Earlier this week, I described a gut-check moment for Republicans, asking whether they are as willing to take political risks to repeal and replace Obamacare as Democrats were when they passed it in the first place. However, at some point, conservatives in Congress may have to face a gut-check moment of their own: Is a plan they would now categorize as Obamacare Lite ultimately better than Obamacare Heavy?
“Obamacare Lite” is the word that many conservatives in Congress have adopted to attack proposals to replace Obamacare that contain several of its key elements, and in their view would effectively enshrine a federal entitlement they’ve been fighting against for years.
Proposals that get slapped with the “Obamacare Lite” label contain a number of features (from taxes to regulations) that would make conservatives uncomfortable, but typically the biggest element is a refundable tax credit. A refundable tax credit is set at a fixed sum — say, $3,000, so people with lower incomes who pay little or no taxes can still get $3,000. Also, these credits would be advanceable, meaning that individuals would receive money when they pay premiums throughout the year, as opposed to merely when they pay their taxes. Thus, refundable and advanceable tax credits would be similar to the subsidies in Obamacare’s exchanges and less like a simple tax deduction toward the purchase of insurance, which functions more like a tax cut since it would only be available up to the amount that individuals owe in taxes.
I, too, have raised alarms about Obamacare replacement plans that would concede too much policy ground to Obamacare. I have warned about Repeal In Name Only, or RINOcare, in which Republicans simply slap some free market sounding reforms on Obamacare and claim it was repealed and replaced. So, I certainly think conservatives should hold the line, and fight for as free market a plan as possible.
But there is also a stark political reality. In the Senate, even using the reconciliation procedure and assuming Vice President Mike Pence breaks any tie, Republicans can only spare two votes. Looking at the range of plans that have been released, there is a Grand Canyon-sized gulf between Sens. Bill Cassidy and Susan Collins (who would keep Obamacare largely intact) and Sen. Rand Paul’s deduction and health savings account-based plan. So, if anything is going to pass, there are going to have to be compromises.
And at some point toward the end of the legislative process, conservatives will face a choice as to where they draw the line. An Obamacare Lite plan may still eliminate mandates, give states a lot more flexibility, while coming with less spending, lower taxes and fewer regulations. Though such a plan should not be confused as a pure free market alternative, would conservatives prefer that nothing happens and the full Obamacare stays intact, leaving Democrats with something substantial to build on when they retake power?
My suggestion to conservatives weighing what they can ultimately swallow is to have a list of other features they want to push for, so that the more spending and other objectionable features they’re asked to back, the more they can fight for market-based reforms in other areas. For instance, if they’re asked to vote for refundable tax credits, they should push Senate leadership to take a more aggressive approach during the reconciliation process, so they can remove more federal regulations that drive up costs and limit choices. They can push for loosening restrictions on HSAs beyond what is being currently contemplated by leadership. For instance, they could allow people to put money in HSAs without needing to pair it with a qualifying health plan, and allow employers the option of making their healthcare contributions in the form of a large contributions to HSAs, which could be used toward premiums, and can be taken with individuals from job to job. On Medicaid, they could insist on giving states wide latitude over the designs of their programs, and for every dollar of spending they agree to, they should insist on more reforms.
Liberals who wanted a single-payer healthcare system went into the Obamacare fight hoping to at least get a government-run plan (or public option) on the exchanges, which they hoped would migrate toward single-payer over time. There were many liberal members of Congress who insisted at various points that they could not and would not vote for any plan that did not include a public option, but eventually, they did because they knew that Obamacare took a big leap forward. As Paul Krugman would later put it, Obamacare is a “Rube Goldberg device” that “relies on a combination of regulations and subsidies to rope, coddle, and nudge us into a rough approximation of a single-payer system.”
Conservatives are going to eventually find themselves in a similar spot — contemplating whether to support a plan they’d now consider Obamacare Lite in order to avoid preserving Obamacare Heavy.
