Jeb Bush is releasing a healthcare plan that would repeal President Obama’s healthcare law and replace it with a new system of health insurance tax credits, reflecting two political and policy assumptions.
One, Bush has determined that a candidate cannot win the Republican presidential nomination nor can the healthcare system be truly reformed, without repealing Obamacare. Two, he has accepted that Obamacare, by expanding insurance, has shifted the debate in a way that forces Republicans to take coverage into account when crafting alternatives.
By taking this approach, which his campaign announced on Monday and he plans to lay out in a Tuesday morning speech in New Hampshire, Bush has joined an emerging mainstream consensus among Republican lawmakers and thinkers, while opening himself up to attack from some on the right, notably his rival in the presidential race, Louisiana Gov. Bobby Jindal. Jeb has also broken with the approach that his brother, George W. Bush, proposed late in his presidency.
Under JebCare, which repeals Obamacare, individuals who are not offered health insurance coverage through their employers can use tax credits toward the purchase of insurance. The campaign does not specify an exact dollar amount, but the credits would be set at the average value of the current benefits that individuals receive through their employers, and they would grow at a standard level of inflation. This is an attempt to equalize the tax treatment for purchasing insurance, because under the current system, tax benefits are limited to individuals who obtain insurance through their employers. The credits would also vary on age, rather than income. The idea is that the credits should be enough to cover the cost of a catastrophic health plan, allowing individuals to contribute more if they want more comprehensive coverage.
This credit-based approach echoes proposals by House Budget Committee Chairman Tom Price, Bush’s current presidential rival, Sen. Marco Rubio, and his former rival, Wisconsin Gov. Scott Walker. The idea of making credits vary by age was originally proposed by DC-based policy group, the 2017 Project. The fact that Bush is also embracing these ideas suggests a growing consensus around this type of Obamacare alternative.
It also pits Bush against the approach taken by Jindal, who has attacked proposals such as this one as “Obamacare Lite.” He has argued that tax credits, which individuals can collect even if they have little or no tax burden, are just another form of government spending and has instead proposed allowing individuals a standard deduction for the purchase of insurance. Jindal’s deduction-based approach was actually the path pursued by Jeb’s brother, President George W. Bush, in his 2007 healthcare proposal. Jeb’s differing approach suggests he’s assumed that the ground has shifted since Obamacare expanded insurance coverage to millions of Americans and such a path is no longer viable, because deductions won’t benefit uninsured Americans who don’t have a large enough tax burden against which to deduct.
The fact that Jeb Bush would limit tax credits only to those who don’t have job-based insurance also reflects a shift. As Bush’s proposal notes, much of the current problem with healthcare financing in this country can be traced back to the ruling that made insurance tax deductible only if obtained through an employer. In the past, this has been a target of market-based reforms. But right now, roughly half of Americans receive insurance through their employers.
As a presidential candidate in 2008, John McCain learned the hard way how entrenched the current system is when he made the credits more widely available and was successfully pummeled by President Obama, who attacked him for wanting to unravel employer-based health insurance. The fear is that if credits are made available to all, then healthier workers with access to cheaper insurance policies on the outside market would reject employer coverage, thus leaving employers with older, sicker, and more expensive workers – prompting businesses to drop coverage. Jeb, reluctant to give this argument to Hillary Clinton or any Democrat, thus sought to limit the disruption to employer-based insurance.
Bush’s plan would tinker with the employer-based market, but only slightly. Though the plan would cap the value of the deduction for employer-based insurance, it would set the cap very high — at $12,000 for individuals and $30,000 for families, an amount that would grow with inflation. Thus, the cap is only likely to impact a small number of very expensive plans.
In addition to credits, Bush’s plan would expand the use of health savings accounts, allowing individuals to put up to $6,550 in the tax free accounts for qualified medical expenses, roughly double the limit today. Bush would also enable for a broader use for HSAs, such as allowing the money to be used toward the payment of premiums.
The Bush plan would also move to give more flexibility to states. In a departure from the approach taken by Obamacare, which mandated that insurers cover those with pre-existing conditions and expanded Medicaid, under Bush’s proposal, the federal government would send a capped amount of money to states to provide coverage to low-income individuals and those with pre-existing conditions based on the states meeting certain outcomes.
Bush’s plan also calls for a number of actions aimed at expanding innovation, for instance, by accelerating the way the Food and Drug Administration oversees clinical trials on new drugs. He would also boost funding for the National Institutes of Health.
The campaign has not released a cost estimate of the proposal, though its repeal of Obamacare would likely mean it would be scored as a tax and spending cut. A more complicated question is whether it would have been a cost-saver relative to the pre-Obamacare status quo, which Jindal has argued is a litmus test for whether a proposal is truly conservative and fully repeals Obamacare.
