The Affordable Care Act has been a policy success. It has substantially reduced the number of uninsured, while slowing the growth in American health care spending. The people who have been newly insured under the ACA like it.
None of these things have made the law popular among the population as a whole. But if there's one thing that's less popular than the ACA, it's repealing the ACA. For this reason, Republicans opposed to ObamaCare have to at least pretend to have an alternative.
One of these alternatives was put forward last week by Ed Gillespie, former chairman of the Republican National Committee and more recently a failed candidate for Senate. The plan has been praised on the right for being a serious alternative to ObamaCare. However, it doesn't really solve the Republican health care problem. That's because as an alternative to the ACA it's far worse than nothing.
The core of Gillespie's plan is a proposal for tax credits to purchase insurance. Gillsepie's case for the credits is unintentionally revealing:
These tax credits would benefit everyone, whereas under the Affordable Care Act premium assistance almost exclusively benefits the near-poor and the near-elderly, at great cost to the middle class and the young. A household in Virginia of two 36-year-olds making $63,000 a year gets no subsidy under ObamaCare, but under my plan, they'd get a tax credit worth $4,200. And those with policies covering adult children up to their 26th birthday could keep them. [The New York Times]
Note that Gillespie carefully describes his model family as two people making $63,000 a year, rather than more honestly discussing a household with an income of $126,000 — well more than twice the national per capita household income. In other words, Gillespie is proposing an upper-class tax cut, the one Republican solution to every problem under the sun. (Except global warming, which doesn't exist.)
But it's worse than that. The credits will be inadequate for most people to purchase decent insurance. This is not necessarily a huge issue for Gillespie's model six-figure earners, but a bigger problem for the more typical household. And because Gillespie would eliminate the ACA's crucial provisions guaranteeing insurance regardless of pre-existing conditions, insurance will not be available at all for many people. (The high-risk pools Gillespie proposes as an alternative would have to be subsidized at unrealistically high levels or they would fail.)
Gillespie is proposing to make the individual insurance market worthless for most people, and offering only inadequate tax subsidies in exchange. But we haven't even touched upon the poor, whom the ACA sought to cover through a historic Medicaid expansion that would be covering more than 10 million people had it not been ineptly re-written by the Supreme Court.
This is Gillespie's answer to the poor newly covered by the ACA: drop dead. Under his plan, "Medicaid would revert to pre-ObamaCare eligibility levels." In other words, the millions of people already covered under the ACA's expansion would be out of luck, and those who would be covered if their states eventually decide to take the large amount of federal money on offer would be out of luck as well.
What we have here, then, is definitive Republican policy circa 2014: funding tax breaks that disproportionately benefit the wealthy on the backs of the most vulnerable people in society.
What could possibly justify such cruelty? Gillespie asserts that the Medicaid expansion would be "unsustainable," arguing that health care costs can only be controlled by market competition. But this argument is theoretically and empirically indefensible. As the Nobel Prize–winning economist Kenneth Arrow long ago explained, markets in health care don't work like markets for other consumer goods. And Arrow's theory has been proven right in practice again and again. Other liberal democracies have more state intervention in health care markets, and all of them cover more people for less money (and often much less money) than the United States. The fact that the ACA's provisions have bent the cost curve underlines this point.
Just to add to his total detachment from all known facts about health care policy, Gillespie also proposes that old Republican standby, tort reform to limit malpractice lawsuits. Alas, this approach has been a proven failure at either controlling costs or reducing the number of uninsured.
Gillespie's proposal, in other words, is a disaster. It would result in a huge spike in the ranks of the uninsured and medical bankruptcies, with horrible human consequences, without significantly addressing the horribly inefficient American health care system. As an alternative to the ACA, it represents what the de facto Republican alternative for the uninsured has always been: nothing.
