Republican lawmakers crafting alternatives to Obamacare face a fundamental decision: whether to focus on expanding coverage or containing costs. Their choice may be driven, at least in part, by budget scorekeepers.
The Congressional Budget Office released a report in December 2008 on key issues in analyzing major health-care proposals. Included was a chart projecting individuals’ willingness to enroll in health insurance at various levels of subsidy (in technical terms, an elasticity curve). That curve suggested that insurance enrollment would remain below 40% until subsidies reached 70% of cost and that even if costs were 100% subsidized, about a fifth of individuals would decline to enroll. (And that level of subsidy is probably much greater than many Republicans would be willing to offer.)
This scenario is what prompted President Barack Obama to accept an individual mandate after he had campaigned against it; Nancy-Ann DeParle, one of his advisers overseeing health-care efforts, wrote in April 2009 that “the Congressional Budget Office (CBO) will likely take the position that without an individual responsibility requirement, half of the uninsured will be left uncovered.”
Having fought a mandate to purchase health insurance on both policy and constitutional grounds, Republicans are unlikely to include one in their alternative. This means that CBO is likely to analyze, or score, such a proposal as covering fewer individuals than Obamacare. While the GOP plan taking shape may not contain the legislative detail necessary to receive a CBO analysis, any Republican alternative is likely to be criticized by Obamacare supporters for not covering as many Americans.
Republicans could, however, embrace such an outcome as a feature rather than a flaw to their proposal. CBO concluded last September that eliminating the mandate would dramatically reduce coverage levels; this could be cited as grounds to argue that most of Obamacare’s coverage gains have come due to government coercion.
Some conservatives may argue that lowering costs, not increasing health coverage, is the proper metric by which to gauge health-care reforms. The plan I worked on for America Next, a conservative think tank, took this approach, focusing on reducing costs rather than on implementing a major coverage expansion.
Other details may spark controversy, but lowering costs vs. increasing coverage is a fundamental distinction likely to define any alternative to Obamacare. The option Republicans choose and the way they frame the issue will go a long way toward shaping the policy and political battles to come.
This post was originally published at the Wall Street Journal Think Tank blog.