A lot of libertarians hate Trump/Ryancare

posted at 6:31 pm on May 7, 2017 by Taylor Millard

There’s a lot of angst on the right regarding the American Health Care Act. The Senate is expected to pass its own version of the bill with Washington Examiner pointing out there’s going to have to be plenty of compromise between the two chambers.

“I know the members of the Senate have lots of amendments,” said Sen. John Barrasso, R-Wyo., a medical doctor and member of the GOP leadership. “This is going to be an open process on the Senate floor, so we’re working to get to yes.”

A few GOP lawmakers are backing alternative plans, which further guarantees the final product will have to be a compromise between the two chambers.

“There are undoubtedly going to be some changes,” Senate Finance Committee Chairman Orrin Hatch, R-Utah, who will play a key role in writing the compromise, told the Washington Examiner…

Sen. Tim Scott, R-S.C., said he’s not thrilled with the House plan to preserve tax credits for earning up to 850 percent of the poverty level who want to buy insurance. He’d rather spend the money to bring down costs for older consumers, who under the AHCA would pay more.

“I’m not completely in line with that,” Scott told the Washington Examiner. “We have to squeeze that down so we can give that money to folks between the ages of 50 and 64.”

One thing Michigan Congressman Justin Amash (and noted libertarian) wrote on Facebook is the bill is a little bit better than Obamacare. He believes the bill does advance liberty a little bit, which is why he supported it.

Amash could be right, but other libertarians are pretty angry about Trump/Ryancare. There is an interesting theory from Reason editor Peter Suderman on why the House bill was written the way it was. He writes at The New York Times the GOP was looking to pass a tax bill, not an actual health care bill.

The flaws of the bill, then, can be understood as a symptom of the flaws of the Republican Party, which has for decades maintained a myopic focus on tax cuts at the expense of nearly all else. Too often, it is a party of people who seem to confuse governing with cutting taxes…

Republicans have consistently had difficulty making the case for the bill on health policy merits. It’s not even clear that most House Republican lawmakers know what’s in the legislation. “I don’t think any individual has read the whole bill,” Representative Tom Garrett of Virginia said. Why then did House Republicans push so hard to pass this health care bill?

Because it cuts taxes — especially for the top 20 percent of earners — and so sets up the broader tax reform legislation Republicans hope to pass later in the year…

Suderman goes a step further in believing AHCA will actually help the GOP make the Bush tax cuts permanent.

The Senate effectively requires 60 votes to pass most legislation, but Republicans hold only 52 seats. However, Senate rules allow for the passage of certain types of legislation using a process known as reconciliation, which requires only a simple majority. Republicans planned to use the reconciliation process to go it alone on both health care and tax reform.

But that process comes with conditions. There’s a ticking clock; the reconciliation instructions that allow for the passage of the health care bill expire as soon as the next budget resolution is introduced. And the process does not allow for the passage of legislation that raises the deficit outside the 10-year budget window via a simple majority.

This, for example, is why the tax cuts passed under President George W. Bush in 2001 were set to expire after a decade. For tax cuts to be permanent, they must be deemed “revenue neutral.”

That is where the American Health Care Act comes in: It would eliminate roughly $1 trillion in taxes used to pay for the additional spending in Obamacare. As a result, it would significantly lower the federal government’s tax revenue baseline. The baseline is an important figure in congressional budgeting, because it sets expectations for how much the government is projected, on paper, to spend and raise if current law remains the same.

The trick, then, is to make the health care bill’s tax cuts part of that baseline by passing them into law before a tax-reform package. This would provide Republicans with far more room to permanently cut taxes later in the year. In short, Republicans would be able to devise a tax bill that collects about $1 trillion less in revenue but that would still qualify as revenue-neutral under Senate procedure.

Veronique de Rugy has similar complaints about the bill at Reason.

It is wrongheaded and paternalistic to use the tax code as a system of reward or penalty, as opposed to just being a means of raising revenue while introducing as few distortions as possible to the economy. The GOP’s proposed health care tax credits are no better in this regard than the long-decried individual mandate, which punishes people for not buying a product Washington wants them to.

We already have a long list of tax credits meant to influence our behavior, nudging us to have more kids, save more money, drive electric vehicles, buy a house, go back to school, and more. Politicians justify the credits as either promoting good things (such as homeownership) or discouraging bad ones (such as pollution from fossil fuels). But as the economists Ed Lazear and Jim Poterba wrote back in 2005, “Such arguments are usually difficult to support with empirical evidence, and they lead to special privileges and a myriad of tax breaks that are likely, on balance, to reduce the efficiency of the tax system.”

Republicans, who currently hold majorities in both the House and the Senate, regularly claim they want a fairer, simpler tax code. But the credits they seem to love are far more likely to be the product of special-interest lobbying than a careful study of social externalities.

Mandates and tax credits don’t work, especially when the government has no plan whatsoever to reduce government spending (unfilled federal jobs aside). An actual solution to letting the free market take over medicine again, could take decades. This doesn’t mean Obamacare can’t be destroyed, and a more free market bill (like letting people go across state lines to buy insurance) can’t be put in place. But the root of the issue is the government’s expanded role in taking care of others. The federal government should be willing to look at privatizing Social Security, or eliminating it entirely for people under the age of 50 (they would get a check for the amount the government has taken from their paycheck). Those 50 and older could be allowed to either keep Social Security or get the same lump sum the others are getting. Medicare and Medicaid would have to be shut down over a period of 40 years, so other non-state alternatives can be formed and funded. It’s an overly simple solution, but one which should be considered to save the country’s longterm future. It also unfortunately solves only part of the problem, and the rest would have to be solved through eliminating corporate welfare and cutting spending on everything elsewhere (including military spending).

The biggest reason why this probably won’t happen is the fact politicians don’t think longterm. They prefer thinking short term to stay in office. This is why Trump/Ryancare is a disaster, and won’t actually fix health care in America.


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