Can Paul Ryan and the GOP Deliver a Credible Obamacare Alternative?
Policy + Politics

Can Paul Ryan and the GOP Deliver a Credible Obamacare Alternative?

REUTERS/Joshua Roberts

House Speaker Paul Ryan and other GOP leaders this week intend to unveil their latest vision for replacing the Affordable Care Act, trying once again to make good on a pledge to not only jettison President Obama’s signature health care program but offer a credible alternative.

Almost from the moment the ACA was enacted in 2010, GOP leaders and presidential candidates have called for “root and branch” repeal of every facet of the program.

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Republicans and their allies can give chapter and verse on why Obamacare must be extinguished — the government costs are too high, new taxes are too onerous, people weren’t allowed to keep the insurance of their choice, premiums and co-payments are going through the roof, experimental non-profit co-ops proved to be a disaster and so on. But for years House and Senate Republicans repeatedly failed to explain how to replace the program without leaving millions of people once again without insurance coverage and without committing the government to even higher costs and liabilities.

Stuart M. Butler, a senior fellow in economics at the Brookings Institution who has spent decades tracking health care policy in Washington, said that Republicans have been flummoxed until now in crafting a realistic alternative that doesn’t leave millions of Americans in the lurch because “it’s really hard to square the circle” with budget and funding numbers acceptable to a highly diverse, conservative group of Republican lawmakers.

“It’s real hard to figure out how you get no significant reduction in health care coverage if you get rid of the individual mandate [to purchase insurance] and you try to repeal some of the taxes in the program,” said Butler, who previously headed the Center for Policy Innovation at the conservative Heritage Foundation. “So there’s tough decisions that have to be made if you’re really putting forward an alternative that claims to reduce people’s costs and not end up with a lot of people becoming uninsured.”

Ryan and several key House committee chairmen believe they have finally come up with a concept and plan that could be used as the basis for the replacement of Obamacare, provided of course that Donald Trump succeeds President Obama in the White House and the Republicans can retain control of the House and Senate in the November general election.

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The new plan set for release this week reportedly will include a refundable tax credit that could be used by low and moderate-income families or others who don’t have the benefit of employer-provided coverage to purchase health care insurance in the private market. One version getting a lot of attention provides a universal tax credit adjusted by age, so that the older you are the bigger the tax credit.

The proposed GOP tax credit would mark a significant departure from the refundable credit currently available under Obamacare, which is based on a sliding income scale and can only be used to subsidize the premiums on health care insurance plans purchased within state and federal Obamacare exchanges.

The proposal would also raise billions of dollars in revenue for the new program by imposing a cap on the federal tax exclusion on employer-based health insurance. Currently, premiums paid for employer-sponsored health insurance are excluded from taxable income. That reduces the amount that workers owe in income and payroll taxes by about $250 billion a year. The House Republican plan would substantially cut into that major tax break.

While GOP leaders may argue that a cap on the tax exclusion for employer-provided insurance is justified because it would eliminate a glaring tax loophole while helping to fund new health insurance initiatives, businesses and employees throughout the country would likely protest the move that would greatly increase their tax bill.

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Ryan’s health care reform ideas are part of his larger effort to set a new GOP policy agenda for the upcoming general election and beyond. But in a tell-tale sign that the Republicans are still struggling to agree on a replacement for Obamacare, the plan will not include specific dollar figures on some of its core provisions, as The Hill newspaper reported last week.

“It will not include specific dollar amounts on how large the tax credit would be, nor will it note which employer health insurance plans would be subject to taxation,” The Hill reported, based on interviews with health care industry lobbyists and congressional aides.

That lack of specificity has led to very low expectations among health policy experts, who have often been promised detailed Obamacare replacement plans only to be presented with vague ideas and slogans.

“The proper attitude about this is great cynicism,” said Harold Pollack, a health policy expert and professor at the University of Chicago’s School of Social Service Administration. “It’s been more than six years since ACA was passed, and Republicans are still trying to come up with a coherent response to it.”

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Given the lack of specificity, he said, “We’re discussing vaporware, and I strongly doubt that they will go beyond that point.” This has been going on for years, he said. “They’re still refusing to put any kind of meat on the bone, so it is very difficult to comment on it.”

Pollack said that the failure to address the fallout from eliminating the individual mandate has been a running problem for the GOP’s proposals.

“A credible plan to replace Obamacare needs to offer some form of universal coverage, or state that tens of millions of people will be uninsured,” Pollack said.

That gets to a hard truth. One of the harsh political realities for the Republicans is that once a major social program like Obamacare is enacted and implemented, and the public has begun to draw benefits from it, it is very hard to completely do away with it. Past efforts to dismantle major health care programs like Medicare and Medicaid and the Medicare Part D prescription drug program failed miserably because people didn’t want to give up their benefits once they got them.

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The core elements of the Affordable Care Act include federal tax subsidies to purchase health insurance on government exchanges, protection of people with pre-existing medical conditions from being denied coverage, authorization for children to remain on their family’s health care policy through age 26 and other features that families would be reluctant to give up.

“A number of those provisions individually are very popular,” said Bill Hoagland, a vice president of the Bipartisan Policy Center and an expert on health care, said in an interview. “It always struck me when I looked at the polling on this that if you just ask generically about Obamacare, you get this sharp division between Democrats and Republicans. But if you start talking about specifics, I think this is where it gets a lot more difficult for Republicans.”