On August 18, Wisconsin governor Scott Walker became the first leading Republican presidential candidate to release a full-fledged Obamacare alternative. Walker’s alternative would fully repeal Obamacare and provide the sort of real reform for which Americans have long been waiting. But there has been a fair amount of misreporting in the wake of Walker’s announcement, and it’s worth setting the record straight.
It’s not Burr-Coburn-Hatch (or Burr-Hatch-Upton).
A couple of outlets, most notably the Wall Street Journal’s editorial page, have erroneously suggested that Walker’s proposal is pretty much the same as the one released last year by senators Richard Burr, Tom Coburn, and Orrin Hatch. For better or worse, that claim is false—Walker’s alternative is not Burr-Coburn-Hatch.
To be sure, the Burr-Coburn-Hatch proposal, now updated as the Burr-Hatch-Upton proposal (with House Energy and Commerce chairman Fred Upton as the third member), has much to commend it. Like Walker’s alternative, it would not change the tax treatment of the typical person’s employer-based insurance and therefore wouldn’t needlessly disrupt the employer-based market. (In contrast, the approach that Marco Rubio recently outlined in an op-ed would change the tax treatment of the typical employer-based plan and thus would be vulnerable to the politically potent charge that it would jeopardize the insurance of millions of middle-class Americans.) Moreover, like Walker’s alternative (as well as Rubio’s approach), Burr-Hatch-Upton wouldn’t neglect to deal with the poor and near-poor who have become newly insured under Obamacare—an important element of any alternative that wouldn’t be politically dead-on-arrival.
However, Walker’s alternative is strikingly different from Burr-Hatch-Upton in other ways. Burr-Hatch-Upton would not repeal all of Obamacare; Walker’s alternative would. Burr-Hatch-Upton would allow states to “auto-enroll” Americans in insurance plans they didn’t pick and didn’t indicate they wanted to be enrolled in, sending taxpayers the bill; Walker’s alternative wouldn’t. Burr-Hatch-Upton would income-test its tax credits, thereby playing on Obamacare’s redistribution-centered turf; Walker’s alternative would not.
In addition, Burr-Hatch-Upton’s tax credits would cost half a trillion dollars more than Walker’s would cost, based on scoring of identical tax credits proposed by the 2017 Project. Scoring by the nonpartisan Center for Health and Economy (H&E) found that Burr-Hatch-Upton’s tax credits would save only $43 billion versus Obamacare’s premium subsidies (from 2017-24), while the 2017 Project/Walker tax credits would save a whopping $572 billion (from 2016-23)—more than ten times as much.
This is despite the fact that Walker’s tax credits would do much more to help the middle class. The typical 35-year-old single person making $37,000 a year, or 35-year-old married couple making a joint income of $65,000, would get the following:
Under Obamacare: $0
Under Burr-Hatch-Upton: $0
Under Walker: a tax credit of $2,100 per person
Assuming that these 35-year-olds don’t itemize their taxes (and likely even if they do), their tax credits would come entirely in the form of tax cuts. The single person would simply pay $2,100 less in income taxes, while the couple would pay $4,200 less. There would be no federal spending involved.
It would dramatically reduce federal spending and taxes.