A quick health reform deal
October 31, 2013 15 Comments
So I am obsessed with looking for health reform deals, so here is a quick one that could provide Republicans with some political gains and help the ACA in policy terms which should be the biggest short, medium and long term policy goal for the Democrats which would pay political dividends as well. It could also get Republicans rolling on laying out and fixing specific problems with the ACA, saving them from having to “start over” after a repeal that is not likely to ever come…..and eventually the ACA could become the entire nation’s health reform law.
- For 2014, make some amount of the premium paid by individuals buying coverage in the exchanges who are above 400% of poverty (and thus get no tax credit) tax deductible. This will then give everyone with insurance some federal subsidy (Medicare and Medicaid directly, those with employer sponsored health insurance lots via the tax exclusion of the amount paid by an employer, those receiving exchange subsidies directly, based on their income, and then those buying who are above 400% of poverty getting some benefit from the deduction). Long run we need to reduce tax preferenced spending, so maybe the “pay for” could be bringing forward the cadillac tax or more directly capping the tax exclusion….and slowly turning down the very high tax subsidy of cadillac ESI and searching for the “goldilocks” level of subsidy at some point in the future. A slow “boil the frog a little at the time” approach is likely the only way out of what Paul Starr calls “the policy trap” of many liking their insurance and the subsidy they get, and what Ramesh Ponnuru is worrying about here.
- For 2015, replace the individual mandate with the auto-enroll provisions envisioned by Rep. Paul Ryan’s Patients’ Choice Act. Strong auto-enroll policies enacted while allowing an opt out (presumably with some consequences, correct Libertarians?) could actually pool risk better than the weak individual mandate we now have. We will also have to develop a default insurance option to make auto-enroll work.
Work with me people.
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Lets say of the 6M people >400FPL, half buy a plan with a $2500 tax credit.
Pay for = 8B/yr
Caddy tax = 149B/10yrs–back loaded and grows, but for simple math = 15B yr.
You need to raise the tax by 50%
Im working with ya.
best way would be to replace tax with direct capping of tax exclusion to make it clearer that it is employees getting the subsidy. Would be hard, but this is the one relatively little deal that I can think of that gives Rs something to crow about (we killed the ind mandate) while impoving risk pooling of the law, and actually beginning a convo on HOW MUCH subsidy should folks gets across the income spectrum
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This seems like a compromise in search of support, rather than one that actually exists. Is there any evidence that a voting constituency of Rs support the auto enroll provision, rather than just some conservative intellectuals. As we all know, the ACA’s, and every democratic hc proposal, origins lie with conservative intellectual roots only to be deserted during actual legislating. It seems that a bill that was introduced merely as a reactionary measure with very few cosponsors and no markup does not have much legislative staying power, and probably does not represent a good faith proposal. I would argue that the burden of proof is on republicans to prove that they have any good faith interest in health care reform and not just hostile opposition to the increased provision of healthcare or the presidency of obama. The actions of this congress show little appetite for reform or policy-minded legislating. As of now, we appear to have a historical outlier party that is disinterested in policy and incapable of governance. Is there any reason to try and cut a deal with such a party rather than waiting for the party to sort itself out and then workin on serious reform.the evidence suggests there is probably no deal even possible.
There is no evidence elected Republicans support anything related to health policy, with support defined as willing to vote for it. It will take actions to prove otherwise. Just pointing out a way that would actually be good/decent policy
Your point is well taken that those individual insureds over 400% of poverty should be given some kind of subsidy.
However it is not so easy to do this just through the tax code
Let me give an example.
A couple in their late 50’s earns $63,000. No kids at home. In most states they are pure middle class.
A decent family health policy on the ACA exchanges costs $14,000. No subsidy for them.
Making the $14,000 tax deductible saves them about $2500 on taxes.
That is a pretty skimpy subsidy.
A better idea would be to make the ACA subsidies less like a cliff, and more of a slippery slope. This would dent the federal budget, but as you say elsewhere, this is a group of people who are very vocal in their complaints (unlike the beaten down Medicaid group).
The entire ACA could be overthrown from their protests. Remember that the 1989 Medicare Catastrophic act was overturned essentially by the lobbying of about 1 million wealthy seniors.
These are all good points.
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