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Can Republicans agree on an alternative to Obamacare?

Louisiana Gov. Bobby Jindal (R) took on some of his fellow Republicans in a recent opinion piece about his views on healthcare. Some of his criticism was right on the mark. But the governor went too far. In fact, if we followed his advice, there would be no Republican health reform at all.

“Some Republicans in Congress are on the verge of proposing an alternative to Obamacare that imposes new tax hikes on the American people,” Jindal wrote.  Although he didn’t name them, it’s clear who he had in mind. Last year’s proposal by Republican Sens. Richard Burr, (N.C.), Tom Coburn (Okla.) and Orrin Hatch (Utah) would have abolished Obamacare and created a new tax credit for the individual market, funded in part by a tax on employer-provided health plans that are above-average cost.

{mosads}I too have been critical of this proposal. But then Jindal goes on to write, “any replacement of Obamacare must repeal all of the Obamacare taxes.” I can understand repealing some of them. But why all of them?

Over the next ten years, ObamaCare will cost almost $2 trillion. Where is all that money coming from? It’s mainly coming from special interests who agreed to higher taxes, lower fees, etc. in order to help pass the Affordable Care Act. More than one-third of it comes from cuts in Medicare spending and AARP agreed to all of them. Then there are cuts in hospital spending, taxes on the self-insured plans of large companies, taxes on labor union plans, taxes on drug companies, etc. In each case, the “victim” agreed to the sacrifice.

Here is something else Republicans need to keep in mind. Very few of these special interests are asking for their money back. I know of one company that estimates its annual cost from Obamacare is $1 billion – and they are not asking for their money back! Even if they did, it’s unclear that they deserve to have it back. After all, in return for higher taxes, lower fees, etc., all those special interests expected to gain financially from ObamaCare. What they gave up with one hand they expected to more than get back with the other.

So what is a conservative/libertarian thing to do with $2 trillion? Repeal all the mandates, deregulate the exchanges and then enact a tax cut. But tax relief needs to be tied to health care. Just as the Republican-created child tax credit gives all families $1,000 of tax relief per child, we need a uniform tax credit for health care.

ObamaCare is slated to spend about $200 billion a year on tax subsidies for health insurance. Tax subsidies for employer sponsored insurance amount to an additional $300 billion. Is there a way to use thesesame dollars to promote a more rational health care system? The Congressional Budget Office estimates that the cost of enrolling an adult in Medicaid is about $2,500 a year. For a family of four the cost is about $8,000. So if we gave every American and every family a tax credit of these amounts, they would be able to afford at least Medicaid-like insurance. They could supplement the tax credit with additional, after-tax funds if they wanted better care and more accessible care.

People would get the same tax relief no matter where they obtained their insurance – at work, in the marketplace or in an exchange.

What if people turn down the offer and remain uninsured? We could adopt various strategies for automatic enrollment. But even then, a lot of people will slip through the cracks. In that case, some portion of the tax credit should be sent to local safety net institutions as a source of funds to draw on if the uninsured can’t pay their medical bills. The principle is: money follows people. For everyone who opts for private insurance, there is a credit. For everyone who doesn’t, there is a safety net contribution.

A uniform tax credit funded by Obamacare revenues would go a long way toward solving the problems we are now experiencing. And it’s consistent with traditional Republican values.

Goodman is president of the Goodman Institute for Public Policy Research and author of Priceless (independent Institute, 2012).

Tags Orrin Hatch Richard Burr Tom Coburn

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