Published on November 5th, 20140
Ed Gillespie – A Conservative Alternative to ObamaCare
Employers are limiting many employees to 28 hours of work a week instead of 40 in order to avoid Obamacare’s costly mandates, and small business owners won’t hire additional workers for the same reason.
Obamacare taxes are wreaking havoc on the job market. The tax on medical devices has already cost 33,000 jobs (and is projected to cost another 132,000 after it’s fully implemented), and the National Federation of Independent Businesses projects that between 152,000 and 286,000 jobs will be lost in the next decade due to Obamacare’s health insurance tax.
Our seniors are also feeling the effects of Obamacare. A quarter of Medicare beneficiaries are enrolled in Medicare Advantage plans which will experience cuts, thanks to Obamacare, by $137 billion over ten years. As a result, seniors will see their benefits slashed by an average of $3,700 per beneficiary in 2017, 27% below what they would have been without Obamacare. Seniors who stay in the program will see higher out of pocket costs or loss of the added benefits for those who are pushed out of the program. A $3,700 payment rate loss means that a senior enrolled at 65 would lose $44,000 in benefits over the rest of their lives by the time they are 77 or 78.
The new entitlements created by Obamacare come at an astronomical cost: about $2 trillion in new federal spending over a decade, and more than $1 trillion in total new taxes. For that enormous price tag, Obamacare has not even addressed the problems it was ostensibly designed to solve: rising health care costs and premiums and affordable coverage for all. Remarkably, with all the disruption to our economy and intrusions on our freedom, an estimated 31 million Americans will remain uninsured (versus the Obama administration’s own estimate of 47 million when the bill was passed) and Obamacare will be a permanent impediment to economic growth.
All around the Commonwealth, I hear from Virginians who face skyrocketing insurance premiums and stand to lose the doctors they trust and coverage they like. They understand that Obamacare is not the solution, and that the problem is not just a failed website launch but thousands of pages of bad policy. They know that the way to reform health care isn’t to kill jobs, reduce wages, cancel health care plans that Virginians’ like, cut nearly $1 trillion from Medicare, impose new taxes, and increase our deficit. They know that Obamacare is making things worse.
In order to repeal Obamacare, we must present an alternative that is both practically effective and politically viable. Repeal efforts in the absence of an alternative plan have repeatedly fallen short. Unlike some other alternative proposals, my plan is an attractive alternative to Obamacare that can actually achieve what millions across America who have been adversely affected by this monstrosity of a law desire: its full repeal.
I’ll take a different approach. As Senator for Virginia, I will vote to replace Obamacare with a real reform plan that puts patients first and provides more affordable options. My plan is based on the belief that the American people want a health care system that provides access to quality, affordable care which empowers doctors and patients, not politicians and political appointees. They want a system that makes insurance more affordable, let’s us keep our doctors and existing plans, and allows businesses to grow and hire—all without bankrupting the nation and crippling the economy.
The centerpiece of my plan, which is modeled on the plan put out by the 2017 Project, is the creation of an individual health insurance tax credit which would be available to anyone who buys health insurance in the individual market. For the typical Virginian — and the typical American — my alternative would not touch the tax break for employer-based insurance. The credits would instead go directly to individuals and families, not to insurance companies like Obamacare’s subsidies do. And they could be used to buy any real insurance that people might want, not merely the insurance that President Obama and Senator Warner say they must have.
Under my alternative, the tax credits would be broken into three groups: those less than 35 years of age would receive a credit of $1,200 a year; between 35-49 years of age, credit of $2,100 per year; and 50 or over, credit of $3,000 per year. Those with dependent children would get an additional $900 per child.
As an example, a typical Virginia family of four with parents 40 years of age would receive a tax credit of $6,000 a year to spend on health insurance. If they find a plan they like which costs more, the tax credit will cover $6,000, and they would supplement the rest. If their preferred plan costs less than $6,000, then the family can place what is saved into a health savings account (HSAs) from which they could use the funds to pay for any out-of-pocket expenses.
My proposed health insurance tax credits have been found by the Government Accountability Office to be sufficient, by and large, to cover health care costs. In Virginia, every healthy person would be able to purchase insurance without any of their own money. Nationally, except in five northeastern states with hyper-regulation and mandates, any healthy person could buy insurance without spending more than $15 a month. This means real, substantive, individually controlled health insurance will be accessible to consumers throughout America.
In addition to depositing any difference left from the tax credit into a HSA, families would be able to add any additional funds they wish to the account. Since Americans will be controlling and owning the accounts, they would have a reason to comparison shop medical needs as informed consumers. My plan will make HSAs easier to use and would offer a one-time tax credit of $1,000 per person for having or opening such an account to encourage their use.
My plan would have several components for those with pre-existing condition. Most importantly, those with preexisting conditions could not, whatsoever, be dropped from their existing insurance. That said though, there are three loop-holes when Americans could be left without insurance due to no fault of their own. First, when babies are born, parents would have six months to buy insurance without paying more because their baby might have a preexisting condition from birth. When Americans turn 18 or leave their parents’ insurance, they would have a six month period to purchase without paying more for preexisting conditions that may or may not have been covered in childhood. Lastly, if someone who has been insured for a year or more under an employer-based plan but then loses access to that coverage would have two months to move over to an individual-market plan without having to pay more for a preexisting condition that was already covered.
To ensure everyone with pre-existing conditions has an opportunity to obtain insurance, my alternative would allocate $75 billion over ten years in federal funding for state-run “high risk” pools which would provide good, but not extravagant, insurance. Since the pool is partially subsidized at public expense, no one with an expensive preexisting condition would be asked to pay more than they can afford toward their share of their premium. This is the only part of my plan which is income-tested to ensure those in the pools cannot afford insurance on the open market. States would run the pools and set the standards, but no one could be turned away or charged an amount they couldn’t afford, no matter how unhealthy they might be.
A new individual health insurance tax credit, implementing commonsense reforms for those with pre-existing conditions, and incentivizing HSAs are the key components of my plan. Several additional items also need to be implements to further improve the insurance market and keep America first for health-care innovation:
- Government regulations which are preventing insurance from being sold across state lines must be reduced. Americans can decide for themselves what type of coverage they’d like to buy. Being a resident of a state should not mean being kept captive to regulations which impose needless mandates and unnecessarily raises costs.
- My alternative would call upon states to enact sensible medical-malpractice reforms to limit the costly and wasteful practice of defensive medicine that enriches trial lawyers at the expense of everyone else.
- Pursue policies that keep America first in health-care research and medical innovation, areas in which we’ve long led the world. We need to focus on ways to keep Virginians — and all Americans — healthy, not just on getting them treated when they’re already sick.
The combination of these proposals would address the inequities in our federal health care policies that existed even before Obamacare was passed. And, of course, the first line of my alternative would fix what President Obama and Senator Warner broke through their passage of Obamacare, as it would repeal every last letter of that monstrosity.
Altogether, compared to Obamacare, my proposal will save taxpayers about $1 trillion over the next decade. It would also likely result in more people being insured in the private market than under Obamacare, as about half of Obamacare’s newly insured are people who are simply being dumped into a broken Medicaid system. Under my alternative, Medicaid would revert to pre-Obamacare eligibility levels — which vary by state — and anyone who was put on Medicaid under Obamacare would get a tax credit instead that he or she would be able to use to buy real insurance. What’s more, any Medicaid recipient who wants to do so could freely opt out of Medicaid, take the tax credit, and buy real insurance.
Under my alternative, taxpayers would not only save about $1 trillion. They would also enjoy the full benefits of repealing Obamacare and finally implementing real reform that is sensible, substantial and relatively simple — reform that focuses on fixing what the government broke, rather than on empowering the government and letting it control even more of Americans’ lives.
In sum, under this proposal, the cost of health care would go down, freedom of action would be secured, and any American who wishes to buy health insurance could do so.
About the Author: Edward W. Gillespie is a Republican political strategist who served as the 61st Chairman of the Republican National Committee and Counselor to the President in the George W. Bush administration. He is currently running for Virginia’s U.S. Senate seat currently held by Mark Warner in the 2014 election, and on June 7, 2014, he received the Republican nomination.