The Affordable Care Act and the GOP: Reform, Replace, Restart, or Innovate?

Gov. Scott Walker's approach is merely 'Obamacare Lite.'


Scott Walker
Michael Vadon

Wisconsin Gov. Scott Walker recently released his replacement plan for the Affordable Care Act and jump-started the presidential debate about how to wind down Obamacare.

In his book "Overcoming Obamacare," The Washington Examiner's Philip Klein catalogs the three main schools of thought regarding post-ACA policy: reform, replace, and restart. The restart school needs a little explaining. It would repeal the ACA and implement reforms as lawmakers would have at 2009 spending levels, had they a chance.

The main difference among the three approaches is how much their proponents favor the government's role in providing health insurance. The plans formulated by the restart school are often the ideologically purest of them all. Its biggest current advocate in the presidential race is Louisiana Gov. Bobby Jindal. Walker, on the other hand, belongs to the replace school.

Unfortunately, its replacement option remains very tolerant of government intervention. For instance, it would offer large health care tax credits for those who aren't covered through their employers. The tax credit would be refundable so that low-income individuals could receive cash to buy private insurance. The hope is that once freed from the many ACA rules of the insurance exchanges, people would see their coverage costs go down and actually be able to buy more affordable insurance.

It would pay for the subsidies by capping the employer health care tax exclusion and reforming Medicaid. But it still would add to the deficit. According to Manhattan Institute Senior Fellow Avik Roy, an adviser to former Texas Gov. Rick Perry's presidential campaign, the plan wouldn't reform Medicare; hence, an ACA repeal would increase Medicare spending by more than $800 billion over 10 years.

Walker argues that the use of tax credits would allow him to reach more low-income consumers and minimize the disruptions to the 12 million people who bought insurance through government exchanges. It also would make the changes more politically feasible.

But as a result, it is also best-described as "Obamacare Lite," says the Cato Institute's Michael Cannon. When I asked him about the plan, he replied: "Supporters cry slander when you say health insurance tax credits are Obamacare Lite. But tax credits function exactly like an individual mandate. Either way, the IRS takes more of your money if you choose not to buy a government-designed health plan." He continued, "When Walker's plan says that a family of four can get a tax credit of up to $7,800, it means that's the amount of the effective penalty that families will have to pay if they don't buy a government-designed health plan."

Under this plan, he added, "Washington will retain as much control over your health plan as it does under Obamacare's individual mandate." In this case, "Congress would define what level of coverage lets you avoid a tax credit's implicit penalty. Special interests would have the same incentive and ability to force you to buy coverage you don't want."

Klein told me: "Walker's plan restricts the tax credits to those who aren't offered insurance through their employers and thus limits choice. I understand he did this out of fear of disrupting the employer-based insurance system, but we aren't ever going to get to a really free market system if consumers don't have control over health care dollars."

This plan also shows that Republicans still don't understand that health care coverage is different from health care. If they did, their goal would be to produce better health care (not health insurance) for more people at a lower cost, year after year. This requires freeing all health care suppliers from regulations at the state and federal levels that currently prevent the kinds of revolutionary innovation in the health care industry that we've seen in other fields, such as information technology. It requires allowing consumers to choose treatments, even high-risk ones.

Bringing revolutionary innovation and consumer choice to health care would break the health care cost curve to bits—making the need for health insurance much less important or moot in many cases. The Walker plan wouldn't do that.


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  2. How about treating it like car and home insurance.It would pay for large unexpected costs and sell insurance across state lines. Also,rid the tax code of the exeption on employer paid plans.It’s income folks.

    1. Obviously, the best plan is to not only repeal the ACA, but also to eliminate other goverment intrusions into healthcare (eliminate the employer-provided insurance tax benefit, allow for insurance to be sold across state lines, eliminate certificates of need, loosen licensing restrictions, etc.).

      Since there’s no political will to do that, a better reform would be something along the lines of what you suggest, and which is being used in Singapore. The goverment could mandate or provide high deductible health insurance that provides no coverage for anything until a deductible is met (say, $5,000). Allow (Singapore requires) people to set aside tax-free money to pay for everyday medical expenses (or supplemental insurance if they choose), with the high deductible plan as the back stop for high medical bills in a given year.

  3. government run and doomed to fail

  4. Walker doesn’t get it. Next.

  5. “For instance, it would offer large health care tax credits for those who aren’t covered through their employers.”

    No. Just… no.

    We’re trying to get a flat tax implemented and throw out the million-page monstrosity that is the current tax code. Let’s not add even MORE pages to it.

    1. But if we add more pages, we need to add another cadre of administrators to oversee these changes.

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  6. So, I’ve been saying that I thought Walker was going to get the nomination, and that I could vote for him to prevent the ascension of the Hildabeast.
    But, he sure blew it with this one.

  7. You know who else didn’t have health insurance?

  8. The phrase of 2016 is going to be “Risk Corridors.” If you don’t know what it is, look it up. In simple terms, it’s subsidies on the back-end (i.e. Insurance Companies). Your premiums haven’t gone up as much as they should have because the insurance companies are billing the government for lost profits. It wasn’t too much last year, but next year it’s going to be insanely high. It’s going to be a central part of the presidential campaigns.

    Nobody wants to fix it because (a) for Republicans it would make premiums jump by 20%, essentially making the Obamacare fix cost Americans more and (b) for Democrats the model at best allows the government to influence health insurer policy and at worst breaks the insurance companies in a few years and ushers in single payer.

  9. Philip Klein catalogs the three main schools of thought regarding post-ACA policy: reform, replace, and restart.

    Really? Only those 3? Talk about a false trichotomy…

    How about “repeal all Fed laws concerning health care”? Also, you miss the government worshippers’ school of thought, “make it single payer”.

    This isn’t even close to right.

  10. The missing word is “repeal”

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  14. End Federal government involvement in individual health care completely, do not replace the UCA with any other similar form of Federal government involvement in individual health care.
    Our Federal government should once again become disassociated directly with the individuals who populate the 50 States which it was created to protect, the States that is and NOT the people individually. Our elected politicians at the Federal level of government in our Constitutional Republic only have a duty to create and enforce laws with the consent of both the people and the States, with no regard to equality in distribution of production. Laws should always be clear and concise in their wordings, leaving little room for need to be interpreted in any way other than was the law broken. Our laws should apply to all equally, regardless of race, religion, lack of religion, age, sex, wealth, or political office.
    Government of the people should begin, meaning its’ source, with the people who elect those who are then given the powers to carry out the will of the people and NOT their own or their parties agenda.

  15. Repeal. Period.

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