Free Market Fundamentalist Opinion

Walker’s Sensible Plan to Replace Obamacare

The Wisconsin governor’s plan to repeal and replace the Democratic health reforms has some good ideas in it.

Scott Walker’s campaign for the Republican Party’s 2016 presidential nomination has so far not impressed this blog. The governor of Wisconsin seems to be trying to appeal to every constituency in his party at once and the easiest way to do that is not say anything meaningful.

On Tuesday, he finally took a step toward defining what, if nominated and elected, he would actually do. And it’s not at all bad.

Like most Republicans, Walker has criticized President Barack Obama’s health reforms and, like all Republican presidential candidates, has promised to repeal it.

Now he has a plan (PDF) for replacing it as well.

Walker lists the main shortcomings of Obama’s reforms. “It was written by lawmakers who believe the federal government always knows best,” he argues. It has forced Americans — contrary to the president’s promises — to change plans because the law imposed new standards on insurance packages. It has caused premiums to rise and quite possibly depressed employment, as companies with fifty workers or more are forced to buy health insurance for all their employees under it.

The biggest oddity — and problem — in American health insurance is that the tax system incentivizes people to get it through their employer. Other developed countries with health systems that are of comparable quality to America’s but much cheaper are tailored to individuals, so people don’t lose their access to care if they lose their jobs.

Walker’s plan would move the United States in that direction. He proposes tax credits for those not insured by their employer. But, unlike Obamacare, this would not involve a federal exchange and the size of the credit would be determined by age, rather than income or family size, so there’s no need for oversight by the Internal Revenue Service.

The value of the credits would range from $900 for those up to the age of sixteen to $3,000 for those over fifty.

The Washington Examiner explains that the credits would be “refundable,” meaning that individuals would receive the same fixed amount of money regardless of their tax burden.

So if a man in his 50s owes $2,000 in taxes and claims a $3,000 health insurance credit, he’d effectively receive a $2,000 tax cut and then another $1,000 in government spending.

According to Walker, such a system would “level the playing field between those who purchase coverage through an employer and those who purchase it on the open market.”

This would ensure people are not locked into their current jobs just to maintain health insurance coverage and give people the flexibility to switch employers or even careers.

It is a more market-based approach that conservatives should like, even if it doesn’t totally remove financial support from the government.

Walker’s plan would fix another big problem in American health care and something the Democrats did not do: allow people to buy insurance outside their state.

Current law won’t let Americans to buy insurance across state lines, making it difficult for smaller insurance companies to compete nationally and limiting consumers’ choices. Allowing nationwide competition should bring down premiums.

Walker would also raise the amount Americans can save tax-free in health savings accounts — to $6,250 per year for individuals and $12,500 for families. Being able to pay more care out of pocket should reduce the need for comprehensive insurance plans, again, saving people money.

These changes, as well as the elimination of regulations from the 2010 Affordable Care Act, would help reduce premiums by as much as 25 percent, according to Walker.

There are some question marks. The plan promises “additional reforms” to prevent insurance companies from denying coverage to customers with preexisting conditions — but it doesn’t spell out what those reforms would look like. It is difficult to imagine how this can be done with “incentives” alone when Walker rules out mandates.

Given that 70 percent of Obamacare enrollees were covered through an expansion of Medicaid and given that the program is projected to cost as much as $786 billion, or 3.1 percent of national economic output, by 2022, no health reform is complete without an overhaul of this entitlement program.

Walker proposes to reorganize Medicaid into smaller pieces: one for low-income families, which is what Medicaid was originally supposed to do, and another for Americans with disabilities and poor seniors. If this will save enough money to keep the program afloat is a question for the number crunchers.

At least Walker has a plan, though, and there are some good ideas in it. Now let’s hear what the other candidates propose to do other than repeal Obamacare “on day one”.