(Bloomberg View) — Republicans dislike Obamacare: The party is unified on that issue. But they don’t all dislike it for the same reasons, and their disagreements help explain their continued inability to figure out how to respond to a Supreme Court decision on the law that’s expected by the end of June.
Many of the Affordable Care Act’s opponents, like many of its supporters, identify the law’s core feature as the use of federal subsidies to help millions of people who had lacked health insurance to get it. They think the proposed Republican alternatives— which also involve offering subsidies to help people buy insurance — look awfully similar to this arrangement. “Obamacare lite” is their preferred disparagement.
But an alternative view is that while the federal government over-subsidizes the consumption of health care — and has for decades – increasing subsidies was not the main way that Obamacare expanded government involvement in health care. Rather, its key innovation was to make the health care system further centralized, regulated and coercive.
On this view, the law’s most objectionable aspect isn’t the tax credits. The real problem is that Obamacare makes the federal government the primary regulator of health insurance, uses that regulatory power to strictly define coverage in ways that restrict options and competition, attempts to force people to buy insurance products they don’t want, creates a federal board of dubious constitutionality to set standards, and assumes that empowering experts in Washington is the best way to make health care more efficient and rational. The tax credits in Obamacare are objectionable mainly insofar as they further this highly prescriptive scheme.
Yet tax credits could, in this view, be an important part of a reform that reduces the federal role in health care. That reform would pare back the total amount of subsidies offered, but more importantly use the subsidies to empower consumers and create competition among insurers and health care providers. It would avoid favoring employer-provided insurance over plans purchased by individuals (which federal tax preferences have done for six decades), allow cheaper and more expensive coverage to compete on a level playing field, and bring people into health-insurance markets rather than relegating them to Medicaid’s inferior alternative.