How the 2016 Republicans Will Fight Over the Future of Obamacare

Repeal, yes. But then what? Setting the stage for the presidential primary.

From left to right: Chris Christie, Jeb Bush, Marco Rubio, Rand Paul and Rick Perry
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Dylan Scott
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Dylan Scott
March 30, 2015, 4 p.m.
  1. Re­peal Obama­care.
  2. ?????
  3. Con­ser­vat­ive health care re­form!

Every Re­pub­lic­an 2016 pres­id­en­tial hope­ful is go­ing to start their health care policy plat­form with re­peal­ing the Af­ford­able Care Act. It is a cent­ral ten­et of the faith.

But what then? Con­ser­vat­ive re­peal-and-re­place plans have popped up from time to time over the last five years, but rarely garnered more than token press cov­er­age and have nev­er re­ceived a full vote in front of Con­gress. In oth­er words: There has been no vig­or­ous de­bate that shapes a white pa­per in­to real policy.

Some con­tenders, like Louisi­ana Gov. Bobby Jin­dal, have pro­act­ively re­leased painstak­ingly de­tailed and com­pre­hens­ive plans. Oth­ers, like phys­i­cian Ben Car­son, have nev­er held pub­lic of­fice and nev­er needed to ex­plain their po­s­i­tions in much de­tail. Some pro­pos­als — like health sav­ings ac­counts, block-grant­ing Medi­caid, or al­low­ing in­sur­ance to be sold across state lines — are uni­ver­sally pop­u­lar on the right. But the pro­ver­bi­al dev­il is al­ways in the de­tails.

(RE­LATED: Obama­care Could Be in Trouble if It Drives Busi­nesses From In­sur­ance Mar­ket)

“I think you have to present something that is so at­tract­ive that people would flock to it,” Car­son told Na­tion­al Journ­al. “We need to bring the health care sys­tem in­to the free mar­ket.”

The pres­id­en­tial cam­paign might be the first op­por­tun­ity for Re­pub­lic­ans to really have the tough talk about how they would ac­tu­ally go about dis­mant­ling and re­pla­cing the law they’ve spent the last half dec­ade cam­paign­ing against.

There are ar­gu­ably three schools of thoughts with­in the GOP on health care, said Avik Roy, a seni­or fel­low at the Man­hat­tan In­sti­tute.

One wants to ef­fect­ively re­vert to a pre-Obama­care world. An­oth­er ac­know­ledges the new real­ity that Obama­care has cre­ated and en­cour­ages con­ser­vat­ives to con­sider what’s polit­ic­ally vi­able in that world. The third would say that Re­pub­lic­ans should yield the cov­er­age side of health care re­form to lib­er­als and work on the best free-mar­ket al­tern­at­ive they can muster without meas­ur­ing it against the ACA.

With that in mind, and some guid­ance from Roy and Douglas Holtz-Eakin, an­oth­er lead­ing con­ser­vat­ive policy wonk, former dir­ect­or of the Con­gres­sion­al Budget Of­fice, and John Mc­Cain 2008 cam­paign ad­viser who now heads the Amer­ic­an Ac­tion For­um, here are three big areas for de­bate in 2016.

Tax treat­ment of health in­sur­ance.

This is a big one, be­cause em­ploy­er-based health in­sur­ance cov­ers al­most half of the U.S. pop­u­la­tion, and a big reas­on for that is em­ploy­er con­tri­bu­tions are ex­cluded from taxes. You start mess­ing with that, and you risk a lot of people get­ting wor­ried that they’re go­ing to lose a plan they like. (Sound fa­mil­i­ar?)

But, Holtz-Eakin said, it is a big is­sue for con­ser­vat­ive wonks. They see the status quo, which ex­empts health-in­sur­ance con­tri­bu­tions from be­ing treated as tax­able in­come, as a huge sub­sidy that “feeds the ap­pet­ite for in­ap­pro­pri­ately large plans” and drive up costs. Obama­care could ac­tu­ally give Re­pub­lic­ans more free­dom on this is­sue, Roy poin­ted out, be­cause its “Ca­dillac Tax” has already in­sti­tuted a tax on em­ploy­er-based health in­sur­ance.

(RE­LATED: Obama­care Prom­ises Tax-Sea­son Sur­prises)

There are still likely to be some risks, though, de­pend­ing on what you pro­pose. The usu­al op­tions are elim­in­at­ing it, cap­ping, it or re­pla­cing it with some kind of tax cred­it that any in­di­vidu­als who pur­chase their own in­sur­ance can also use.

Here is one in­struct­ive epis­ode. Last year, Re­pub­lic­an Sens. Richard Burr, Or­rin Hatch, and Tom Coburn pro­duced a com­pre­hens­ive health care plan. It would have ini­tially capped the em­ploy­er ex­clu­sion, as it’s called, at 65 per­cent of the “av­er­age (health) plan’s costs.”

That would have meant a huge tax in­crease for a lot of Amer­ic­ans — hun­dreds of bil­lions of dol­lars com­bined, by some es­tim­ates. That at­trac­ted crit­ic­al press cov­er­age, which led to the sen­at­ors quietly re­vis­ing their plan to cap the ex­clu­sion at the av­er­age cost of an “ex­pens­ive high-op­tion plan,” sig­ni­fic­antly re­du­cing the im­pact — and there­fore polit­ic­al risk. But that is in­dic­at­ive of the tricky ter­rain that the 2016 can­did­ates will be nav­ig­at­ing.

What does the safety net look like?

Re­peal­ing Obama­care means scrap­ping its Medi­caid ex­pan­sion and tax sub­sidies, both of which have helped mil­lions of poorer Amer­ic­ans pur­chase private in­sur­ance. Which leaves the ques­tion of how you provide some kind of safety net for that pop­u­la­tion, which has his­tor­ic­ally been less likely to be in­sured and most at risk of med­ic­al bank­ruptcy.

Block-grant­ing Medi­caid — send­ing states a set amount of fed­er­al dol­lars and then giv­ing them sub­stan­tial free­dom in what they do with it — is be­loved by con­ser­vat­ives. Sen. Ted Cruz called it one of the things Re­pub­lic­ans “gen­er­ally agree about when it comes to health care re­form.” But they usu­ally step over the stick­i­er ques­tions of how you hold states ac­count­able for what they do and pre­vent them from throw­ing mil­lions off Medi­caid rolls.

(RE­LATED: Sup­port for the Af­ford­able Care Act Breaks Down Along Ra­cial Lines)

Then there is also the pos­sib­il­ity of con­tinu­ing some kind of tax cred­it to help people buy private in­sur­ance. Rep. Paul Ry­an and oth­er House lead­ers pro­posed do­ing so in their post-King v. Bur­well con­tin­gency plan. The Burr-Hatch-Coburn plan would also have kept a tax cred­it. “That’s where the ac­tion is,” Roy said. Con­ser­vat­ives dis­agree on wheth­er to have a flat-tax cred­it or to means-test it, giv­ing a more gen­er­ous cred­it to lower-in­come people as Obama­care did.

Former Flor­ida Gov. Jeb Bush has hin­ted at a third path re­cently: some kind of gov­ern­ment-sup­por­ted cata­stroph­ic cov­er­age. “The ef­fort by the state, by the gov­ern­ment, ought to be to try to cre­ate cata­stroph­ic cov­er­age,” he said in Iowa, “where there is re­lief for fam­il­ies in our coun­try, where if you have a hard­ship that goes way bey­ond your means of pay­ing for it, the gov­ern­ment is there or an en­tity is there to help you deal with that.

What about small busi­nesses?

The fi­nal piece of the puzzle is how Re­pub­lic­ans would help small busi­nesses and their em­ploy­ees ac­cess health in­sur­ance.

Obama­care is sup­posed to cre­ate spe­cial mar­ket­places for small busi­nesses to, as a group, get a bet­ter deal on health plans. The can­did­ates will have to fig­ure out what they would do in­stead.

There are gen­er­ally two com­pet­ing ideas on the right: One is let­ting small busi­nesses pool to­geth­er and shop for in­sur­ance as a unit, not un­like the Obama­care mar­ket­places. An­oth­er is giv­ing them some kind of spe­cial tax cred­it. Wis­con­sin Gov. Scott Walk­er ar­gued in 2010 that elim­in­at­ing a tax on health sav­ings ac­counts and thereby ex­pand­ing ac­cess to them would en­cour­age small busi­nesses to of­fer health in­sur­ance — though he earned a “Mostly False” from Poli­ti­Fact when the news or­gan­iz­a­tion con­sul­ted policy ex­perts about that claim.

Caitlin Owens contributed to this article.
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