Now don’t you go saying that the Republicans just want to repeal the Affordable Care Act without having any plans for a replacement — as a matter of fact, on Monday, three GOP senators — Tom Coburn, Richard Burr, and Orrin “Giggles” Hatch — introduced an exciting plan that would not only repeal Obamacare, but also replace it with a market-based alternative that is not a huge socialist tax increase on working Americans, because it is a huge free market tax increase on working Americans. For freedom.
As Forbes columnist Matthew Herper (for whom junior high school had to be a living hell) points out, the Coburn-Burr-Hatch plan reaches the admirable goal of being “budget neutral” by doing away with the ACA’s taxes on medical devices and other corporate taxes and shifting them to individual workers by making employer-provided health benefits taxable as income.
Here’s what the Senators propose: right now, health insurance is not taxed as income. This is arguably the original sin of the U.S. healthcare system, which has insulated consumers from health costs and allowed prices to skyrocket. During World War II, wages were frozen but pensions and benefits were exempted; in 1943 the Internal Revenue Service ruled that these benefits weren’t taxable, either.
Many health economists believe this is a bad thing, because it shields people from paying their own premiums, and Coburn, Burr, and Hatch deserve credit for tackling this head on. But that doesn’t make this any more politically workable – or appealing to those of us who get health insurance through our employers.
It wouldn’t make the entire amount of your health benefits subject to taxation — just 35% of it. Health policy expert and former Obama advisor Ezekiel Emanuel estimates that for an average family of four with employer-provided health insurance, that would come to an annual tax increase of roughly $1,300 a year. But it’s market-based!
And while the plan would get rid of state healthcare exchanges (so that all the money spent on setting them up could now be a total loss), it would keep a lot of parts of the ACA, only make them a lot meaner and potentially more profitable for insurers:
it keeps the basic structure of trying to keep people in the insurance system (in this case by making pre-existing conditions something that insurers can’t use against you until you fail to sign up for coverage – and then you get slammed) and of paying subsidies to help poor people get insurance. Allowing less comprehensive benefits and allowing insurers to charge five times as much for their sickest and oldest customers as for their youngest and healthiest, compared to three times under Obamacare, could lower the cost of insurance for young people and get more of them in the system.
So hey, that sounds “fair!” And of course, as Emanuel notes there’d still be plenty of people with no coverage at all, but they can always go to the emergency room, and no one will ever have to pay for that. And the Medicaid expansion, already limited to states that allowed it to go forward, would be partially rolled back. No more coverage for preventive care, a change that would cut up-front costs but lead to more expensive illnesses down the line. People without jobs or whose employers don’t provide insurance would get a tax credit to buy insurance, but much less than Obamacare, and the tax subsidy only increases with age, not financial need. And the plan would have all sorts of beautiful loopholes that would allow insurance companies to play all sorts of fun games with pre-existing conditions again:
So if you lose your job and therefore your employer-sponsored health insurance, you would not be excluded for a pre-existing condition if you immediately bought your own insurance. But if there were a gap in coverage, insurance companies could deny you coverage.
What if the paperwork you filled out is “lost”? The history of insurance companies’ tricks for denying coverage to high-cost patients — like revoking the insurance of a cancer patient who failed to disclose that she had back problems — does not inspire confidence.
On the other hand, the alternative plan would mean no more free slut pills, so huge tax increases on the middle class seem like a small price to pay.
Follow Doktor Zoom on Twitter. He’s working on getting coffee covered as a preventative treatment.