A Viable Alternative to ObamaCare

In the wake of Republican mid-term electoral victories, and with support for the president’s health care law registering new lows in the Gallup survey, it is time to consider what a “repeal and replace” strategy for Obamacare might actually look like.

While it is true that the politics and timing remain fluid, it is still possible to outline substantive changes.

At the top of the list would be replacing the Obamacare premium tax credits for exchange coverage with a new health care tax credit design that is broader, fairer and simpler.

Obamacare provides substantial subsidies for buying health insurance but only to individuals who have incomes between 100 percent and 400 percent of the federal poverty level, and only if they purchase coverage through a government-run exchange. Individuals with access to employer-sponsored coverage are ineligible for the new subsidies, and the law fines employers with 50 or more full-time workers if they do not offer coverage. Furthermore, even when someone qualifies for a premium tax credit, calculating the correct amount is absurdly complicated. The amount varies based not only on the recipient’s income but also according to the size of his family and the cost of the “reference plan” in the county of residence. There are more than 3,000 counties in the U.S.

The fairly obvious move would be to replace that complicated design with a uniform tax credit for health insurance available to all Americans. That way those with access to employer coverage could apply the credit to their employer’s plan, and all the employer would have to do is adjust the worker’s tax withholding to reflect the credit. Those who buy coverage on their own simply could authorize their insurer to collect the credit on their behalf and then bill them for the portion of the premium not covered by the credit.

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