To the surprise of no one, President Obama swiftly vetoed the latest bill aiming to repeal his signature health law. Soon afterward, Senate Republican leaders made clear that they don’t want to offer up an Obamacare alternative until after the election in November.
That’s garnered criticism among Democrats. “When will they show their flawed plan to the American people?” blared House Minority Leader Nancy Pelosi’s official website.
But the Republican replacement for Obamacare is hardly a secret. Most of the party’s leaders have united around some basic principles that will expand access to affordable health care the moment Obamacare is repealed and replaced.
There’s now six years of evidence that the Affordable Care Act has failed. Premiums in 2016 will rise by an average of 12.3 percent nationwide. A poll released earlier this month found that one in five Americans with insurance had trouble paying their medical bills last year. And according to a recent survey by the Kaiser Family Foundation, Americans who believe Obamacare has hurt them outnumber those who believe it has helped them.
By voting to repeal Obamacare, Republicans in Congress are responding to voters’ angst. And that action was not an empty gesture, even though both parties knew a presidential veto was inevitable.
Republicans now know how to get a repeal bill out of Congress and onto the president’s desk. Perhaps the 62nd time was the charm.
And if an opponent of Obamacare that supports the free market enters the White House in 2017, that knowledge will come in handy.
The Senate GOP’s decision to hold off on introducing a replacement bill this year, meanwhile, doesn’t mean that they don’t have an alternative. Several members of Congress — and several presidential candidates — have offered up reform packages with common elements.
To start, they’re all set on ending the decades-old distortion in our tax code that lets employers — but not individuals — purchase insurance with pre-tax money. The best way to accomplish this is through individual tax credits based on age rather than income.
Setting those credits at $1,200 annually for young adults, $2,100 for those in middle age, and $3,000 for those over 50 would be ideal, as those levels would cover most of the cost of the standard insurance policy that was available prior to Obamacare.
Such a reform would also be simpler to administer, dispensing with the need for the ACA’s massive subsidy-calculating bureaucracy.
A replacement plan for Obamacare should also permit individuals to save more in health savings accounts, which allow patients to set aside money tax-free for routine health expenses.
HSAs reduce health spending by giving consumers control over their health care dollars. Because they’re in charge of their money, they tend to be more cost-conscious. Indeed, a recent study comparing health plans at 54 large firms employing 13 million people found that companies with plans featuring HSAs saw health spending drop, without any increases in emergency or inpatient care. Contribution limits should also be raised to match those of IRAs.
Liberalizing the health insurance market by allowing interstate sales would also help make coverage more affordable, by boosting competition among insurers and encouraging new companies to enter the market.
Lower premiums would, in turn, lead to dramatic expansions in coverage. A national insurance market would increase the number of insured individuals by 49 percent in New Jersey and 25 percent in Oregon, according to researchers at the University of Minnesota.
Any replacement plan for Obamacare must also address the challenges faced by those with pre-existing conditions. The ACA’s solution has been to force insurers to sell coverage without regard for a person’s age or health status. Explosive premium growth has been the result.
Instead, lawmakers should prohibit insurers from raising premiums if an individual has been insured continuously over the previous year. Such a policy would give even the healthiest Americans a strong incentive to purchase and maintain coverage, even after receiving treatment — succeeding where Obamacare has largely failed.
Of course, so long as President Obama is in office, his namesake will remain the law of the land. But Obamacare’s critics have largely settled on their vision for a replacement. They now have one year to make a substantive case for it.