Does the GOP Have a Health Plan?
The Republicans have no plan to insure the uninsured. How do I know that? A New York Times editorial told me. So did Ezra Klein, writing in The Washington Post. Matt Miller, also writing in the Post, went further. “I’m willing to repeal ObamaCare,” he wrote, provided the Republicans can “cover the same number of uninsured” and “do it at a lower cost.”
So why don’t the Republicans have a plan? That’s easy. “They’re against reform because it would cover the uninsured — and that’s something they just don’t want to do,” wrote Paul Krugman in The New York Times. The Times’ own editorial said the same thing.
All this has caused me to suffer a bout of severe depression. But, wait a minute. Wasn’t health care the biggest issue in the last presidential election? And…how memory fades…didn’t the Obama campaign spend millions of dollars…promoting his own plan?…no, that’s not right…
Ah, now I remember. The Obama campaign spent tens of millions of dollars on TV commercials attacking the John McCain health plan! It spent more money than has ever been spent for or against any policy proposal in the history of American politics.
The McCain plan, for all those suffering from collective amnesia, proposed to replace all existing health care tax and spending subsidies with a universal health grant, structured like a refundable tax credit. The Patients’ Choice Act version of the idea is sponsored by Tom Coburn (R-OK) and Paul Ryan (R-WI). It promises $2,300 (individual) or $5,700 (family) to everyone who isn’t enrolled in a government health plan.
So what was candidate Obama’s problem with that? Did he object that the plan wasn’t generous enough? Too few regulations? No, none of that. The Obama TV ads focused like a laser on raw self-interest. McCain’s health plan, the ads said, will cause your withholding taxes to go up (without mentioning the offsetting credit that would cause them to go down).
Think about that. The Obama campaign spent all that money attacking the most comprehensive and progressive proposal for universal care proposed by any serious presidential candidate in modern times on the grounds that somebody’s tax bill might — just might — go up!
I’ll skip over the question of how you can spend that much money on TV ads and not come to the attention of The New York Times or any of the opinion writers mentioned above, to address a point that can easily get lost with all the demagoguery swirling around. Under the McCain/Coburn/Ryan approach, the first $5,700 a family spends on health insurance is courtesy of Uncle Sam. To have the kind of coverage a typical large corporation has, employees and employers would have to kick in about $6,300 more (with unsubsidized money). Not everyone may choose, or be able, to do that. Some might add $3,300 of their own money and buy a $9,000 plan. Some might settle for whatever catastrophic coverage $5,700 will buy. But everybody — and I mean everybody who doesn’t turn down a free lunch — would have protection against large medical bills.
Let’s contrast that approach with what happens under the new health reform legislation. Recently, Health and Human Services Secretary Kathleen Sebelius gave 30,000 McDonald’s workers a temporary waiver from the new regulations so they can keep their limited-benefit, “mini-med” plans — which would otherwise be wiped out by ObamaCare regulations.
If McDonald’s lowered these employees’ wages by $5,700 and bought them $5,700 worth of health insurance, the only subsidy available today is the one embedded in the tax law — the ability to pay premiums with dollars that escape the payroll tax. (These employees earn too little to pay income taxes.) That’s worth about $872 — less than one-sixth of what the Republicans were offering.
The new health reform law will make things even worse. Because mini-med plans won’t be compliant in 2014 with ObamaCare’s mandated benefit package, McDonald’s will have to pay a $2,000 fine for each employee. In short, to get the kind of plan McCain/Coburn/Ryan would give them for free, McDonald’s workers would have to pay almost all of the cost out of their own pockets (remembering that employer payments are dollar-for-dollar substitutes for wages) and pay a net fine to the government to boot!
To be fully compliant with the new law, McDonald’s and its employees will have to spend an estimated $12,500 on family health insurance in 2014. In this case the federal tax subsidy rises to $1,913. But that implies that $15-an-hour employees will have to give up more than one-third of their take home pay! This is what backers of ObamaCare call “insuring the uninsured.”
Technically, employers and employees have another option. They could drop employer-provided insurance, pay a $2,000 per person fine and let low-income employees join Medicaid or enroll in heavily subsidized plans in newly created health insurance exchanges. But if every employer did this, the cost to the federal government would far exceed the revenues ObamaCare raises. This way of insuring the uninsured is not paid for under the new law.
For all the hoopla, the health reform law enacted last year has no practical way to insure millions of uninsured and underinsured families. By contrast, the Republicans actually had a plan. It’s a better plan than ObamaCare. More universal. More progressive. More rational. And it was funded.
But they would be foolish to trot this plan out again and start talking about it — subjecting themselves to more relentless and dishonest demagoguery — unless the Democrats are willing to renegotiate the entire health reform package.
One party cannot reform major institutions on its own. Not Social Security. Not health care. Not Medicare. Invariably, the party that tries to go it alone loses seats in the next election.
Good post. Nice sense of humor — all wasted, unfortunately because the people you are twitting have absolutely no sense of humor.
Of course the GOP has a health plan. It’s a very good health plan. But they are too cowardly to talk about it.
The Republicans have a good health reform plan — but they are not very good at communicating why their plan is better than ideas promoted by the Democrats. The ideas advanced by Democrats and left-leaning public health advocates appeals to people who want to believe we all can get something for nothing. That is, people want to believe employers and insurers can provide lavish health benefits and nobody has to suffer lower wages or high premiums in return. This is just not true.
Good post Dr. Goodman — and Devon is right. Eventually someone has to pay. Many in favor of the ACA conveniently fail to look at who bears the true burden.
It’s a n excellent plan, whose roots trace back to John Goodman and Mark Pauly — writing in Health Affairs fifteen years ago.
“But everybody — and I mean everybody who doesn’t turn down a free lunch — would have protection against large medical bills.”
Apparently most would turn down the “free lunch” since highly credible simulations have demonstrated that the refundable tax credit approach of Holtz-Eakin (McCain) and others would have only a very modest impact in reducing the numbers of uninsured.
Of course, the Affordable Care Act, with its “free lunch” of subsidies, will also leave tens of millions uninsured.
We need a program with total automatic enrollment if we want everyone to have the security of being insured (as some of us do). Part A of Medicare is now so automatic that you can’t turn it down unless you decline to receive your Social Security benefits (just ask Dick Armey). We need to improve Medicare and then provide it to everyone – automatically.
Great post. The GOP reformers need to tread carefully on this. The Dems are itching to demagogue this issue, just like you point out.
Very nicely done, John.
Of course, we all ruefully notice that politics is too heavily involved in health care posturings.
My question is, “Who, exactly, are such mis-representations effective in misleading?” Identify that group, and you identify the true source of the problem. Are they more likely to be Democratic voters? Independents? Who? What else characterizes them?
@ Don McCanne
I don’t know of any study showing that the reduction in the number of uninsured would be modest. Lewin estimated the McCain and Obama impacts would be similar. But Lewin didn’t consider the effect of allowing the uninsured to have insurance whose premium exactly matches the tax credit. This really is a free lunch and it’s hard to imagine people willingly turning it down.
A big problem with this argument is history. The Rs did nothing on this from 2002-06 when they controlled House, Senate and WH. They are great on defense, but no evidence they have an offense on these matters. A step would be to at least have the Patients’ Choice Act scored (it was actually co-sponsored in last congress by Ryan and Nunes and Coburn and Burr; McCain didn’t co-sponsor.
@ Don
The R’s did worse than nothing. They passed a prescription drug benefit under Medicare which mostly replaced coverage seniors already had and created an unfunded liability greater than that of Social Security.
Margaret Thatcher said ‘The problem with Socialism is sooner or later you run out of other people’s money’ – arent’ we close?
Great post!
I wonder how much money the Obama administration has poured into marketing their health care plan– between the campaign leading up to PPACA and having to defend it even after it was passed, the number must be astronomical!
It’s called daddy’s credit card Patrick, and baby girl sets the debt limit.
But VISA doesn’t like seeing her shopping with friends everyday in a pink Corvette, oblivious to the fact that the money is theirs.
“VISA” is going to cut her off within two years. (Video of the full hearing at the bottom-skip to 60:00)
John,
I thought you just posted the other day that McDonalds got their waiver due to MLR? I guess being around Newt confussed you?
You end your commentary with “cheers.” Do we have anything to cheer about?
-Dr. Bob Kramer
Erik,
http://dictionary.reference.com/browse/confussed
Also…
The Obama plan depends on the distrubution of a complex system of subsidies through the exchange that are based on income.
Question: If you’re a lower income American whose income fluctuates every month, how does the exchange calculate that? We only file income taxes once a year.
If my income goes up and I get ‘over-subsidized,’ do I need to start filing my taxes on a monthly basis or do I just wait to get a large tax bill from the IRS at the end of the year?
What if my income goes down? How do I prove that? How do I decrease my payments each month? Do I need to re-enroll in a plan each time my income changes?
@Don Taylor: Republicans in general were woefully undereducated on health economics and policy prior to 2009. Having been through the Obamacare ordeal, however, we’ve learned a few things. I expect GOP health reform proposals to be much more frequent and well considered than in the past.
John, this may be your most important post. The Coburn plan is as close as we can get to foolproof (if we accept the fact that everyone should have access to health care).
The fact that there have been no negative comments on this post from the usual suspects (to date) gives a clue as to what reasonable objections the other side might be able put forth in the light of actual media exposure. With that in mind I am curious as to why you think it is not time to “trot this plan out and start talking about it”. The other side is reeling with bad polls, states are officially rebelling against Obamacare in court and dems are slowly abandoning the Obamacare ship. Why is this not the time to bring the facts into the light and drive a stake through the heart of this abominable law? The basic tenets of this concept are fairly easy to explain, and very hard for the other side to obfuscate? Are there those among us good guys who hope to hang on to the status quo and not to reform healthcare? I hope not.
For my two cents I am for Boehner running this up the pole the minute the mainstream media is convinced we are not going to be mutated into giant rabbits as a result of Japanese plutonium exposure, and they have time to cover something that actually impacts American citizens. I don’t think we can wait until Obama can personally go to Tripoli and accept Gaddafi’s letter of resignation (even though he might try to make that case), so maybe we should just get started while everyone is alert and before we go back to wringing our hands over the mental health of Charlie Sheen.
Tom,
It’s nice of you to catch my typo.
Now Tom, can you tell me if McDonald’s received their waiver for not being able to reach their MLR ratio or for the mini-med capped policies that are for bidden under PPACA?
Or are you just the spelling police?
How is this (the McCain Plan) any different from the PPACA enrollment mandate?
Under “Jonnycare” you have to give the federal government more hard earned money in the form of a withholding tax (mandatory) only to have it given back to you in the form of a subsidy (optional). Under “Obamacare” you merely have to be enrolled in any public/private insurance.
Why are Republicans even considering this expansion of government into the way health care is financed? Whatever happened to “government intervention distorts free markets?”
I thought Republicans hated governmental corruption yet they are willing to mandate that all Americans submit their healthcare dollars to the government so the government can tell you what medical plan you will qualify for in the form of a subsidy. Talk about a government slush fund.
Does the GOP Have a Health Plan? Everyone in the US is already covered. In an emergency they can go to almost any hospital and in a non emergency they can pay cash. To be covered and wait on line as seen in socialized western nations is not a solution. Sometimes charities or physicians will help with the bill and sometimes people have to take out loans or go bankrupt.
Of course these very same people could have been insured as well by simply paying the insurance premium at which time they would have been guaranteed treatments that might be denied in other western nations that are socialized. Who says that people need first dollar coverage? Why doesn’t the government stay out and let high deductible plans thrive so that insurance is affordable? Why doesn’t government simply pay a sliding scale for those that just need a little assistance because they fall between having an entitlement and having enough income? Pay dollar for dollar half (or whatever the amount) of the bill and let the patient pay the other half until the deductible is reached.
On a different thought, since I believe in high deductible insurance I often wondered how a person that can’t afford a $60 medical bill could afford the car he drove with that advanced stereo and leather seats. For many years as a physician I had neither.
Wasn’t the McCain plan essentially a reworked Bush plan?
John wrote: “The R’s did worse than nothing. They passed a prescription drug benefit under Medicare which mostly replaced coverage seniors already had and created an unfunded liability greater than that of Social Security.”
The R’s were trying to outdo the D’s, but many conservatives went along with Part D as if it was the greatest invention since white bread. How can we believe that the R’s can pass a good health care plan or even get ObamaCare repealed if they could support Part D? Think of all the conservatives that supported the bill.
@ Erik
Erik, clearly you don’t understand the idea here. “Jonnycare” as you call it actually encourages free markets because it makes funds available for the buyer to purchase his own health insurance (or combination of insurance and self payment. How can it (government) foster corruption when it has nothing to do with the distribution of benefits? In fact, all it does is restructure the manner in which federal funds already being allocated to healthcare.
@ Al
It’s true that everyone in this country gets health services already, but the problem is the various processes for treatment and payment are terribly flawed and inefficient. For example, why not replace the antiquated employer deduction with a credit for the individual so that he may choose the program that fits his needs. If all people (or at least the vast majority) are compelled to make these decisions, the system will certainly become less wasteful. The patient/doctor relationship will be revived, and decisions will be made about treatments for the right reasons.
Frank writes: ” For example, why not replace the antiquated employer deduction with a credit for the individual so that he may choose the program that fits his needs.”
To be honest I wouldn’t mind getting rid of the tax deduction for health care entirely so anything that approximates that goal is fine with me.
Frank,
The funds are available to the buyer only “AFTER” it is given to the government and the government redistributes it back to the buyer.
Who cares about the benefits, it is the financing that is a problem here.
Why should I have to give the government money for my health insurance premium when I have for 25 years paid for it directly myself? Why does the government need to intrude in to my health care payments? I truly thought republicans were against big government?
This is the very definition of a slush fund. Give us money now and we might give a portion of it back to you a year from now?
Very good Erik; keen eyes will serve you well.
Erik,
Obviously the only way the government has money is if it collects it in taxes (forget about the printing press for this discussion). If you go back to the original premise that everyone is going to have access to health care, then you have to address exactly how they are going to get it. There are all kinds of possibilities but no reasonable ones that do not involve government financing. Medicare and Medicaid are wasteful boondoggles from a financial effectiveness standpoint, as is just about any other government managed benefit initiative. Is it not a no-brainer to remove that management responsibility away from the bureaucrats and into the hands of those who are most directly impacted?
Now if your position is one that demands no government involvement in health care for the elderly or indigent, I get your point. The problem is that position is not practical, nor is it politically viable. It is in fact giving the responsibility of reforming health care to the leftists by default.
If, during your 25 years of health insurance premium paying, you have worked for an employer who sponsored a group insurance program you have accepted subsidy from the government. In any case you have paid Medicare taxes whether you like it or not. So we are all already knee deep in health insurance taxes and subsidies. Why not find a better way to manage it?
Still no answer to my question: How will the government determine what I’m supposed to pay the insurer each month?
Will I need to verify my income on a monthly basis or just settle up at the end of the year?
Ray,
Determining the payments for the exchange plans is a complex issue. We discussed that in our blog last month at PNHP. Although, as a single payer supporter, my comments are quite biased, our description of the mechanics of paying the premium are very accurate.
The link for “Tax day surprise for some exchange participants”:
http://www.pnhp.org/news/2011/february/tax-day-surprise-for-some-exchange-participants
Relating this to John Goodman’s blog, not only is the Republican plan lousy, the Democratic plan is as well.
I have to laugh at the thought of the GOP plans giving anything for “free.” Not only does the free lunch not exist, it has been getting more expensive each year. The Obama team has recognized the unsustainable trajectory (16% of GDP and climbing) and has at least had the courage to tackle the problem. I have no patients with Republican detractors taking potshots when they don’t have solutions, although the Obama plan is not perfect,it is addressing the problems. Like it or not, when they were Senators, Obama and Clinton spent a lot of time getting educated on health care issues. Obama also recognizes that a healthy insurance industry is required to allocate risk. The individual mandate is actually a Republican creation (Romney, I believe) and now included as a compromise for the insurance industry. So with all this going on what is the individual to do? Try to stay healthy and out of the system, but this is also becoming increasingly difficult due to corporate control of our food supply, environmental toxins, and the aging of the population.
According to this post the R’s are reforming health care by raising our taxes then giving it back to us “McCain’s health plan, the ads said, will cause your withholding taxes to go up (without mentioning the offsetting credit that would cause them to go down)”
This blog has completely missed the fact that catastrophic coverage is a terrible model. Imagine for a moment that you are a “have not” rather than a “Have” (oh right, that would never happen to you because you R’s pull yourselves up by your bootstraps) now think about how you felt the first time your child was sick; was the idea of staying home and hoping they get better an option? For many uncovered Americans it is. Their only other option being the ED. Fast forward, you feel lethargic but don’t know what is happening to you, you try to stay healthy but your income does not allow trips to Whole Foods, you can’t go to the doctor because you have no insurance, that’s right another trip to the ED with undiagnosed diabetes… now we can all foot the bill for dialysis since you have no kidneys left after years of unregulated high blood sugar. Too bad for you if you are poor and live in Arizona where Medicaid will no longer be paying for life saving treatments like kidney transplants. The reason that an unregulated market as this blog suggests will not work is because it does not provide for ways to ensure that Americans get the care that they truly need. The goal should not be to perpetuate the current system that does not work, but to create one that does. I agree with the blog that we must reach across party lines, but it is not going to be easy with many staunch conservatives easily boosting that Americans have a right to choose to have health care rather than a right to health.
May I simply just say what a comfort to find a person that actually knows
what they are discussing on the internet. You certainly understand how to bring a problem to light and make
it important. More people must look at this and understand
this side of the story. I was surprised that you’re not more popular given that you certainly have the gift.
Feel free to visit my webpage … diet plan for women