GOP Prepares Release of Plan to Repeal and Replace Obamacare

Published May 16, 2016

As the 2016 Republican presidential primary race moves toward the party’s national convention in Cleveland on July 18—the deadline House Speaker Paul Ryan (R-WI) gave the Health Care Reform Task Force to propose a plan to repeal and replace the Affordable Care Act (ACA)—House Republicans continue to offer suggestions centered on expanding consumer choice and patients’ control over their own health care spending.

The Republican Study Committee’s recommendations, released April 22, include creating a standard federal income tax deduction for health insurance of $7,500 per individual and $20,500 for families and giving states block grants to fund and reform their Medicaid programs according to their particular needs.

Rep. Tom Price’s (R-GA) plan, introduced in the House of Representatives in May 2015, proposes providing tax credits to help individuals and families buy health insurance and expanding the use of health savings accounts (HSAs).

Health Insurance Tax Credit

Peter Ferrara, author of Power to the People: The New Road to Freedom and Prosperity for the Poor, Seniors, and Those Most in Need of the World’s Best Health Care and a senior fellow of The Heartland Institute, which publishes Health Care News, says issuing a universal health insurance tax credit would help empower individuals and families to purchase the health insurance they want.

“For one thing, you have to compete with the current Obamacare plan if you’re going to try to promote something that’s supposed to repeal and replace it,” Ferrara said. “This alternative would be a universal health insurance tax credit of $2,500 per person, as proposed by John Goodman, or it could be closer to $3,000 and up to $8,000 per family. Everyone will be free to use this tax credit to buy the health insurance of their choice, not just the plan their employer provides.”

Ferrara says a universal health insurance credit would increase consumer choice and competition, lower health care costs, and lead to better insurance.

“The competitive market process will drive insurance companies to try to design health insurance plans that cost as little as possible, and it may be remarkable how dramatically they reduce the costs of a health insurance plan,” Ferrara said. “The universal health insurance tax credit would level the playing field and raise the bar for insurance companies by driving them to compete for customers.”

Age-Based Tax Credit?

Sally Pipes, president and chief executive officer of the Pacific Research Institute, says the GOP should consider implementing a health insurance tax credit that is based on age, rather than income.

“Forty percent of people don’t pay any federal income tax, so I’ve moved to the idea of an age-based, refundable tax credit so that everybody would have the opportunity,” Pipes said.

Pipes says any health insurance tax credit should be designed to place patients in charge of their own health care decisions.

“The tax credit should go to the person, the individual, not the insurance company,” Pipes said. “People should have control over that tax credit on what kind of coverage they’ll buy. If they have money left over, I would hope that they would put that remaining money into a health savings account. HSAs put doctors and patients in charge of health care and not a third party, whether the third party is an insurance company or it’s the federal or state government. HSAs are really a tremendous part of the health care system that leads to empowering doctors and patients.”

HSA Benefits Cited

Pipes says removing restrictions current law places on HSAs would lower costs and lead to wiser health care decisions.

“If you turned 65 and you’re a senior, you’re not eligible to set up an HSA, or if you had an HSA, to continue contributing to your health savings account,” Pipes said. “I think a way to cut health care costs would be to extend the law so that people who have health savings accounts [could continue them], or seniors if they don’t have one could set one up. When people have an HSA, they become much more prudent in how they use the health care system and how they spend their health care dollars.”

Pipes says people should be allowed to contribute to their HSAs at least as much as they may put in their individual retirement accounts tax-free. In 2016, individuals may contribute to HSAs $3,350, and families may contribute $6,750.

“I would like to see those amounts raised so that people can put away more money,” Pipes said. “They should at least be tied to the amount of money that a person can put into their individual retirement account, which is $5,500, and if you’re 50 or over, $6,500.”

Medicaid Block Grants

Ferrara says giving states block grants to administer their Medicaid programs should be central to any plan for repealing and replacing Obamacare.

“Medicaid block grants have achieved wide acceptability within the Republican Party,” Ferrara said. “Congress should block-grant Medicaid back to the states. We had an enormous success with this approach in welfare reform, which was enacted in 1996.”

Ferrara says when reforming Aid to Families with Dependent Children (AFDC) in 1996, “[The federal government said], ‘We’re going to have a fixed, finite block grant for each state. You get a certain amount and no more. You are free to go and redesign this program however you think it will work best for poor people in your state, but if you spend more, 100 percent of that comes out of the state’s pocket. If you spend less, 100 percent of that savings goes into that state’s pocket.'”

“What that drove the states to do was to aggressively promote work for the able-bodied, to get them off of AFDC-style welfare,” Ferrara said. “The poor benefited, and the taxpayers benefited. Extend that same principle to Medicaid. Let’s block-grant Medicaid back to the states.”

Jordan Finney ([email protected]) writes from Hillsdale, Michigan.

Internet Info:

“Republican Study Committee Health Care Task Force Recommendations,” Republican Study Committee, April 22, 2015:

House Resolution 2300, Empowering Patients First Act, introduced in the U.S. House of Representatives by Rep. Tom Price, May 13, 2015:

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