Jeb Bush Health Reform: Innovation and Patient-Centered Care

Bush2(A version of this Health Alert was published by The Hill.)

By avoiding sound bites and respecting voters’ ability to understand issues, Governor Jeb Bush’s health-reform proposal demonstrates strong leadership. Repeal and replace Obamacare? Sure, Bush is for that, but no Republican politician should win points simply by regurgitating what many citizens fear has become little more than a slogan.

What is especially impressive is that Bush leads with a non-Obamacare issue  – fundamental reform of the Food and Drug Administration (FDA): “It should not cost $1.2 billion to $2.6 billion nor take 12 to 15 years to advance a medicine from discovery to patients, but that is the case under the Food and Drug Administration’s current regulatory mess.”

This should be music to the ears of patients who suffer from diseases that still cannot be cured, or those whose treatments are too expensive.

FDA reform would also lower prices of existing drugs. In recent weeks stories have hit the news about decades-old drugs whose prices have been jacked sky-high by executives taking advantage of complex FDA rules that impede competition. Hillary Clinton responded with a plan to empower the federal government to regulate drug-makers like utilities – letting it decide whether research and development spending merits a return on investment. Although merely a set of talking points, Clinton’s proposal has led to a collapse in share prices of innovative biotechnology and pharmaceutical businesses. If enacted, her proposal would produce an immediate drought of new capital for medical research.

Bush’s plan, on the other hand, would encourage investors to put their capital at risk to develop new medicines. It goes beyond new drugs. Noting the growth of health-related apps on smartphones and 3-D printers that can manufacture blood vessels, heart valves, and liver cells, Bush recognizes the need for an entirely new approach to regulating medical devices, too.

Fortunately, if he is elected president, Bush can look forward to working with a Congress that has already invested significant political capital in regulatory reform. Last spring the House of Representatives approved the 21st Century Cures Act with bipartisan majorities. If enacted, it would improve the FDA and ensure a light regulatory touch on cutting-edge digital health technologies. The Senate will start debating its version of this important legislation after Thanksgiving. Regrettably, both President Obama and Hillary Clinton have been silent on this topic. Bush’s willingness to lead on this issue, paired with a committed Congress, suggests a real opportunity for change.

As for health insurance, Bush recognizes that pre-Obamacare benefits were designed in the 1940s, ‘50s, and ‘60s and that we need to revisit how we get coverage. Obamacare made things worse, suppressing job and wage growth. Instead of hyper-regulated and expensive Obamacare policies, Bush would allow small businesses the option of making tax-free contributions to health coverage for their employees, which they can keep as they move from job to job.

Further, Bush offers a tax credit for those without employer-based coverage. Obamacare’s tax credits impose high effective marginal income tax rates on their beneficiaries, because they phase out as a household’s income rises. Bush’s tax credit would be based on the average tax benefit enjoyed by those who currently get coverage through their jobs. It is an elegant way to introduce tax fairness in health insurance without threatening employer-based benefits. Bush would also cap the exclusion of employer-based health benefits from taxable income at $30,000 per family. This is reasonable limit to the traditionally open-ended exclusion, and much better than Obamacare’s punitive 40 percent excise tax (“Cadillac tax”) on high-value employer-based plans, due to kick in in 2018.

Although favoring private insurance, Bush also recognizes insurers are too powerful, dictating “how care is delivered and how to pay for it.” He would end this by allowing patients to control more health dollars directly through tax-advantaged Health Savings Accounts, which federal tax credits, states, and businesses can supplement. Obamacare cemented insurers’ control of our access to health care. Bush’s proposal would shrink their power considerably, with the result that prices of health goods and services would be limited by consumer pressure.

Serious post-Obamacare health reform has not yet had an adequate profile in the presidential primary. Governor Bush’s proposal should serve to elevate it to the position it deserves.

Comments (3)

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  1. Jimbino says:

    Under the Bush plan, risk-averse breeding couples are winners and the non-risk-averse non-breeding singles are losers. What would be fair is to eliminate all tax consequences of being single and not insured. Why is the gummint favoring insurance companies at the expense of the people?

    Furthermore, any favorable tax treatment should extend to funds spent for care or drugs in Mexico, Cuba and other foreign countries. Both Obamacare and Bushcare are antagonistic to free trade in health care and drugs, at great cost to the patient.

    • Where does the breeding business come into it?

      • Jimbino says:

        Breeding comes into it in the taxpayer subsidies implicit in family policies. Two singles pay, say $6000 each for coverage, but a couple with 4 kids doesn’t pay $36000. I don’t know about the rest of you, but I don’t take jobs where the employer subsidizes other peoples’ kids and I prefer to sell my services in countries where the gummint also does not subsidize breeding and the implicit subsidies. Even in Germany, depending on your salary, you can still go “bare,” avoiding health insurance altogether.