clock menu more-arrow no yes mobile

Filed under:

Jeb Bush's Obamacare replacement gets one big thing right

Photo by Sean Rayford/Getty Images

Jeb Bush's Obamacare replacement gets one big thing right: It focuses on actual health innovations, not just health insurance.

This is a major break from how health policy discussions tend to go. You can scour the plans released by Marco Rubio and Bobby Jindal and Hillary Clinton and Bernie Sanders and the dearly departed Scott Walker without finding any real ideas, or even empty rhetoric, about new cures for disease or new treatments that extend life.

This myopia is endemic to Washington's debate over health care policy, which reflects the process by which Washington makes health care policy. The big committees that control insurance and taxes — the Senate Finance and House Energy and Commerce Committees — control health policy, and so health policy focuses on insurance and tax topics: subsidies, deductibles, copays, out-of-pocket costs, marketplaces, and so on.

Left out of all this is the thing all that money is supposed to buy: improvements in human health.

Bush's plan begins with finding cures for major diseases

Bush's plan, to his credit, begins with a long section on medical innovation. It notes that Alzheimer’s is the sixth leading cause of death in America and costs the nation $226 billion each year, but it can't be "prevented, cured or slowed." It laments that the National Institutes of Health "lacks the resources to fund the most promising research." It worries over the fact that "medical research has identified the molecular causes of roughly 4,000 human diseases, but treatments only currently exist for approximately 250."

These are the right problems to be worried about. Bush's solutions aren't groundbreaking — modernize the FDA, increase funding for the NIH, push the private sector to create national health IT standards, make anonymized Medicare and Medicaid data available to researchers, hunt and destroy regulations that impede medical innovation — but the focus matters. If the next president's top health care priority really were medical innovation, it would be a very, very big deal. (This is probably the right time to note that there is a candidate from the Transhumanism Party driving around the country in a bus shaped like a coffin and promising to end death forever.)

The rest of Bush's plan — like Rubio and Walker's plans before it — shows just how entrenched Obamacare really is. The proposal is built to enable a simple talking point: Bush's plan covers more people at lower cost than Obamacare. This reflects a dominant strain of thought among Republicans, which holds, as Ramesh Ponnuru writes, that "a viable replacement for Obamacare has to largely leave employer coverage alone and enable people who now get coverage through Obamacare to buy new plans."

In other words, a replacement for Obamacare needs to do more or less what Obamacare does. Near-universal health insurance has become table stakes in American politics. That, more than anything else, will be Obamacare's most lasting achievement.

The problem with Bush's Obamacare replacement

Bush's plan is to offer an age-related tax credit sufficient for every American to buy a very spare form of catastrophic health insurance, which he would pay for by capping the deduction for employer-based health care — a simpler, supercharged Cadillac tax, in other words.

Bush also wants to combine the funding streams for Medicaid, the Children's Health Insurance Program, and potentially some existing Obamacare subsidies, and give states more control over how to spend the cash — though if this works the way most Republican block grants proposals work, it will probably lead to massive cuts to those programs.

The rationale for Bush's plan goes something like this: Health insurance is meant to protect against huge, unexpected health care costs, but for various reasons (some related to the tax treatment of employer-based health insurance, some related to the fears and preferences of living human beings) it has morphed into something closer to insulation from all health costs — it covers predictable, routine expenses as well as catastrophic, unexpected ones.

The result is exactly what you would expect: People consume too much health care with too little price sensitivity. If people had to pay the full cost of their care, they would become better shoppers, and that would force both lower prices and more innovations.

It's a nice theory. But the practical result of Bush's plan would be that people with good jobs and lots of money continue to enjoy health insurance as we know it, while poorer people who are finally getting more generous coverage are shunted into catastrophic plans with huge deductibles.

As Jonathan Cohn writes, "Without [Obamacare] levels of assistance, poorer people who want more comprehensive coverage probably wouldn’t have the money to buy it. Once they got sick, they’d be stuck with more punishing out-of-pocket expenses. And because these are people with lower incomes, they’d have less money to cover those costs."

The hope is that that high deductibles will make people better health care shoppers, but recent research shows they really don't — sick people just stop getting care because they can't afford it.

No Congress would pass Bush's plan

There are a lot of details missing in Bush's plan, from how big the insurance subsidies would be to what happens to the very poor to how the newly unified funding stream works. But all that's a bit beside the point. The core problem of Bush's Obamacare replacement is that it would be a political nightmare to pass and implement.

It would take millions of people who have comprehensive insurance under Obamacare today and force them into higher-deductible, catastrophic plans. It would require Republicans to do an about-face on the Cadillac tax and increase taxes on employer-based health insurance. It weakens protections for people with preexisting conditions and upends insurance marketplaces that both states and providers have spent years building.

The backlash would be enormous — and once the legislative compromises were made, the industry concessions granted, and public opinion taken into account, Republicans would likely be left with something that isn't quite Obamacare but does something pretty similar. It's a tremendous amount of pain for very little policy gain.

Which is why the first part of Bush's plan is so interesting. I don't believe the next Republican president is going to be willing to expend the political capital necessary to replace Obamacare with a more conservative alternative. So if that's all the next Republican president wants to do on health care, then nothing much is going to get done.

But if the next Republican president is actually interested in medical innovation, that's something he or she could conceivably pursue without getting trapped in the Obamacare quagmire — and the benefits, if it were done well, could be enormous.

Sign up for the newsletter Sign up for Vox Recommends

Get curated picks of the best Vox journalism to read, watch, and listen to every week, from our editors.