It has been clear for some time that Republicans need just two things in order to repeal Obamacare—a winning alternative and political willpower. The jury is still out on how much of the latter the party possesses. But when it comes to uniting around a well-conceived alternative that can pave the way to full repeal, the news is increasingly good. Jeb Bush’s just-released Obamacare alternative is the latest example of this encouraging trend.
Bush’s alternative would fix what the federal government had already broken even before Obamacare was passed and made everything so much worse. For 70 years, Americans have gotten a tax break for getting health insurance through their employer, while millions of their fellow citizens who have bought insurance on their own have gotten no tax break whatsoever. Bush’s plan would end this inequality in the tax code, which is at the root of America’s (pre-Obamacare) health-insurance woes.
It would do so by offering simple, flat, age-based, refundable tax credits to those who don’t get insurance through their employer but instead buy it on their own. Bush is the fourth major political figure to champion this model, which originated with the “Winning Alternative to Obamacare” (first released by the 2017 Project, which I ran and Bill Kristol chaired). Ed Gillespie, Tom Price, and Scott Walker all adopted the Winning Alternative’s simple tax credits of $1,200 for those under 35 years of age, $2,100 for those between 35 and 50, $3,000 for those 50 and over, and $900 per child. Bush’s alternative doesn’t specify exact values, but it does call for tax credits that are “adjusted by age,” “refundable,” and given “regardless of income”—in other words, it follows the same model.
Twenty months ago, when we released our alternative, Bill and I wrote,
“Just as important as what our proposal would do is what it wouldn’t do. It wouldn’t force anyone to buy insurance. It wouldn’t auto-enroll anyone in any plan. It wouldn’t reduce the tax break for employer-based insurance (aside from closing the tax loophole at the high end). It wouldn’t cost anywhere near the $2 trillion over a decade that Obamacare would cost. It wouldn’t undermine religious liberty. It would allow Americans to keep their current plan if they like it.”
We continued,
“While most Americans don’t support Obamacare’s income redistribution, they also don’t want to see those with lower incomes tossed off their newly acquired insurance. In terms of effects on the near-poor and the middle class, [two prominent] recent GOP alternatives tend to err in opposite directions. The RSC [Republican Study Committee] proposal relies on a tax deduction, not a credit. So it provides a significant assist to the upper half of income-earners, while millions of lower-income people would get comparatively little help in paying for their insurance. The Coburn-Burr-Hatch proposal [now updated as Burr-Hatch-Upton], on the other hand, income-tests its tax credit, therefore doing little or nothing for much of the middle class. Our alternative effectively splits this difference, offering tax credits rather than deductions, but not means-testing them—thus helping both the newly insured near-poor and the neglected-by-Obamacare middle class.”
In other words, Burr-Hatch-Upton and the RSC bill mark the goal posts, and Gillespie, Price, Walker, and Bush have now kicked it in between.
This approach—leave the typical employer-based plan alone; offer tax credits, but don’t income-test them—is a political and policy winner. It blunts both major potential lines of attack—that a conservative alternative would do nothing for the poor or near poor (who are almost the sole beneficiaries under Obamacare), or would jeopardize employer-based insurance.
The apparent consensus developing around this approach suggests that Republicans are playing to win. And that consensus is looking pretty strong. Price’s bill has 79 cosponsors, including Jeb Hensarling, Trey Gowdy, Marsha Blackburn, and RSC chairman Bill Flores. When highlighting “significantly better alternatives to Obamacare,” Carly Fiorina recently singled out Price’s and Walker’s proposals. Importantly, Ted Cruz recently said that he is “open to considering” a refundable tax credit “as long as it’s consistent with those principles that I laid out”—that is, “empowering patients…not a government bureaucrat.”
Like Gillespie’s, Price’s, and Walker’s tax credits, Bush’s would encourage people to shop for value. In the words of Bush’s release, “Whatever portion of the [tax] credit is not used to cover insurance premiums could be deposited into a health savings account (HSA).” Also like these other alternatives, Bush’s plan would close the tax loophole on high-end health insurance without touching the tax treatment of the typical employer-based plan. Bush, however, is less bold in closing the tax loophole, capping the tax exemption at a $30,000 family plan or $12,000 individual plan, rather than the $20,000 and $8,000 figures called for by the Winning Alternative, Gillespie, and Price. (Walker didn’t specify.) The result would be that, all other things being equal, Bush’s alternative would have a higher net cost.
When the nonpartisan Center for Health and Economy (co-chaired by liberal-leaning Uwe Reinhardt of Princeton and conservative-leaning former Congressional Budget Office director Douglas Holtz-Eakin) scored the Winning Alternative to Obamacare, it found that—versus Obamacare—it would save $1.1 trillion over eight years and lead to 6 million more people having private health insurance. (No score has yet been released for Bush’s alternative.)
An apparent weakness of Bush’s plan is that it seems to rely too much on “cooperative federalism,” which — as Michael Greve has noted — isn’t really federalism and tends to undermine the separation of powers by encouraging unilateral executive rule. For example, under Bush’s alternative, states would have to meet—presumably to the satisfaction of the secretary of the U.S. Department of Health and Human Services—various “metrics” and “report on access to care”; “would need to develop an evidence-based action plan to address costs”; and “could supplement the new tax credit so that low-income individuals have a fully funded HSA to meet all of their out-of-pocket costs.” This last part not only sounds expensive but could defeat the purpose of an HSA, which is to give people control of their own health-care dollars and hope they will shop for value once they have skin in the game.
Another strong point of Bush’s plan is that his tax credits would really be tax credits—or tax cuts—whereas Obamacare’s subsides are not. Bush’s release reads, “Instead of ObamaCare subsidies that go to insurance companies, these tax credits would go directly to individuals.”
It is good to see such a consensus forming—around a non-income-tested, tax-credit-based alternative, which would greatly appeal to middle-class Americans who get nothing from Obamacare but the tab. As that consensus hopefully continues to form, the other thing needed for repeal—willpower—will remain crucial.
Bush’s release says, “As president of the United States, Jeb Bush will make fixing the broken health care system one of his top priorities. He will work with Congress to repeal and replace ObamaCare.” Republican voters might well demand that the eventually GOP nominee make repealing and replacing Obamacare his top priority (at least domestically), and that he lead Congress to repeal Obamacare whether it wants to or not. It will be interesting to see which candidate voters decide can most be trusted on that front.
In the meantime, Bush deserves credit for putting out a fine Obamacare alternative and thereby helping to advance the nation-defining cause of repeal.