Opinion

Closing The Deal With Conservatives On Obamacare

The national media – predictably – focused on the bad news for the GOP in the Congressional Budget Office (CBO) “score” of the Obamacare replacement bill: a predicted increase of 24 million uninsured after a decade.

But CBO also provided some very good news for conservatives: the bill would reduce federal spending by $1.2 trillion over 10 years. The repeal of the Obamacare taxes in the bill would amount to nearly a trillion dollar tax cut as well. The net for the deficit would be a reduction of $337 billion, at a minimum.

Charles Blahous of the Mercatus Center and the Hoover Institution explained in the Wall Street Journal last Friday how the repeal bill could reduce the deficit by as much as a trillion dollars over the next decade, when all the tricks CBO used in 2010 to score the original Obamacare bill as a net deficit reduction are unraveled.

That is a powerful combination to appeal to conservatives. What other bill has offered the prospect of cutting taxes, spending, and the deficit by as much as a trillion dollars each over 10 years? Repealing Obamacare regulations would mean at least another trillion in reduced regulatory costs for American businesses and consumers.

The GOP should make clear that the bill would also block grant Medicaid to the states, resulting in another trillion or more in reduced federal spending, according to prior CBO scores. The bill would consequently involve the largest reduction in entitlement spending in U.S. history, counting the Obamacare repeal as well.

Block grants were originally President Reagan’s plan for all welfare programs, including Medicaid. Republicans should gear up to argue that Medicaid block grants to the states would be an enormous benefit to the poor. Health care professionals, backed by detailed health care studies, have argued that coverage by today’s federally dominated Medicaid is not any better for the poor in terms of health care outcomes than being completely uninsured

Tax credits contained in the bill would expand to everyone the tax advantage of employer provided insurance.  That has long been a goal of conservative Republicans.  Republican leaders can further expand the bill’s appeal to conservatives by providing that the tax credits can be used by the poor to leave Medicaid for private health insurance. States could use their new control over Medicaid to provide vouchers for the poor to buy private health insurance.

Republican leaders should make the further changes necessary to affirm that the individual and employer mandates are fully repealed. The 30% premium penalty for those that want to become insured again after letting their coverage lapse for 60 days is heavily used by other health insurance programs to prevent people from gaming the system by dropping coverage when they don’t need it, and returning to coverage when they become sick.

Guaranteed issue and community rating regulations have been major factors causing health insurance premiums to soar under Obamacare.  Republican leaders would further appeal to conservatives by providing for repeal of these impractical regulations as well, as there are better and less costly ways to assure coverage for pre-existing conditions.

The best is high-risk pools, where those uninsured who have become too sick to get coverage in the market can become covered for pre-existing conditions.  They would be charged what they can pay based on their income, and their state would subsidize the pool for whatever costs remained. The leadership bill provides states with funding for that.

Obamacare taxes and regulations have been the drivers for all Obamacare premium increases.  Repealing Obamacare regulations, either legislatively, or administratively under Secretary Price’s authority, along with Obamacare tax repeal, would cause health insurance premiums to decline.

Those lower insurance costs would cause more people, not less, to insure, which is what CBO scoring missed because CBO has no sound model to predict health insurance costs and coverage CBO originally predicted Obamacare would cover 26 million of the uninsured through the Exchanges. As of last year, only 10 million were covered. CBO also missed that market competition under Medicare Part C, where seniors can choose private insurance to provide their Medicare benefits, would be effective in reducing health insurance costs by 40% as it turned out.

Before we again rely on CBO for “scoring” of health care, tax reform or spending reductions, Congress must take charge and oversee the “number crunching” lest we deny America much-needed reforms.

Uhler is Founder and Chairman of the National Tax Limitation Committee and National Tax Limitation Foundation (NTLF). He was a contemporary and collaborator with both Ronald Reagan and Milton Friedman in California and across the country. Peter Ferrara is Principal and General Counsel for the Raddington Group, an international economic consulting firm, and a Senior Fellow with the Heartland Institute and NTLF. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush.