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Obamacare

The GOP's New Health Care Plan Shows That Republicans Have Become Trapped By Obamacare

New Republican replacement plan is barely a plan at all.

Peter Suderman | 6.28.2016 2:31 PM

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(Official White House Photo by Pete Souza)

House Republicans have been promising to propose an Obamacare replacement since at least 2010. Last week they finally delivered on that promise. It wasn't worth the wait.

The plan is less of a fully realized proposal and more of a quick sketch of the sort of health care policy Republicans might pursue if given the chance.

As it turns out, the health care policy that Republicans might pursue looks, well, a lot like Obamacare—except, possibly, worse.

Although the plan starts by repealing the health care law in its entirety, it ends up replacing many of its central components with similar provisions: preexisting coverage rules, subsidies for the purchase of insurance, and even an (implicit) mandate.

Cato Institute Health Policy Director Michael Cannon, writing at Forbes, identifies a number of striking similarities between the House GOP plan and Obamacare, including the use of tax credits to help subsidize insurance coverage, regulations requiring insurers to sell to all comers regardless of health status, the millennial mandate to cover dependents up to age 26, and the sort of political definition of what constitutes qualifying coverage that is inevitable with any plan that doles out subsidies to some plans but not others.

The GOP plan would also create a kind of an insurance mandate. While there's no rule requiring people to maintain coverage or pay a fine, the existence of tax credits ends up pulling everyone into the system anyway, by essentially declaring that everyone who does not maintain qualifying coverage has to pay more in taxes.

The plan also retains a modified version of an Obamacare rule known as community rating, which, in very general terms, requires insurers to judge risk based on the properties of a group rather than on an individual. Essentially, it's a form of price controls. And as Cannon argues, the price controls in the Republican plan, combined with the loosening of some other regulations, might actually make the insurance that is offered in the individual market worse than it is under Obamacare, trapping people in a cycle of ever-worsening coverage.

Granted, not all of the ideas are bad.

In particular, the expansion of Health Savings Accounts (HSAs) is a useful idea that if anything could benefit from further expansion. The proposal might help weaken the link between health insurance and employment. 

But what this plan, as with the plans released by GOP presidential candidates last summer, demonstrates most is an inability to move substantially beyond the framework established by the Affordable Care Act.

The Republican plan to repeal and replace Obamacare, then, is to repeal the law and replace it with something that isn't an exact Obamacare clone, but works from many of the same principles, modified to Republican preferences. Maybe that's not too surprising, given that Obamacare was, after all, based on a Republican idea. 

In any case, it's clear that Republicans have become trapped by Obamacare, their policy imaginations and political inclinations limited by the president's health law and the world it has created. 

Even that, however, may give it too much credit: This thin sketch of a plan lacks a number of crucial details, like the size of the credit it would offer, saying only that it would be big enough to cover the cost of a typical pre-Obamacare plan. Without that number, it is impossible to produce any serious cost or coverage estimates, which means it is impossible to even make an educated guess about what its real world effects on either individual health coverage or the federal budget would be. It is like listening to a real estate developer describe a building, but finding out that no measurements exist, and thus you cannot even see a render of what the final product might look like. 

The Republican plan to replace Obamacare is here, in other words, and it is not a plan at all.

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NEXT: 'Labor Unions Now Play a Particularly Boutique Role in the Economy'

Peter Suderman is features editor at Reason.

ObamacareHealth insurance
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