a chip to get Democrats to the table and to agree on replace? Condeluci, in other words, envisions an eventual hybrid in which low income people get income-based support to render coverage affordable, while the somewhat more affluent -- or maybe everyone who buys in the individual market -- get a fixed tax credit to defray some of the cost.

Given that the president-elect is promising that no one who has insurance will be left without insurance, and that a flat tax credit would be obviously inadequate for lower-income households, it seems fairly likely that an income-based subsidy would be included in any tax credit plan. That in turn means that regardless of income, everyone would receive a federal subsidy to offset a large portion of their health insurance premiums--in other words, a massive new entitlement program. There's precedent, too. In 2003 Republicans hatched the Medicare Prescription Drug, Improvement, and Modernization Act, which created a new federal entitlement for seniors known as Medicare Part D. It may not be likely, but don't discount the possibility that Republicans end up outflanking democrats on the left instead of right, it has happened before.


So there you have it. Republicans have narrowed the health policy options to the range between complete destruction of the individual market and a massive expansion of entitlements.