In what can only be described as a ill-fated attempt to focus this summer's primary campaign season on something other than Donald Trump's noxious opinions about Hispanics and women, both Florida Sen. Marco Rubio and Wisconsin Gov. Scott Walker have unveiled their plans for repealing and replacing Obamacare. Rubio laid out his thoughts in a Politico op-ed Monday night. Walker released a brief policy paper Tuesday, which he elaborated on during a speech delivered, as a few sharp observers noted on Twitter, before the symbolically inconvenient backdrop of a screw machine factory. The two proposals have much in common, and together should give the public a pretty good notion of what to expect from the GOP field on health care.
What's the major idea? After scrapping the Affordable Care Act, both Rubio and Walker would essentially give Americans a little bit of money so that they can possibly afford to buy cheap insurance. And by cheap insurance, I mean really crappy insurance. This is the approach that has been popular among conservative policy thinkers for a while, and is basically the inverse of Obamacare, which gives Americans subsidies to buy higher quality coverage. The GOP strategy consists largely of three main steps:
- Allow Americans to buy coverage across state lines.
- Give people who don't get insurance through their employer a tax credit so that they can purchase a private plan.
- Create special "high-risk pools" for the sick who can't get coverage otherwise.
Now here's how that all works together.
Today, even though Obamacare put in place a new set of federal standards, health insurers are still basically regulated by the states, which have different laws about consumer protection and what conditions companies are required to cover. The result is that Americans have to buy health plans in the state where they live. Republicans, like Rubio and Walker, would like to change that system by allowing consumers to shop around the country, which they argue would create competition and drive down prices.
In theory, there's nothing wrong with this idea. But it only works if the federal government sets acceptable guidelines about what sorts of plans insurers are allowed to sell. Otherwise, it would almost certainly spur a harmful race to the bottom, in which companies would flock to states with the loosest regulations, and offer cut-rate insurance offering little protection. The likely result, as the Congressional Budget Office argued years ago, is that young, healthy customers would opt for the least expensive options available, while older, sicker Americans would end up paying more for coverage. Meanwhile, many of those invincible-feeling twentysomethings would find their health insurance wasn't worth much once they actually needed it. And the chances are that a Walker or Rubio administration wouldn't do much to stop that from happening.
Setting those niggling little problems aside, letting Americans buy health insurance in a lightly regulated national market would probably lead companies to offer some affordable catastrophic coverage. That's where we get to Step 2. Both Rubio and Walker would offer Americans without job-based insurance a tax credit to buy on the individual market, which would likely be enough to pay for a low-end plan.
Walker notes that there are some people who, under his system, might actually get a bigger tax credit than they would now under Obamacare, which subsidizes coverage purchased on its health care exchanges. But if the governor really wants to offer even remotely generous tax credits, it's probably going to be expensive. And that's a bit of a problem, since he's planning to 86 all of the taxes that currently pay for the Affordable Care Act.
Of course, tax credits won't do much good for people if they can't get coverage because they have cancer or a disability. Obamacare, of course, outright bans insurers from discriminating against people with pre-existing conditions, then makes it up to the companies by requiring every American to get insured, which gives them more healthy (and profitable) customers. Rubio, Walker, and other Republicans would eliminate those rules. Instead, they would likely try to help the sick get coverage through other means, likely by subsidizing state-run "high-risk pools." (Both Rubio and Walker suggest this is only one option, but it's really the conservative policy of choice.) The idea is that companies can sell special insurance plans designed for the infirm, which the government can help pay for.
This is an idea that has been tried many times before, most recently as a stopgap measure under Obamacare that was meant to tide people over until the law went into full effect. The lessons have been pretty clear: Most of the time, the plans offered in high-risk pools remain extremely expensive and tend not to enroll many individuals. You could potentially fix those problems by injecting many billions of dollars into them. But last I checked, Republicans aren't typically fans of government spending, and the chances that they would appropriately fund the pools seem rather small.
Both Rubio and Walker offer up additional ideas, some of which would be, well, controversial. For instance, Rubio would seemingly fund his plan partly by cutting back on the tax break for employer-provided health insurance, which, as Vox's Sarah Kliff writes, would have the obvious effect of making most Americans' insurance more expensive (it's also probably a nonstarter in Congress). Both he and Walker, would also give more control over Medicaid to the states, which is typically code for cutting back on benefits to the poor. Rubio also explicitly says he would eventually turn Medicare into a program that helps seniors buy private insurance. Walker, perhaps wisely, doesn't really touch the subject.
But the big takeaway is that the establishment GOP contenders are edging toward a consensus alternative to Obamacare, a three-part plan that would potentially make insurance cheaper for the young, more expensive for the old and sick, and depending on how tight-fisted Congress felt, unaffordable for the ill. Thankfully for them, nobody should notice for a while. Everybody is still paying attention to Trump, after all.