POLITICS

Scott Walker And The Trouble With Obamacare 'Replacement' Plans

Repeal is one thing. Replacing Obamacare with a plan that works is another.

Very near the beginning of Scott Walker's new proposal to "repeal and replace" the Affordable Care Act, he bemoans that Obamacare forced so many people to give up the insurance they once had.

Walker, the Republican governor of Wisconsin and one of many GOP presidential hopefuls, then goes on to outline an alternative plan that would do the exact same thing.

By scrapping President Barack Obama's 2010 health care overhaul, Walker's plan -- which the governor announced this week -- would take away health coverage from some unknowable share of the millions of people who have gained it under Obamacare. It promotes benefits like less regulation and less federal spending on health insurance, as well as cheaper coverage for some young and healthy people. But like all the other Republican “repeal and replace” plans that have appeared in the last few years, Walker's proposal never acknowledges the trade-offs and consequences of these changes.  

This is the crux of the dilemma facing Obamacare opponents, now that the law has taken hold in the real world: Their proposals would also create winners and losers, albeit different ones from those created by the Affordable Care Act. There's a pretty significant gap between campaigning against the president's signature law and governing with it in place, and talking points -- no matter how appealing they sound -- often don't meet up with reality.

Forced to reconcile their pledges to repeal Obamacare with the political fallout that could come from upending people's health coverage, candidates have mostly chosen either to downplay the negatives or promise what they can't deliver. Obama experienced the consequences of this in the fall of 2013, when insurers canceled policies that didn’t conform to the new law’s regulations -- thereby violating Obama’s oft-repeated pledge that "if you like your plan, you can keep it." Any White House hopeful seeking a better understanding of how bruising it is to carry out big changes to health policy need only ask the building's current occupant.

Obamacare isn't overwhelmingly popular, but it's now integrated into the health care system and has been responsible for a historic expansion of health insurance coverage. That's the starting point for whatever plans Republicans propose, and GOP candidates must reckon with this reality.

By rolling back Obamacare's new spending and regulation, both of which Republicans oppose on ideological principle, any GOP “replacement” proposals would almost certainly leave people far more exposed to crippling medical bills. That's true for Walker's plan and for those touted by his rival candidates within the party (Florida Sen. Marco Rubio published a rough outline of his plan Monday, and Louisiana Gov. Bobby Jindal issued a paper on health care reform in April 2014). Walker issued his plan Tuesday and spoke about it during a visit to a Minneapolis factory.

"We aim for an easy transition," Walker's plan says. It doesn't say how.

And in a reflection of just how much the Affordable Care Act is now enmeshed with the health care system -- and how certain components of the law, like guaranteed coverage of pre-existing conditions, remain popular even though "Obamacare" isn't -- Walker's plan appears to accept many of the ACA's premises.

Walker would still provide financial assistance to some people, for example. He would keep some adults without children or disabilities on Medicaid, and he'd provide some form of fallback option for people with pre-existing conditions. These goals are superficially similar to those of the Affordable Care Act, but how Walker proposes to achieve them is vastly different.

Walker would rescind the Affordable Care Act’s regulations on the policies that insurers sell and the prices they charge for those policies. The Walker campaign does not specify precisely how it would go about this, or exactly which regulations it would end. But similar plans that have been circulating in conservative circles -- like a plan from the so-called 2017 Project, a conservative think tank based in Washington -- have called for allowing insurers more leeway to adjust premiums based on age, and eliminating requirements that all policies include a set of “essential” health benefits. 

What sort of effects would a plan like this have? It seems safe to assume that insurers would start charging older Americans much higher premiums for comprehensive coverage, or simply stop offering such policies altogether. Younger and healthier people could go back to buying the type of cheap, skimpy policies that many had before Obamacare. But others would lose the comprehensive coverage they have now, leaving them exposed to higher medical expenses.

Walker's plan would offer financial assistance to people buying coverage on their own -- just as the Affordable Care Act has done -- but it would use a very different formula for calculating that assistance. Instead of offering tax credits that vary based on income and the price of insurance in a given locale, Walker’s plan would offer tax credits that vary only by age. And while Obamacare also offers lower-income people additional financial assistance that reduces out-of-pocket costs, Walker's plan calls for no such protection. Instead, it would provide more tax incentives for setting aside money in “health savings accounts” -- a form of tax-preferred savings that people can use to cover medical expenses.

This would tend to work out well for some middle- and upper-income people, because right now they don’t qualify for much -- or any -- financial assistance for the government. But less affluent people would lose assistance, to the point that large numbers of Americans would no longer be able to afford comprehensive coverage at all, and those who could afford it would face much more punishing bills.

Walker would convert Medicaid into a “block grant” for beneficiaries who don't have disabilities or are younger than 65. This would be a huge change, and in some ways would be the most consequential part of his proposal -- although it may get the least attention from the press.

Medicaid guarantees a comprehensive set of benefits to anybody who meets the program’s income criteria. In states that have expanded the program as the Affordable Care Act envisions, those criteria now include anybody in a household where income is below 133 percent of the poverty level -- or $26,720 a year for a family of three.

Walker would remake the program from scratch. Under his plan, the federal government would give states a fixed sum of money based on a pre-existing formula, rather than allow funding to rise and fall depending on need. The feds would also give states much more leeway to determine what kind of insurance to provide. What would almost certainly happen as a result, given the fiscal constraints Republicans typically impose on these plans, would be a loss of insurance for millions of people as states cut back on eligibility, benefits or both.

Of course, that doesn’t mean any of Walker's policies are likely to become law if he's elected president.

Versions of these ideas have been appearing in Republican campaign platforms at least as far back as President George W. Bush's 2004 re-election campaign. Sen. John McCain (Ariz.) and former Massachusetts Gov. Mitt Romney ran as GOP presidential nominees on similar platforms in 2008 and 2012, respectively. And Republican lawmakers have introduced numerous bills in recent years that have included features resembling these campaign plans.

And therein lies the problem with Walker's and Rubio's and Jindal's plans, which have nothing to do with their substance: When in power, Republicans have never made a strong push to enact those plans. This was true in the 1990s when the GOP fought President Bill Clinton's reforms, it was true after 2010 when they took over the House and it's been true since last year when they took over the Senate. Despite dozens of votes in the House to repeal Obamacare, the Senate has failed even to get that far, and the GOP leaders in both chambers have never coalesced around a replacement plan.

The Republican 2016 contenders want voters to believe things will be different this time, that Obamacare will be easier to repeal and replace than it has been thus far, and that GOP leaders care enough about health care to go beyond vilifying Democratic policies and put some of their own in place. If history is any guide, voters eager for that outcome will have to go on waiting.

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