It has been clear for some time that Republicans need just two things in order to repeal Obamacare—a winning alternative and political willpower. The jury is still out on how much of the latter the party possesses. But when it comes to uniting around a well-conceived alternative that can pave the way to full repeal, the news is increasingly good. Jeb Bush’s just-released Obamacare alternative is the latest example of this encouraging trend.
Bush’s alternative would fix what the federal government had already broken even before Obamacare was passed and made everything so much worse. For 70 years, Americans have gotten a tax break for getting health insurance through their employer, while millions of their fellow citizens who have bought insurance on their own have gotten no tax break whatsoever. Bush’s plan would end this inequality in the tax code, which is at the root of America’s (pre-Obamacare) health-insurance woes.
It would do so by offering simple, flat, age-based, refundable tax credits to those who don’t get insurance through their employer but instead buy it on their own. Bush is the fourth major political figure to champion this model, which originated with the “Winning Alternative to Obamacare” (first released by the 2017 Project, which I ran and Bill Kristol chaired). Ed Gillespie, Tom Price, and Scott Walker all adopted the Winning Alternative’s simple tax credits of $1,200 for those under 35 years of age, $2,100 for those between 35 and 50, $3,000 for those 50 and over, and $900 per child. Bush’s alternative doesn’t specify exact values, but it does call for tax credits that are “adjusted by age,” “refundable,” and given “regardless of income”—in other words, it follows the same model.
Twenty months ago, when we released our alternative, Bill and I wrote,
“Just as important as what our proposal would do is what it wouldn’t do. It wouldn’t force anyone to buy insurance. It wouldn’t auto-enroll anyone in any plan. It wouldn’t reduce the tax break for employer-based insurance (aside from closing the tax loophole at the high end). It wouldn’t cost anywhere near the $2 trillion over a decade that Obamacare would cost. It wouldn’t undermine religious liberty. It would allow Americans to keep their current plan if they like it.”
“While most Americans don’t support Obamacare’s income redistribution, they also don’t want to see those with lower incomes tossed off their newly acquired insurance. In terms of effects on the near-poor and the middle class, [two prominent] recent GOP alternatives tend to err in opposite directions. The RSC [Republican Study Committee] proposal relies on a tax deduction, not a credit. So it provides a significant assist to the upper half of income-earners, while millions of lower-income people would get comparatively little help in paying for their insurance. The Coburn-Burr-Hatch proposal [now updated as Burr-Hatch-Upton], on the other hand, income-tests its tax credit, therefore doing little or nothing for much of the middle class. Our alternative effectively splits this difference, offering tax credits rather than deductions, but not means-testing them—thus helping both the newly insured near-poor and the neglected-by-Obamacare middle class.”
In other words, Burr-Hatch-Upton and the RSC bill mark the goal posts, and Gillespie, Price, Walker, and Bush have now kicked it in between.
This approach—leave the typical employer-based plan alone; offer tax credits, but don’t income-test them—is a political and policy winner. It blunts both major potential lines of attack—that a conservative alternative would do nothing for the poor or near poor (who are almost the sole beneficiaries under Obamacare), or would jeopardize employer-based insurance.