GOP Health Plan: Good, Bad and Ugly
The House Republican Study Committee has a new health proposal. It would repeal the Affordable Care Act and substitute the following:
The Good
- In place of the current system of excluding employer health expenses from the employees’ taxable income, the plan would give people a standard health deduction of $7,500 (individual) or $20,000 (family), regardless of how much the insurance actually cost. The incentive effects here are very good. No longer could people lower their taxes by spending more on health insurance or face additional taxes if they find ways to economize.
- HSA restrictions would be substantially liberalized, including allowing HRA deposits to be withdrawn as taxable income (which would double the number of people who can now do that), letting FSAs roll over (effectively creating 35 million new HSA accounts) and extending the HSA concept to Medicaid.
The Bad
- Unlike the more familiar idea of a tax credit (with the same subsidy for everyone), this approach gives the largest tax break to the highest income earners. It is probably even more regressive than the current system. [And there is absolutely no defensible reason for structuring it this way!]
- It solves the pre-existing condition problem by making health insurance guaranteed issue for anyone with continuous coverage. This gives plans incentives to dump their sickest enrollees on other plans and creates other perverse incentives for buyers and sellers of insurance. It’s possible that these perverse incentives may be worse than similar incentives under ObamaCare.
The Ugly
- The plan takes away the ObamaCare subsidies for an estimated 25 million newly insured and has no provision to help the roughly half of the population that pays no income tax.
- Based on CBO estimates of a Bush administration proposal it looks like this proposal could un-insure as many as 20 million voters — oops, I mean people.
“Unlike the more familiar idea of a tax credit (with the same subsidy for everyone), this approach gives the largest tax break to the highest income earners. It is probably even more regressive than the current system. [And there is absolutely no defensible reason for structuring it this way!] ”
Well, if we’re talking about fairness, then it was their money anyway, so they deserve it back, but I understand the point.
On top of that- Big money will help push this through.
Money talks, especially to these clowns in Congress.
So, basically it isn’t a real solution. I’m sure it’ll do a good job of making ObamaCare look good.
Definitely not the answer.
Logic and middle ground, two things that seem to be lacking from Congress
Definitely.
Although, in this case I think it is just lack of understanding of the issue by the R’s.
With unlimited funding it would be easy to insure health care for all, unlimited funding is the hard part.
If you mean unlimited funding in the strictest sense (i.e. infinity), then yes, but if you mean it in the realistic finite way we that unlimited means to people, then, no.
Let’s say that we do ensure realistic “unlimited funding”. If someone has a health problem, we will expend every resource to help them. That means that demand will also go to infinity as will price, which offsets the “unlimited” spending. As more and more resources are pumped into health care, all other spending goes to zero, which will obviously create worse health outcomes (e.g. you don’t have food and water).
But, what if we set prices so that they can’t go up? Then, you get poor quality and long lines because doctors can’t service everyone that needs it. That means people die in the interim.
The point is: scarcity exists in the world; we don’t have enough resources to solve everybody’s problems all the time, or even one problem all the time. We have to make decisions on how to spend our money. There is always a trade off. Paying for someone’s chemo means taking food out of someone’s mouth.
Nicely stated, Dewaine.
How do you draw the line of when it’s simply not worth “holding someone’s hand” anymore?(people who can’t afford health insurance)
We try to do it objectively from societies perspective, but that always means that we are putting a value on someone else’s life. That isn’t fair to them and it creates a perverse incentive structure that doesn’t reward good decisions.
People need to be able to make these valuations themselves and be responsible for the decisions that they make. This is the only fair way, but it is also the optimal way because people are incentivized to make good decisions.
Nonsense, the Fed’s printing presses have hardly broken a sweat.
This is a scary statement, but devastatingly true. If we use the Fed to create “unlimited” funding, we’ll be in big trouble. Like I said, the money comes from somewhere.
“…it looks like this proposal could un-insure as many as 20 million voters — oops, I mean people.”
This is the last thing Republicans need to do right now! They need to please as many people as possible to ensure a victory in 2016.
I hate this sentiment, but it is true. I would respect the Republicans if they were doing the right thing, yet still pushing people away. The half-measures aren’t working. Either go full-populist or full-principle, no more inbetween.
I don’t see Republicans having any sort of victory until they learn to actually communicate healthcare alternatives (and practically every other policy) to the public. They have failed to do this for years.
I think many of them do this well, but as a whole, you are definitely right. We need a unified message AND the right message.
This plan is undoubtedly a huge improvement over ObamaCare.
I don’t know. ObamaCare is (accidently) opening the door for HSA expansion, this plan seems to return things to business as usual.
I like the HSA provisions.
Good post. This plan is not well thought out.
Good luck with that one GOP. We gave the people what they want, and if you take it away then they’ll take your jobs away.
? The polls show that people are dramatically opposed to ObamaCare.
Nice one. Got lots of information from here. Thanks for sharing.