Donald Trump

TrumpCare Will Be Better Than ObamaCare

But can it get past the infighting?


Trump may be a disaster on trade, immigration, foreign policy, free speech, reproductive rights, civil liberties and numerous other issues. But there are some

Health Care Mess
DES Daughter via / CC BY-NC-SA

areas where he might actually be an improvement over the status quo. One of them is health care — and Rep. Tom Price, his pick to head the Department of Health and Human Services, is a perfect indication of that, I note in my column at The Week.

As Peter Suderman has already pointed out, he is the only Republican who has worked out a detailed replacement plan for Obamacare and translated it into an actual bill called the Empowering Patients First Act. In broad-brush strokes, the bill will scrap the individual mandate and insurance subsidies to low income folks who don't qualify for Medicaid. And it'll replace them with universal tax credits for everyone not covered by their employers.

You can get the low-down on the plan in my column here.

It's a good plan, in my opinion, but it'll face a very rough road ahead.

Health care policy in America is enormously complex not because health care itself is inherently any more complex than other goods and services that markets do a fine job of providing. It is because after World War II America rigged the tax code to create a horrible, unwieldy, inefficient, and discriminatory system that is not easy to straighten out. Indeed, trying to work out something semi-rational by injecting the right incentives is awfully hard. Literally every reform produces winners and losers and involves trade offs that mobilize massive political opposition.

Hence it is inevitable that Price's plan would be attacked by liberals. Their big objection among many is that the plan's health care credits won't be as generous as the subsidies under ObamaCare. (That they will be universal doesn't somehow earn it too many brownie points.) And it deregulates the insurance industry too much, leaving patients, especially with pre-existing conditions, to its tender mercies.

But more surprising (though perhaps on reflection equally inevitable) is that the plan is also being attacked from the right. The Cato Institute's Michael Cannon, in fact, thinks it is not all that different from Obamacare. He believes that there is no meaningful difference between subsidies and refundable tax credits.

Furthermore, notes Cannon, the Price plan abolishes the individual mandate in name only. "If the penalty for not buying health insurance is that you lose a $2,000 tax credit, then that's not going to feel much different than paying a $2,000 tax penalty under Obamacare," he insists.

I actually do think there is a big moral difference between confiscating someone's money to make them do your bidding versus giving them money to make them do your bidding. (The real moral issue in the latter course is where that money is coming from? The government gets it from robbing Paul to pay Peter. But if the government is going to be robbing Paul anyway, then it's better that it does not rob Peter even more.)

Cannon favors replacing the current system with Health Care Savings accounts, which has a place in the Price plan but not a sufficiently big one, in his opinion.

Here's how Cannon sees it, as described in the New Jersey Star-Ledger:

Say your current employer pays $13,000 a year for your insurance. Now that $13,000 would go into a tax-free account you control. You could use perhaps $5,000 to buy a bare-bones catastrophic coverage policy. Then you can use the rest to either pay medical bills or to save for future expenses.

Imagine HSA's were in effect from the beginning for the 78 million baby boomers born between 1946 and 1964. As they now move into retirement, many would have tens of thousands set aside for health-care needs.

In other words, scrap the employer-based health care system and give HSAs to everyone. This would be awesome but also politically exceedingly difficult not only because liberals will throw a massive hissy fit but also because of the yuuuuge disruptions to people's current health care coverage in the interim. Replacing public schools (another disastrous government monopoly) with some limited educational vouchers is difficult. This will be a gazillion times more so.

Be that as it may, if you think the political conversation got heated over ObamaCare, wait for the fireworks on TrumpCare to begin. ObamaCare at least had the effect of uniting all its center-right opponents. TrumpCare will splinter them all with each jockeying to get its preferred version enacted.

How it'll all shake out is anybody's guess. But it'll sure be interesting.