Republicans Don't Lack a Plan to Replace Obamacare. They Lack a Unified Theory

The GOP never really took the time to describe the basic mechanics of how their preferred health care system might work.


There has never been a shortage of GOP substitutes for Obamacare, from think tank white papers to congressional committee frameworks to fully drafted bills. But in the seven years that congressional Republicans spent promising to repeal and replace President Obama's health care law, none ever moved beyond the development phase, because what Republicans lacked wasn't a plan. It was a theory.

After the Affordable Care Act (ACA) passed, when Republican legislators were asked what sort of health system they preferred, most would say something about lowering costs, increasing affordability, and improving access. Some might criticize Obamacare for covering too few people, as Senate Majority Leader Mitch McConnell did in January. "What you need to understand is that there are 25 million Americans who aren't covered now," he said on CBS News. "If the idea behind Obamacare was to get everyone covered, that's one of the many failures."

But improved affordability and accessibility is an outcome, not a system. Republicans almost never took the time to describe the basic mechanics of how their preferred health care system might work. As a result, when the GOP took control of both Congress and the White House this year and the time came to draw up an actual plan to repeal and replace the ACA, it struggled to get out of the gate. Proposals were repeatedly altered and delayed. After the House repeal bill was released in March, it was met with an immediate chorus of criticism—with the loudest voices coming from the right.

In his 2015 book Overcoming Obamacare, journalist Philip Klein wrote that conservatives and libertarians have generally split into three schools of thought on what should take the place of the ACA. The first group, which Klein dubbed the reform school, believed that those who opposed Obamacare should nonetheless take its existence as a given. The reform school is not so much a theory of health care policy as one of health care politics: Because Obamacare is already the law of the land, and industry players and state governments have organized themselves around it, opponents have to accept it as, at the very least, a starting point. The idea is not really to repeal Obamacare, but to improve it by pushing things in a more market-friendly direction.

That might mean incremental changes, like deregulating the law's exchanges. But in the long run, it could provide a path to reforms of the larger entitlement system. In a plan put forward by Avik Roy, the founder of the Foundation for Research on Equal Opportunity, a modified Obamacare could serve as a vehicle for the overhaul of Medicare, the nation's most expensive program, and the biggest single driver of America's long-term debt. At its most ambitious, the reform school would make a bargain—accepting some basic tenets of the ACA in exchange for sweeping entitlement changes that would transform the nation's fiscal future.

Klein's second group also believes that Obamacare needs to be the starting point even for critics. But these folks—the replace school—think the law can be fully repealed, so long as a suitable replacement is offered at the same time.

This group's main insight is that repealing Obamacare, which under Obama eventually provided coverage to more than 10 million people through the exchanges and roughly 13 million people through the law's Medicaid expansion, would result in tremendous disruption to the health insurance arrangements of millions. As policy wonks have long understood, disruption is the enemy of health policy reform.

With that in mind, the reform school argues for a system of tax credits to help individuals purchase insurance. The key to this scheme, and the most controversial part of it, is that these credits are advanceable and refundable, meaning that they're paid up front and result in a cash transfer if they exceed the amount of income tax an individual owes. The benefit is that they do more to help poorer individuals, who tend to pay less in income taxes, than deductions, which only count against taxes owed. But setting up a system along these lines would inevitably mean creating a new health care subsidy disbursed by the federal government.

Finally, there's the restart school, which seeks to blow up the system in hopes of moving it in an entirely new direction. The mechanisms favored by restart-school adherents vary. Some, like Cato Institute Health Policy Director Michael Cannon, want to create very large Health Savings Accounts that would both provide a massive tax cut to most Americans and return control of health spending dollars to individuals. (Most Americans are currently covered through insurance purchased by their employers, which gets a tax break not available to individual buyers.) Others want to extend a tax deduction to those who purchase coverage on the individual market.

Whatever the mechanism, the thread connecting this group is a disinclination to compete with Obamacare and other left-of-center plans on comprehensive coverage numbers. A freer market, the thinking goes, would bring innovation and cost savings that would make such coverage less necessary. Health care, not health insurance, should be the metric, they say.

Each of these theories offers a reasonably coherent vision of how Obamacare should be taken down and what should come next. Unfortunately, the same cannot be said for the plan put forth by House Republicans in March. The bill offered a mish-mash of conservative policy ideas that simply didn't hang together.

It accepted the central tenets of Obamacare, leaving the law's major insurance regulations in place and eliminating the individual mandate but setting a new penalty for those who go without coverage. But despite the concessions to the status quo, 14 million fewer people would have insurance after just one year, according to the Congressional Budget Office. That number would rise to 24 million over the next decade.

And despite creating a new refundable tax credit system, the House bill wouldn't provide much benefit to the poor, especially people in their 50s and early 60s. It allowed insurers to charge older people five times as much as younger people (Obamacare sets the limit at three times), while offering subsidies that wouldn't cover the increased cost.

The bill gestured at Medicaid reform, but ignored the bigger fiscal questions about the entitlements system and delayed a Medicaid overhaul until next decade, raising questions about whether the changes would ever go into place. It left Obamacare's "essential health benefits"—a list of mandates regarding what insurers must cover—in place, and did essentially nothing to unwind the tax carve-out for employer-sponsored insurance, leaving the market as regulated and distorted as before.

It was a bill, in other words, that combined the least appealing elements of all three schools of thought, with almost none of the upsides.

Defenders of the plan protest that there were procedural reasons for the bill's structure—in particular, the limits of the reconciliation process, which requires that all provisions have a non-trivial budgetary impact.

But those limitations didn't really explain the underlying logic—or give the bill a theory to hold it all together. The driving idea seemed to be that Republicans needed to be able to claim they had a proposal to repeal and replace the ACA.

Less than three weeks after it was introduced, the bill was pulled from consideration, just hours before a scheduled vote. Members of the House Freedom Caucus, a group of conservative legislators, refused to back it, even after considerable arm twisting from President Trump.

Republicans may have had a plan, but they didn't have the votes. In this case, a theory would have been better.

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39 responses to “Republicans Don't Lack a Plan to Replace Obamacare. They Lack a Unified Theory

  1. Some, like Cato Institute Health Policy Director Michael Cannon, want to create very large Health Savings Accounts that would both provide a massive tax cut to most Americans and return control of health spending dollars to individuals.

    +1 for HSA’s

    1. HSA’s are damn near useless at solving any actual problem. I put a few dozen cafeteria benefits plans in place. The sole reason employers put them in place (along with the encouragement of health plans to provide gym membership – another useless thang) is to get younger employees to cough up more than they should for insurance.

      Their only value in the broader system is helping people to think beyond the short-term stupidity of our current annual open enrollment system. But that just means we should be getting rid of the annual open enrollment system. Until we get rid of that system, it is not POSSIBLE to do preventive medicine and that is what will lower medical costs long-term.

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  2. Republicans almost never took the time to describe the basic mechanics of how their preferred health care system might work.

    Drain the swamp! Wait…

    1. You wait. Then try to shake the rust out of your brain and wake up in 2017. “Republicans” in that sentence is mostly Ryan, and entirely GOPe. “Drain the swamp” is an anti-GOPe slogan. There is nothing stupider than a failure to draw distinctions.

  3. “eliminating the individual mandate but setting a new penalty for those who go without coverage”
    That penalty is called higher premiums for pre-existing conditions!

    1. For one year, iirc. Not nearly enough to work.

  4. Suggestions to reduce healthcare and health insurance costs, which would allow easier access:

    –Use the FTC to abolish/curb Certificate of Need laws in states that prevent new hospitals/clinics from opening.

    –Use the FTC Abolish/curb restrictions on expansion and development of medical schools, which decreases the number of medical students and future doctors.

    –Automatically authorize drugs and medical devices if already authorized by any of the following:
    1. European Medicines Agency (EU)
    2. Health Products and Food Branch (Canada)
    3. Medicines and Healthcare Products Regulatory Agency (UK)
    4. Therapeutic Goods Administration (Australia)
    5. Pharmaceuticals and Medical Devices Agency (Japan)

    –Create fast-track visa program and permission to practice for doctors with active licenses in a number of developed countries (e.g. the UK, Germany, Canada, Japan, etc.).

    –Use the FTC to abolish/curb licensing laws that place unnecessary restrictions on medical practitioners (e.g. allowing nurse practitioners to legally perform more duties/activities independently without a doctor).

    –Use the FTC to abolish/curb laws that require doctor’s prescriptions for many drugs, possibly only requiring a pharmacist’s prescription, if any.

  5. Basic mechanic of preferred health care system:
    1. Health care providers are required to charge everyone the same amount for any given service. They may change that amount once a year, in a time period that precedes the insurance companies setting their rates.
    2. People choose if they want to have health insurance, and if so, what coverage.
    3. People choose who they want for their health care provider.
    4. People go to that provider.
    5. If they have chosen to carry health insurance that covers the service they received, the insurance pays, and they pay. If the insurance they chose does not cover the service received, they pay.

    1. And what happens to folks who take advantage of #2 that find themselves needing emergency care but don’t have the cash? Should EMTALA be repealed?

      1. “5. If… the insurance they chose [if any] does not cover the service received, they pay.”

        Maybe you let them go bankrupt. Or maybe you make EMTALA charges non-dischargeable.

  6. Basic mechanic for health care insurance:
    1. No employer may purchase insurance for any employee. This will allow individuals to purchase the insurance coverage they actually want, instead of selecting what the employer wanted and was willing to pay for. Employers may fund HSAs if they wish. This way men are not required to purchase OB/GYN or maternity coverage, women are not required to purchase prostate care coverage. etc.
    2. Insurance companies sell whatever policies they want, meeting the consumer demand as they see it.
    3. Individuals select the policies they wish, with the coverage they wish. They may use HSAs if they wish.
    4. When an individual has a covered event, the insurance company pays according to the policy.

    1. This is a good point. Theres no good reason im aware of for health Insurance to be part of compensation packages, its just another layer of insulation from prices.

  7. Minor details caused by the current federalization of health care and healthcare insurance:
    1. Those who cannot pay for insurance/healthcare can be subsidized by private charities and the government.
    2. During a transition time (2 or 3 years should do) the additional premiums for pre-existing conditions can be paid by the government. During this period, everyone must determine if they wish to have health insurance. After that time, insurance companies may charge additional premium for pre-existing conditions. An individual is free to not carry insurance, but at the cost of assuming the financial consequences. Since insurance no longer ties an individual to an employer, the policies may be changed, but a system similar to the one Obamacare dumped will be needed to provide for continuous coverage to avoid the additional premium for pre-existing conditions.

    1. For your plan to work, it will have to made clear in the law and regulations that providers are free to refuse any care, without criminal or liability consequences, to those who have chosen to be uninsured and can’t pay for treatment. If we’re not OK with uninsured people bleeding to death in hospital parking lots, we can’t enforce personal responsibility.

      1. And this is exactly why government will inevitably be involved in not only the funding of healthcare, but it its delivery as well.

        What politician is going to stand up and say – “My plan allows the poor and the idiots to bleed to death!”

        Sorry – that won’t sell with the average voter.

        The best hope we have of getting personal responsibility into our healthcare system is to make everyone responsible for predictable medical events and have some sort of catastrophic care system that distributes the cost of catastrophic and emergency care among everyone.

        1. The primary care practices that now charge a monthly fee for access to care rather than fee-for-service or accepting insurance are a step in that direction.

        2. > The best hope we have of getting personal responsibility into our healthcare system is to make everyone responsible for predictable medical events and have some sort of catastrophic care system that distributes the cost of catastrophic and emergency care among everyone.

          Hmm, you seem to be saying that we should either have a MANDATE to buy coverage. or that there be government-supplied catastrophic Medicaid-For-All/

    2. Addendum to 1. , or just die.

  8. You know who else had problems with Unified Theory?

  9. That’s like saying there are a hundred plans, the difficulty is in picking one

  10. Simple health plan.

    1. Have the federal government enact legislation that without a directive, your body will donated to any hospital that’ll take it, or incinerated. Funds to be provided for incineration by a nominal tax. All other taxes related to healthcare to be eliminated
    2. That’s it. Buy from whoever whatever drugs or services you need.

  11. I am increasingly convinced that the majority of these healthcare talks are missing the most important component: government price setting. Until we do this, our healthcare system is always going to be outrageously expensive, thus requiring massive subsidies for the poor, and on and on down the line.

    Seriously, no other country DOESN’T have some sort of price-setting mechanism. Even Singapore, darling of right-wing “healthcare done right” examples, aggressively controls prices. Until this is addressed, I strongly suspect any system is just going to be playing at the margins, and won’t significantly improve healthcare costs as a percent of GDP, or the continually rising amount spent on healthcare.

    1. Hmm, you sound like a Marxist!

      1. I’m definitely not a Marxist. I believe in “realism.” It’s plainly obvious from the evidence before our eyes that 1) capitalism fucking rocks, and 2) massive and intelligent intervention in to healthcare by the government is utterly necessary.

        As it stands, America has massive intervention in to healthcare, but it’s not intelligent.

    2. Government forced price-setting doesn’t work unless the whole of society is communist. Just image what kind of service you’d get from a $2 “price-set” paint job. Companies are in the business to make money and to take out the variable of motivation; you’ll loose all quality possible. Then you have to start regulating quality and soon it goes right back to where we are today – communist medical industry.

      Today’s 1/2-Communist medical market and how it works
      1) Joe lives in a 5000 sq-ft home with mortgage up to his eye-balls
      2) Joe drive a BRAND-NEW full sized gas-guzzling truck
      3) Joe cuts off his fingers and EXPECTS his tent-living neighbor to pay for it because he’s in debt – ( i.e. poor )

      How to fix that – Easily just ALLOW free-market principles and responsibility
      1) Joe considers not buying that 5000 sq-ft home because the bank may take it when his finger falls off
      2) Joe may also loose his BRAND-NEW gas-guzzling truck when his finger falls off
      3) Joe WILL be more careful about preparing for such situations OR He’ll loose his $1/2-million house and truck.

      One simple BILL – Medical Service cannot be denied to anyone BUT; collections of debt may be pursue just like any other service………….. ( PERIOD )

      1. There is no market that is comparable to healthcare, thus your entire example falls apart. The reality of healthcare is this: everyone needs it, and almost no one can afford it. That’s not the basis for a functional marketplace.

        Every other county in the world, regardless of how their system is structured overall, has some kind of price setting mechanism. We don’t, and we spend 18% GDP. That’s not a coincidence.

        1. You do realize that Medicare and Medicaid already have price-settings right? That certainly hasn’t dropped the GDP being thrown at the medical field.

          “Every other country” – Sorry, but; I’ve always taken pride in the “freedom” of our country over others and so have many other of our citizens. We don’t WANT to be like “every other country”.

          As long as people don’t care about price they will lobby for fatter regulations which will block competition and keep the industry at 18% GDP. There’s nothing hard about understanding that. If the Medical personnel are making so much money – WHY isn’t EVERYONE in the medical field? Don’t people want to be rich?

          1. Medicare and Medicaid do NOT have price setting in any meaningful sense. Part D famously prohibits the government from negotiating lower drug prices, for example.

            RE: We don’t WANT to be like “every other country”

            This would be a perfectly fine sentiment if other countries weren’t beating us in healthcare. As it stands, we pay more, generally get less, and must put up with a hopelessly convoluted system. In that context, a “we make our own way” attitude is petulant stubbornness, not virtuous independence.

            RE: WHY isn’t EVERYONE in the medical field?

            There are 16M people in the medical field. 1 in 8 workers is in medical. It is outstripped only by retail. It’s also growing extremely rapidly. So, everyone is in the medical field.

    3. Nonsense. High prices don’t make the health care system expensive. Requiring insurers to pay the high prices makes the health care system expensive.

    4. mortiscrum, you are incoherent. Gov’t price fixing doesn’t work. At least, it won’t create the outcome you want.
      PDQ rule always applies in all things. Price / delivery / quality. pick 2.
      Yeah, you can make it cheap but you can’t have it until next year or you can have it now but it will be shit.

  12. The main reason the Republicans don’t have a plan is because … ObamaRomneyHeritageCare IS their plan!

    Concerning the new “patient-centered” ideas, what the Republicans don’t quite get is that the only way to get folks to TRUST that this type of system could work is to have a fully functioning universal coverage in place; this means strengthening ORHC while giving folks VOLUNTARY choices to become astute health-care consumers – as well as put in place regulations that states that provider prices must be plainly listed, and as well get rid of this ridiculous scam of physicians not in-group being able to “provide” their services.

    Unfortunately, instead of putting into place this framework that could really help to drive down costs via the Invisible Hand, the Republicans have just cast the die for the Democrats unitary control in 2021 to implement Medicare-For-All.

  13. Why is entitlement a dirty word. Many of these “entitlements” are earned over the course of a life time of work- like social security. Others are requirements imposed by a civil society. We need educated people to staff our businesses, labs etc. So we require that k through 12 education be mandatory or we say all children are entitled to an education, funded by the public. Why is health care different? We need a healthy population. It saves money when people don’t get sick or a treated before their problems become too serious or too deadly. It is bad public policy to force people into bankruptcy because of unforeseen or exhorbitant medical bills. Not only does the public have to absorb the cost of treating these people but the cost to society in lost wages and broken families is very high. Wouldn’t iot be saner as well as economically responsible to view health care as an entitlement instead of a privilege simply because keeping people healthy is a social good to be promoted, something from which we all benefit.

    1. Ah! So the Traveler from Altruria has changed his name from Homos to Amogin–to spout the same coercive looting as in 1893! Entitlement is payment for votes by venal politicians with money robbed from fools. Plunkitt explained this with: “can I count on your vote?”

    2. Keeping people fed is a social good, so government should provide everyone’s food.

  14. Since 1928 God’s Own Republicans haven’t changed. Their own claims to only want the Political State to “patrol our shores and deliver the mail” translate into busting smugglers to preserve prohibitionism and a high tariff, and making damn good and sure nobody sends untaxed dope through the mail. Ike and Nixon were elected mainly to make America more like Occupied Germany. Ford was appointed to pardon Nixon and the two Bushes to reinstate Herbert Hoover policies–complete with Crashes and Depressions. The Dems have meanwhile emulated communist East Germany whenever possible. And it was Germany–heroin exporters to the world–that got us stuck with the Harrison Act and to whom Herb Hoover traded the Moratorium on reparations payments and favorable treatment of confiscated drug patents in exchange for their banning of hemp and feigned support for prohibitionism. This past century has been a disheartening series of socialist and prohibitionist health care and drug policies.

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