Just as important as the details of the plan is the fact that it actually now exists. House Republicans have passed bills to repeal Obamacare repeatedly but lacked a cohesive plan of their own to get behind. “Repeal and replace” was the rallying cry, but the question remained: replace with what?
Known for being a policy wonk, Ryan stepped into the void and exhibited leadership to get his caucus to coalesce around a plan. Included are popular provisions from Obamacare that give access to those with pre-existing conditions and allow young people to stay on their parents’ plans to age 26. The alternative plan would be a political non-starter without these.
Health care is a distorted market
Some might complain that the GOP’s health care plan is pretty familiar territory, but there’s no need for anything revolutionary. Moving toward a more rational, transparent market for health care would make a world of difference.
One aspect that will look very familiar is the emphasis on the tax-preferred health savings accounts. Encouraging cash transactions for routine medical care will spur competition and lower costs. Relying on the insurance middleman for even basic services has disconnected both patients and providers from hard-nosed concerns about costs, adding to medical inflation.
Tax credit vs. subsidies
Less familiar as a Republican position is Ryan’s call for a cap on the deductibility of premiums. It’s an acknowledgement that tax policy has real-world consequences. Tax preferences favor some uses of money over others. The preference for health insurance premiums is one factor in workers’ compensation mixes growing in health benefits but not salaries in recent years.
For those purchasing their own health insurance, Ryan’s plan offers a universal tax credit instead of Obamacare’s subsidies. That may sounds like essentially the same thing, but in actual practice they’re quite different – and it is a conservative idea.
Ryan didn’t shy away from more controversial – but necessary – provisions, like slowly raising the eligibility age for Medicare to 67, which matches Social Security. This won’t be popular, of course, but the long-term math on Social Security and Medicare is challenging enough. Slowly shifting eligibility ages will prolong these programs and help lower the deficit.
Ryan’s plan hits a number of important touchstones, including block grants to states for Medicaid and capping non-economic damages for medical liability suits. But more than anything, the plan’s specificity and just the fact that it exists is a big step forward for Congressional Republicans. Replace with what? This.