How a Meghan Trainor Song Explains the Obamacare Debate

Meghan Trainor may not be known as a policy wonk, but her lyrics could prove surprisingly useful for health care analysts. In constructing an Obamacare alternative, the debate really is all about that base—or, to be more specific, multiple baselines.

Despite the lyrics to Trainor’s famous hit, the intersection of those baselines—the coverage and fiscal baselines, along with the beliefs of the Republican Party base—has caused “treble” in replacing the health law.

Health Insurance Versus Health Care Prices

Of course, some of those Americans—such as yours truly—had lost their prior coverage and were forced to buy exchange policies, or obtained coverage through Obamacare’s mandate for coverage of young adults under age 26, a provision ancillary to the law’s main entitlements. Moreover, other studies suggest the 20 million number is both inflated and driven largely by Obamacare’s massive expansion of Medicaid, not individuals purchasing policies on state insurance exchanges.

The alternative to Obamacare released by America Next nearly three years ago, which I helped draft, decided to focus on what bothers Americans most about the health care system: rising costs. Any Republican alternative to Obamacare that excludes an individual mandate or employer mandate likely will not cover as many individuals as Obamacare, perhaps by a good number. That’s one reason the America Next plan centered on controlling health costs, not implementing a coverage expansion designed to compete with Obamacare.

Although conservatives would historically focus on how their policies will lower health costs, right now many Republicans appear fixated on chasing coverage numbers. House Speaker Paul Ryan and Health and Human Services Secretary Tom Price both support refundable, advanceable tax credits, a policy Ryan has supported for many years. While incorporating a refundable tax credit into an Obamacare alternative will result in more Americans with health coverage—mitigating the first baseline issue—it could have other ramifications.

The Tax and Spend Baseline

The second baseline to consider when talking about Obamacare alternatives is the tax and spending baseline. If a replacement plan pre-supposes repeal of the law, should an alternative be viewed as raising or lowering taxes and spending relative to what existed with the law, or relative to what existed prior to the law?

For instance, the Congressional Budget Office estimated in 2015 that Obamacare will raise nearly $1.2 trillion in taxes over a decade. If an alternative to Obamacare would change that $1.2 trillion number to $800 billion, should that be viewed as a $400 billion tax cut relative to Obamacare itself, or a $800 billion tax increase, because Obamacare should be assumed as fully repealed?

Then There’s the Republican Base

On this front, the third base involved in this discussion, the Republican political base, has made its voice clear. Asked in a March 2014 poll conducted by America Next whether “any replacement of Obamacare must repeal all of the Obamacare taxes and not just replace them with other taxes,” 55 percent of the general public agreed. More concerning for Republican members of Congress, self-identified Republicans and conservatives agreed by much larger margins, approaching three to one. They would view any attempt to leave some of the law’s taxes or spending intact as inconsistent with pledges to repeal the law entirely.

Therein lies Republicans’ dilemma. Some Republicans believe that any credible Obamacare alternative must offer some insurance subsidy to those newly covered by the law. Several Republican alternatives already released would re-direct the funds raised by the law—whether through taxes, spending, or both—to finance new subsidy options.

However, based on the polling available, Republican voters disagree with this strategy. With Obamacare little discussed during the presidential campaign, and President Trump sending decidedly un-conservative signals about his policy priorities, Tea Party supporters may be more than a little surprised if an alternative to the law ends up retaining chunks of its spending and taxes.

This interplay among the base of new insureds, the spending and tax baselines, and the beliefs of the conservative base will define the House Republican alternative to Obamacare, and the legislative debate that continues to unfold. Meghan Trainor may never serve as a Washington policy analyst, but her mantra that it’s all about that base will ring true in the debate surrounding Obamacare.

This post was originally published at The Federalist.

The Good, The Bad, and The Ugly of House Republicans’ Obamacare Replacement

On Thursday, prior to lawmakers returning home for the President’s Day recess, House leadership gave them a brief outline of policies likely to be included in “repeal-and-replace” legislation introduced next month. While this “full replace” strategy likely will encounter additional obstacles and delays, as I outlined last week, it’s worth analyzing the specific policies being proposed at this point, to see how they shape up.

The Good

State Innovation Grants: While sounding new to some, this concept was first introduced in 2009 in the House Republican alternative to Obamacare, and later reprised in an Obamacare alternative introduced by America Next and then-Gov. Bobby Jindal (R-LA) that I helped draft. The program provides federal incentives for states to reform their insurance markets in ways that will lower premiums, expand access, and ensure coverage for individuals with pre-existing conditions (i.e., high-risk pools).

Health Savings Accounts (HSAs): In recent years, health savings accounts have become a popular and effective way to reduce health care costs. In addition to making other minor reforms, the Republican plan would roughly double HSA contribution limits. This change would allow individuals—particularly those just establishing HSAs—to save more for medical expenses, while not sparking the over-consumption that an unlimited HSA might incentivize.

Medicaid: With respect to Obamacare’s expansion of Medicaid to the able-bodied, the House document says expansion states “could continue to receive enhanced federal payments for currently enrolled beneficiaries for a limited period of time” (emphasis mine). This language would effectively adopt my earlier proposal of freezing enrollment in the Medicaid expansion—perhaps the most effective way to unwind the Obamacare entitlement. Unfortunately, other changes (described below) might have the opposite effect.

The Bad (or Questionable)

More Obamacare? In discussing the transition period between Obamacare and the new regime they seek to establish, the House document states “the Obamacare subsidies are adjusted slightly [sic] to provide additional assistance for younger Americans and reduce the over-subsidization older Americans are receiving.”

Regardless, it seems questionable whether the answer to Obamacare’s problems lies in either more spending or another federal regulation that would only slightly ease the current micromanagement of health insurers. The focus should remain on repealing Obamacare, not fixing Obamacare.

Medicaid: At minimum, the House paper leaves more questions than it answers here, providing few specifics on the formula for a reformed Medicaid program (either block grants or per capita caps) in the future. In last year’s Better Way plan, House leadership proposed creating a “base year” for a reformed program of 2016, but that specific policy point did not appear in last week’s document.

Since release of the Better Way plan last year, new data from actuarial reports on Medicaid have shown how states that expanded Medicaid have “gamed the system” to increase their federal funding. Specifically, participants in the Medicaid expansion have averaged 14 percent higher costs than non-expansion enrollees—exactly the opposite of the actuary’s projections prior to the law’s implementation. That’s because states have used the prospect of the up to 100 percent federal match for expansion populations—so-called “free money” from Washington—to pay higher physician reimbursements.

Health Savings Accounts: While increasing contribution limits will increase HSA take-up, one other change should take precedence: Allowing HSA funds to be used to pay for insurance premiums, which is currently prohibited in most cases (except for COBRA continuation coverage, during periods of unemployment, and other limited circumstances). Allowing account funds to pay for premiums would represent a quantum leap forward in consumer-driven health care, by creating a defined-contribution model: Small businesses that cannot afford to purchase coverage for their workers can make predictable HSA contributions, which employees can then use to pay for health expenses, or to fund their own health insurance.

It is possible that the budgetary cost of ending the restrictions on premium payments prompted leadership staff to work instead on increasing the contribution limits. But the former should come before the latter, for multiple reasons: Allowing people to use account funds to pay premiums will create greater political movement to increase the contribution limits, while increasing the contribution limits now will make ending the premium restrictions more costly later. Both are positive reforms, but for multiple strategic reasons, ending the premium payment restrictions should take precedence over increasing the contribution limits.

The Ugly

New Entitlement (Funded by New Taxes?): The linchpin of the House plan lies in its system of advanceable, refundable tax credits—a new program of spending that would see the federal government writing “refund” checks to individuals with no income tax liability. However, the proposal likely will not receive a favorable score from the Congressional Budget Office (CBO) about the number of individuals covered by health insurance, at least compared to Obamacare.

Most economists agree that the tax treatment of employer-provided health insurance encourages over-consumption of health insurance and health care. However, there are better ways to reform the tax treatment of health coverage—and provide parity between employer-sponsored and individually purchased insurance—without raising taxes overall. The American people do not support repealing Obamacare’s revenue increases only to replace them with other tax hikes.

Therein lies the great disappointment of the House proposal. While in 2008 Barack Obama campaigned for his plan by saying it would reduce health-care costs, he governed with a singular focus on increasing the number of individuals with health insurance, and in so doing raised costs and premiums for millions of Americans. Going down the same failed Obamacare approach of more taxes and more spending will not lower health costs. That, and not repealing and replacing Obamacare’s taxes and spending, should be House Republicans’ ultimate objective.

This post was originally published at The Federalist.

On Health Care, It’s the Costs, Stupid

At his first post-election press conference Monday, President Obama attempted to sound gracious on the topic of repealing his signature health law, while simultaneously laying down a clear policy gauntlet: the number of Americans with insurance coverage under a Republican replacement.

If they can come up with something better that actually works, a year or two after they’ve replaced [Obamacare] with their own plan, and 25 million people have health insurance and it’s cheaper and better and running smoothly, I’ll be the first one to say that’s great. Congratulations.

In other words, as I noted last month, the president will happily support others’ legislation—so long as it accomplishes exactly what he wants. Ironically enough, when campaigning for the presidency eight years ago, Barack Obama campaigned on one number, but one that had nothing to do with the number of Americans with health coverage. It was $2,500—the premium reduction he promised to the average family.

Obamaspeak: ‘Lower Premiums’ Means Massive Increases

President Obama’s 2016 focus on how many people have health insurance coverage stands in stark contrast to candidate Obama, circa 2008. In the Democratic primaries against Hillary Clinton, he famously opposed an individual mandate to purchase health insurance, because “the reason people don’t have health insurance isn’t because they don’t want it; it’s because they can’t afford it.”

While then-senator Obama did not promise to achieve a certain level of health insurance coverage, he did make a very specific promise to lower premiums. As the video shows, Obama promised—over and over and over again—that his health-care plan would lower premiums by an average of $2,500 per family:

Note also that Obama promised to “lower” and “cut” premiums. That means he didn’t promise that premiums would rise by slightly less than predicted—he pledged to reduce them in absolute terms.

On any count, President Obama’s pledge lies in tatters. Since he signed Obamacare in 2010, the average employer-sponsored health plan has risen by more than $3,300 per family—from $13,770 in 2010 to $18,142 this year. Obamacare’s massive benefit mandates raised the average premium for individually purchased coverage by about 40 percent overnight, as the main provisions of the law took effect in 2014. Premiums are also set to spike on Obamacare exchanges again, with an average of another 25 percent rise for the plan year beginning January 1.

Cost Is Voters’ Top Concern

In reality, Obamacare stands as living proof that affordability matters most for health care and health insurance. While the Medicaid rolls have exploded far beyond most states’ original estimates—perhaps because the program charges no premiums to most beneficiaries—enrollment in exchange plans remains far below projections. Obamacare’s benefit mandates have so raised the cost of coverage that everyone but individuals qualifying for the richest subsidies has stayed away from the exchanges in droves.

Polling data also speaks to voters’ concern about reducing health costs. A survey conducted for America Next in February 2014 (while I served as America Next’s policy director) reveals that voters judge costs as a larger concern than universal coverage by a more than two-to one margin. In addition, by 13 percentage points voters prefer a system that lowers costs but does not guarantee coverage over a system that guarantees health insurance but increases costs:

jacobs1 jacobs2

The Media Is Out of Touch with Americans

In covering a post-Obamacare universe, most media stories in the past week have focused solely on the number of individuals with health insurance. That’s one key metric, but so are whether health insurance results in access to actual health care, whether coverage improves health outcomes, and the extent to which individuals value health insurance over other goods.

Voters care most about reducing the underlying cost of health care. Only lowering costs, not creating new ways for the federal government to subsidize them, will make health care fiscally sustainable in the long term, while increasing the number of Americans with health coverage. That’s the prime metric for judging Obamacare, a metric by which, according to its eponymous creator, it has fallen short, and the metric for judging Republican proposals to replace it.

This post was originally published at The Federalist.

What If GOP Alternatives to Obamacare Cover Fewer People — And That’s Not a Flaw?

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.

Gov. Jindal Op-Ed: An Obamacare Debate Worth Having

Repeal is not enough.

Five years later, that much should be clear. The law’s ill effects — higher premiums, cancelled health plans, bureaucratic ensnarements for doctor and patient alike — have all been well documented. This spring, the American people also got to know for the first time how Obamacare has complicated the tax code — raising taxes for many, and causing confusion and headaches for everyone.

But it’s long past time for the American people to get to know what conservatives would do in Obamacare’s stead. Our healthcare system did face a major threat before President Obama took office — rising costs that threaten to overwhelm middle-class families, and the federal budget as well. But while candidate Obama promised in 2008 to tackle costs, and lower premiums by $2,500 for the typical family, President Obama instead focused on expanding government-run health coverage, and missing the mark on his premium promise by over $1 trillion.

So yes, by all means, let’s ask the question: “Obamacare — when have you stood up and fought against it?” But anyone who wants to ask that question should have a detailed answer to this one: “Obamacare — what would you do instead?” Because it’s not particularly courageous for conservatives simply to oppose a law that remains deeply unpopular with voters. We must tell people what we are for, and let the American people know exactly what we will do, and how we will do it.

That’s why I put forward my own plan to replace Obamacare last year. It’s a plan that focuses like a laser beam on slowing the growth of healthcare costs. It offers 16 specific, proven methods that can work to curb health spending — from Health Savings Accounts, to wellness incentives, to lawsuit reforms that can reduce defensive medicine practices, to more insurance options that can spur competition and bring down prices. Just as important, the plan repeals all of Obamacare’s trillion dollars in tax increases and doesn’t replace them with a single penny of revenue hikes.

Thankfully, more Republicans are finally starting to put out specific proposals about how to replace Obamacare. I’m glad — that’s long since overdue. I think this issue is so important to conservatives, to our party, and to the future of our country that I want to lay down a very clear marker. I’m willing to debate anyone with a serious healthcare plan who wants to compare their Obamacare replacement plans with mine.

Obamacare is so harmful to our country — our health system, our economy and jobs, and our freedom — that we simply must repeal it, and put in place good reforms that will undo the damage Obamacare has caused.

It’s become fashionable in Republican circles in Washington to say that the hour is past, and that it is now too late to repeal all of Obamacare, and to say that we will just have to try to change it best we can. That’s nonsense.

After Hillary Clinton’s health plan went down to defeat in 1994, the Left never stopped their fight. I’ll bet Mrs. Clinton even sent a few emails out about it.

We as conservatives must do the same — we must fight until we win, and put forward a good conservative replacement for Obamacare now and challenge the President to do the right thing.

As Sen. Mike Lee recently said in Iowa: “If a presidential candidate tells us that he wants to repeal Obamacare but doesn’t have a healthcare reform proposal of his own, then maybe we should keep looking for another candidate.”

Sen. Lee is exactly right. We have to fight for what we promised the American people. And putting out clear, specific plans to replace Obamacare should comprise a major element of that effort — because repeal is not enough.

This post was originally published at the Washington Examiner.

The Tax and Spending Implications of King v. Burwell

A PDF of this memo is available through America Next.

Many analysts have talked the potential implications of the upcoming Supreme Court case of King v. Burwell, which debates the legality of Obamacare insurance subsidies offered in the 37 states that have not established state-run insurance Exchanges.1 However, few have noticed one key implication: A Court ruling striking down the subsidies in those 37 states would result in both a net tax cut and a decrease in federal spending and deficits. Conversely, subsequent actions, whether by Congress or by states, to re-establish the flow of premium subsidies will raise taxes, raise spending, and increase the deficit.

Tax Implications

A Court ruling striking down the subsidies in the 37 states that have chosen not to establish state-run Exchanges would have several follow-on effects for other provisions of the law. Recently updated Congressional Budget Office (CBO) baseline estimates2 illustrate the magnitude of these implications if applied nationwide to all 50 states:

  1. Most obviously, the premium subsidies would disappear in the states that have not established their own Exchanges. While Obamacare calls these subsidies premium tax credits, most of the credits are paid on a refundable basis—that is, government subsidies to individuals and families with no income tax liability. CBO and other budget scorekeepers consider such refundable credits government outlays, and not tax cuts/revenue reductions. Eliminating the subsidies nationwide would result in a $775 billion reduction in outlays—the refundable/spending portion of the credits—over ten years, while increasing revenues—i.e., raising taxes for recipients who had actual income tax liability prior to receiving their subsidies—by $134 billion in the same period3.
  2. Because Obamacare’s employer mandate penalties only apply when employees have received premium subsidies, the employer mandate would not apply in states that have not created Exchanges, and whose citizens are therefore ineligible for subsidies.4 Nationally, eliminating the employer mandate would result in a $164 billion tax cut over ten years.5
  3. The individual mandate would be significantly weakened in states without state Exchanges. The law provides an exemption for all those for whom insurance premiums exceed 8.05 percent of income, after the application of subsidies.6 If subsidies become unavailable in the 37 states that have not established their own Exchanges, virtually all households receiving subsidies— those with incomes under 400 percent of the federal poverty level (FPL)—would become exempt from the mandate.7 In June 2014, CBO estimated that households with incomes under 400 percent FPL will pay 39% of the total mandate penalties to be collected in 2016.8 Extrapolating this 39% number to the ten-year estimated revenue raised by the mandate—$47 billion, according to CBO’s recent baseline—yields a total tax cut of $18.3 billion from the weakening of the mandate penalties.9

Thus, if subsidies were eliminated in every state, net tax liabilities would fall by approximately $48.3 billion over ten years—which includes the tax cut associated with effectively eliminating the employer mandate ($164 billion), and the revenue loss associated with weakening the individual mandate ($18.3 billion), offset by the tax increase associated with the revenue portion of the premium tax credits ($134 billion). Conversely, restoring those subsidies if eliminated by a Court ruling would impose a net tax increase of $48.3 billion over ten years.

Spending and Deficit Implications

Because, as noted earlier, the vast majority of the premium subsidies are refundable tax credits, which are considered government outlays, a ruling striking down the subsidies would lower federal spending appreciably. Eliminating the subsidies in all 50 states would lower federal spending by $775 billion over the next ten years.10 As a result, despite the $48.3 billion tax cut described above, eliminating the subsidies nationwide would reduce the deficit by approximately $726.7 billion for the coming decade. But if Congress or the states took action to restore the flow of subsidies, those measures would instead increase spending—and the federal deficit— by hundreds of billions of dollars.

Admittedly, the King v. Burwell case applies only to the 37 states that have not created an Exchange, and not all 50 states. However, whether examining one state, 37 states, or all 50 states, the trend from the CBO data is clear: Striking down the subsidies would 1) cut taxes on net; 2) reduce federal spending; and 3) reduce the deficit. Conversely, any action—whether by states, Congress, or both—to restore the pre-King status quo would 1) raise taxes; 2) raise federal spending; and 3) raise the deficit.

Moreover, this analysis may represent a conservative estimate with regards to the tax cut implications of King v. Burwell, as a favorable Court ruling could have a larger-than-expected impact on the applicability of the individual mandate. Withdrawing subsidies from federally-run Exchanges could also impact premium affordability for families with incomes above 400% FPL, reducing tax liabilities beyond the $18.3 billion estimated above.

Conclusion

The dispute in King v. Burwell revolves around whether the Obama Administration can unilaterally change what the law says. The text of the statute is clear that federal subsidies apply only to those buying policies from an “Exchange established by the state.”11 Yet the Administration promulgated regulations expanding the applicability of subsidies to all Exchanges, whether established by states or run by the federal government.

Conventional wisdom in Washington holds that, in the event of a favorable King v. Burwell ruling striking down the Obama Administration’s rule, Congress—or legislatures in the 37 states affected—will rapidly act to create state Exchanges, or allow some mechanism for subsidies to continue to flow. However, doing so will have significant adverse impacts—raising taxes, raising spending, and raising the deficit. Moreover, resuming the flow of subsidies will only further entrench both Obamacare and its harmful effects—on our budget, on our economy, and on our health care system.

Conservatives should reject any “Obamacare-lite” proposals that seek to re-establish, and further entrench, the tax increases and spending hikes under the President’s unpopular health care law.12 Instead, policy-makers should embrace the opportunity potentially presented by the Court’s upcoming ruling in King v. Burwell to advance solutions that solve the health care problem Americans worry about most—rising costs. Policies that address the problem of cost growth—including the innovative solutions put forward by America Next last spring—without resorting to Obamacare’s tax increases, massive spending, and new entitlements stand the best chance of winning the widespread public support Obamacare has consistently lacked.13

The impending Supreme Court arguments and decision in King v. Burwell provide conservatives with both a challenge and an opportunity. The case gives Congress and the states a chance to craft positive solutions on health care—granting relief to the American people from both Obamacare and rising costs—provided that they recognize more taxes, spending, and deficits are not the answer.

Notes

1. Includes 3 Federally-supported, 7 State-Partnership, and 27 Federally-facilitated Exchanges. See Kaiser Family Foundation, “State Health Insurance Marketplace Types, 2015,” http://kff. org/health-reform/state-indicator/state-health-insurancemarketplace-types/.
2. Congressional Budget Office, “Insurance Coverage Provisions of the Affordable Care Act—January 2015 Baseline,” January 26, 2015, http://www.cbo.gov/sites/default/files/cbofiles/ attachments/43900-2015-01-ACAtables.pdf.
3. Ibid., Table B-3.
4. Patient Protection and Affordable Care Act (PPACA), Public Law 111-148, Section 1513.
5. Congressional Budget Office, January 2015 baseline, Table B-1.
6. Section 5000A(e) of the Internal Revenue Code, as created by Section 1501 of PPACA, provides an exemption from the individual mandate for all those for whom self-only insurance coverage exceeds 8 percent of household income, “reduced by the amount of the credit allowable”—i.e., any applicable federal premium subsidies. The statute further provides for an annual adjustment of the threshold percentage, based on the rate at which premium growth exceeds income growth since 2013. In May 2014, the Centers for Medicare and Medicaid Services set the required contribution percentage for calendar year 2015 at 8.05 percent of income. See Centers for Medicare and Medicaid Services, “Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards for 2015 and Beyond,” Federal Register May 27, 2014, http://www.gpo.gov/fdsys/pkg/FR-201405-27/pdf/2014-11657.pdf, pp. 30243-44.
7. In calendar year 2015, 400% of FPL equals $47,080 for a single individual, and $97,000 for a family of four. See federal poverty guidelines available through the Department of Health and Human Services’ Office of Planning and Evaluation, http://aspe. hhs.gov/POVERTY/15poverty.cfm.
8. Congressional Budget Office, “Penalties for Being Uninsured under the Affordable Care Act: 2014 Update,” June 5, 2014, http:// www.cbo.gov/sites/default/files/45397-IndividualMandate.pdf, Table 1.
9. Congressional Budget Office, January 2015 baseline, Table B-1.
10. Ibid.
11. Section 36B(b)(2)(A) of the Internal Revenue Code, as created by PPACA Section 1401(a).
12. Gov. Bobby Jindal, “The GOP Mustn’t Offer ‘Obamacare-Lite,’” Politico February 1, 2015, http://www.politico.com/magazine/ story/2015/02/gop-obamacare-alternative-114820.html#. VOu9RVaprwJ.
13. See America Next’s Freedom and Empowerment Plan, available at http://americanxt.org/wp-content/uploads/2014/04/The-Freedomand-Empowerment-Plan.pdf.

Gov. Jindal Op-Ed: Rebuttal to Ramesh Ponnuru

My op-ed this week regarding the need for conservative alternatives to Obamacare has prompted numerous responses, including one on these pages. I’m happy to continue this debate by explaining my plan further, and outlining why I believe it’s the preferable choice for conservatives to embrace.

In his column analyzing my plan, Ramesh Ponnuru criticized it on several counts. He calls its “great flaw” that the plan might disruption when compared to Obamacare. But while some may view that as a bug, others might view it as a feature. For instance, the millions of individuals who received cancellation notices might like the opportunity to purchase more affordable coverage without facing the Obamacare mandates that have jacked up their premiums. Likewise the six million Americans about to face the Obamacare mandate tax for the first time come April 15—or the millions more who will face more red tape as they have to apply to Washington for a mandate exemption.

Two other numbers bear particular emphasis. Last spring, the Congressional Budget Office estimated that delaying the individual mandate until 2019 would raise the number of uninsured Americans by 13 million. In other words, under Obamacare, 13 million Americans will receive health coverage because the federal government is forcing individuals under penalty of taxation to buy it. Making sure none of those individuals—many of whom may never have wanted to buy insurance in the first place—have their coverage disrupted would cost far more in taxes than any alternative to Obamacare would raise.

The second number is $2,500—that’s the reduction in premiums Barack Obama promised from his health plan during the 2008 campaign. But according to an America Next analysis last year, the President’s failure to deliver on that promise has cost the American people more than $1.2 trillion in higher premiums just from 2009 through 2013.

In critiquing my proposal, Ponnuru falls into the typical trap of the Left—to evaluate a health plan primarily, if not exclusively, by how many people it provides with insurance cards. I fundamentally disagree with that premise. The American people are worried first and foremost about the rising cost of health coverage—it’s what makes their health care unaffordable, and Obamacare unsustainable.

That’s why my plan emphasizes attacking rising health costs, and not expanding coverage—because focusing on the former is the best way to achieve the latter. Conversely, fixating on the latter—trying to mandate coverage through new regulations, taxes, and Washington diktats—will only make the former less attainable—raising health costs in a way that no regime of taxpayer-funded subsidies could ever sustain.

That said, my plan absolutely includes a safety net for the most vulnerable. It provides at least $100 billion for states to guarantee access for individuals with pre-existing conditions. Rather than dictating a top-down approach from Washington, our plan lets the states decide how best to increase access for their citizens. And it does so in a way that encourages states to reform their existing regulatory regimes—helping to bring down costs.

I believe this plan—focusing first and foremost on reducing costs, and doing so through the states, not Washington, DC—provides the best path forward, most closely adheres to conservative principles, and provides a telling contrast to Obamacare’s shortcomings and failures. To win elections, conservatives need to have better ideas, not merely mimic the ideas of the Left.

This post was originally published at Bloomberg.

Gov. Jindal Op-Ed: The GOP Mustn’t Offer Obamacare Lite

There is a secret that people outside of Washington, D.C., aren’t aware of right now: Some Republicans in Congress are on the verge of proposing an alternative to Obamacare that imposes new tax hikes on the American people.

On March 4, the Supreme Court will hear arguments in a case that could upend Obamacare completely. In King v. Burwell, the court — if it follows the plain text of the law, which says that only individuals purchasing coverage on an “exchange established by the state” are eligible for federal insurance subsidies — could cause disruption to individuals in the 36 states that did not establish a state exchange, and instead rely on the federally run healthcare.gov exchange. For this reason, many observers have argued that conservatives need to present an alternative vision of health reform before the court rules.

Take one major issue related to Obamacare: taxes. The law is chock full of them — no fewer than 18 revenue raisers totaling over $1 trillion through 2022.Yet several alternative proposals being discussed by Republicans don’t actually repeal the law’s tax increases. Instead, they repeal the law’s tax increases, only to replace them with new revenue hikes. So, rather than raise taxes by more than $1 trillion, as Obamacare did, these plans raise taxes by perhaps, say, “only” $500 billion.

This puts Republicans in the positions of being “cheap” Democrats, or Democrat-lite. We’ll raise taxes — but just … less than Obamacare. We’ll spend hundreds of billions on new entitlement programs — but just … less than Obamacare.

But the problem with programs that look like Obamacare is that they bring with them many of Obamacare’s problems. Remember when the Congressional Budget Office concluded that Obamacare will result in more than 2 million Americans working fewer hours, or leaving the labor force altogether? That’s because the law’s insurance subsidies are structured in ways that will cause individuals to work fewer hours, keeping their income low to maintain eligibility for subsidized insurance. Some so-called conservative health plans also have characteristics that will discourage work — even if perhaps less than Obamacare does.

So why talk about “conservative” health care reform if our vision turns us into cheap liberals? Why complain that Obamacare is expanding welfare and dependency, only to propose a similar — albeit smaller — program that could well have the same effects? If conservatives oppose Obamacare’s tax increases on the middle class, then why did one “conservative” health adviser propose accelerating the law’s tax on health plans by phasing it in sooner?

The reality is that while Beltway insiders in the elite salons of Washington can do and say whatever they want, the American people know better. A majority of voters — and even larger majorities of conservative and Republican voters — believe that “any replacement of Obamacare must repeal all of the Obamacare taxes and not just replace them with other taxes.” In other words, the voters won’t be fooled by quasi-liberal health plans masquerading in conservative clothing.

The other good news is that truly conservative health plans exist. Last year, I outlined a plan with America Next, the conservative policy group I founded. The plan focuses like a laser beam on controlling the health care issue that matters most to Americans — skyrocketing health costs. The plan empowers the states to enact reforms that can bring down costs, while also guaranteeing access for individuals with pre-existing conditions. Rather than stifling states with additional regulations from Washington, the America Next plan offers them incentives to improve their insurance markets in ways that offer more choices and lower costs. As a result, Americans should benefit from new avenues to buy portable health insurance they can own themselves — through their church, alumni group or trade association — and lower premiums, too. In fact, the Congressional Budget Office previously analyzed reforms similar to those in the America Next plan and found that they could reduce individual health insurance premiums by thousands of dollars per family.

I recognize there are other good conservative plans out there — and that’s great. For instance, the Republican Study Committee proposed reforming the tax treatment of health insurance without repealing and replacing the tax increases in Obamacare. We should have a robust debate and show both the Supreme Court and the American people that there are better ways to enact true reforms. But I don’t believe that any plan that repeals and replaces Obamacare’s trillions in taxes and spending is a conservative alternative — and the American people agree.

Recently, the left gave us an instructive lesson on why this debate about a conservative alternative is so important. The advocacy group Families USA released a report calling for a veritable orgy of new Obamacare-related spending — new subsidies, insurance mandates, even a proposal to extend subsidized insurance to illegal immigrants. It’s an important reminder, first that the left will always want more government intrusion in health care, and second that conservatives can never hope to outspend the left by acting as cheap liberals. That’s why it’s so important for our party to outline a conservative — repeat, conservative — vision for health care.

This post was originally published at Politico.

An Issue That Could Define Alternatives to Obamacare

 

A line buried in a Heritage Foundation policy paper issued just before the November elections hinted at a major fissure point in discussions surrounding a conservative alternative to Obamacare. The distinctions it raised could shape the form of any health-care alternatives the Republican-led Congress considers next year.

The policy brief, outlining the principles for any conservative health-care alternative, included the following lines:

Replacing the current tax treatment of health benefits with a new design for health care tax relief that is both revenue and budget neutral (based on pre-PPACA levels) is the first step in transforming the American health system into one that is more patient-centered, market-based, and value-focused.

The words in parentheses pack the most punch, for they lay down a clear marker regarding budgetary baselines—which define the parameters of many policy debates in Washington.

Consider a hypothetical alternative to Obamacare that repeals the law entirely, including its more than $1 trillion in tax increases, but then imposes new limits on the tax break for employer-provided health coverage—raising, say, $400 billion in revenue—to finance coverage expansions. Does that alternative cut taxes by $600 billion (the $1 trillion in repealed taxes, offset by the $400 billion in new revenue), or raise taxes by $400 billion, because repeal of the law should be seen as a given?

Polling data conducted for America Next earlier this year suggests that Americans believe the latter. A majority of voters (55%)—and sizable majorities of conservative voters—believe that “any replacement of Obamacare must repeal all of the Obamacare taxes and not just replace them with other taxes.”

Economists and policy experts on both the left and the right agree on the need to reform the tax treatment of health insurance. But there is less agreement on the means. For instance, in one of his now-infamous videos, MIT economist and Obamacare consultant Jonathan Gruber explained how provisions in Obamacare—sold as a tax on insurance companies—ultimately would raise tax burdens on the middle class. Some on the right have proposed that Congress accelerate this tax increase by amending the law next year. Other alternatives to the Affordable Care Act would repeal and replace the law’s tax increases, while still other alternatives (including the plan put forward by America Next) would repeal all of the law’s tax increases, and reform the tax code, without raising additional revenue in its stead.

To the casual observer, these baseline distinctions may seem arcane—but in Washington, they can pack a wallop. Expect the issues referenced in the Heritage brief to resurface whenever the new House and Senate consider health-care alternatives.

This post was originally published at the Wall Street Journal Think Tank blog.

Gov. Jindal Op-Ed: Obamacare’s Failure to Control Costs

When evaluating Obamacare, it’s important to define what “success” means. Success isn’t getting a website to work—even though government auditors recently found that HealthCare.gov still remains subject to lax security controls. And success isn’t forcing people to buy health insurance they might not need or want, under threat of IRS penalty—even though the Obama administration is already working overtime to lower expectations for next year’s enrollment numbers.

No—Obamacare’s prime metric of success, as defined by President Obama himself, should be whether the law reduces health care costs. And on that count, the president could not have been more clear, promising on numerous occasions in 2007 and 2008 that his plan would reduce premium costs for the average family by $2,500 per year. His campaign advisers further told the New York Times that “we think we could get to $2,500 in savings by the end of the first term, or be very close to it.”

A clear definition of Obamacare’s success prior to its enactment allows for an equally clear assessment of the law after its implementation—and on that count, Obamacare has failed miserably. Americans have faced cumulative increases of $6,388 per individual, and $18,610 per family, in higher premium costs because the president failed to achieve the reductions he promised from his health plan.

One year ago this fall, during the HealthCare.gov fiasco, then-Health and Human Services Secretary Kathleen Sebelius famously testified before Congress: “Hold me accountable for the debacle—I’m responsible.” But the real debacle is Obamacare itself: Its mandates, regulations and new government spending have failed to lower health costs, and instead have increased them.

The American people deserve better than Obamacare, and the health care plan I released this spring can provide the relief from rising costs that Americans so desperately need. Rather than focusing on a massive expansion and re-structuring of the health care system, the America Next plan focuses on reducing health costs, using proven methods—competition, more choices for patients, an emphasis on prevention and wellness and no new government mandates—that can lower premiums by thousands of dollars per family.

It’s high time we finally work to enact true health-care reform, one that gives struggling American families relief from rising health costs. That’s the reform President Obama promised, but has singularly failed to deliver.

This post was originally published at Politico.