So what’s the moral of the story? A flawed program – Medicare – was amended using a smart, market-oriented “scalpel” rather than a butcher knife. Similarly targeted, competition-focused fixes to Obamacare would effectively overturn the law without repealing it.
Here’s how to wield that scalpel: For starters, Republicans should work to abolish the law’s employer mandate, which requires employers with 50 or more employees to offer health insurance, else pay a penalty. The GOP should also end the tax breaks for employer-provided health insurance — or, alternatively, make the tax exclusion available to everyone. Across the board, economists and health services researchers agree that one of the most pernicious arrangements in the American health-care system is employer-sponsored health insurance. A slew of tax breaks make health insurance cheaper for employers than paying wages. The tax breaks over-insure Americans, drive up the cost of health-care services (when someone else pays your bills, you’re not as picky about costs), and reduce cash wages.
Going forward, smart reforms to Obamacare would extend subsidies to more bare-bones “catastrophic” plans – those that have high deductibles – while loosening restrictions on what qualifies as insurance, allowing more choice and competition in the exchanges. The GOP should hammer home the point that currently, subsidies extend even to middle-class recipients who may not need them – a family of four making $94,000 qualifies for subsidies, for instance. Re-targeting the subsidies to those who need them would streamline the law and reduce its total cost.