Commentary: Two Cheers for Ryan Health Plan

Published April 1, 2015

On the eve of the Supreme Court hearing of King v. Burwell, three House Republican leaders—Paul Ryan (WI), John Kline (MN), and Fred Upton (MI)—unveiled an important new alternative to Obamacare.

The plan would do two important things: The proposal would abolish the individual and employer mandates to purchase health insurance, and it would give everyone purchasing insurance in the individual market a fixed-sum, refundable tax credit to buy health insurance of their own choosing.

I would give the plan a third cheer if it included two additional reforms.

First, the incentives insurers face need to change completely. Under the Affordable Care Act, we are witnessing a race to the bottom as insurers choose narrow networks that exclude the best doctors and the best hospitals and foist the cost of expensive drugs off onto the sickest enrollees. The answer to this is health status insurance, which would protect people against premium hikes if they later become “uninsurable” because of a pre-existing condition.

Second, Obamacare is shredding the health care safety net by taking funds away from safety-net hospitals, even as their burden is increasing. To rectify that, we need to return some portion of unclaimed credits to the communities where the uninsured live. Money needs to follow people.

John Goodman ([email protected]) is a senior fellow at the Independent Institute. An earlier version of this commentary originally appeared at Forbes. Reprinted with permission.