What Was Wrong with Bushcare?

February 20, 2014 - 2:48 PM

Bushcare - you may never have heard of it, but it was proposed in 2007.  What was the cause of its premature death? Well, Democrats emerged victorious after the 2006 midterm elections and weren't in the mood to deal.  Yet, it was a policy that would've cut the number of uninsured Americans by 65%.

Contrary to liberal talking points, Republicans have alternatives to Obamacare.  They've had them for years.  Last August, Chris Conover at Forbes went through the history:

Let's start with 5 comprehensive health reform proposals that have actually been introduced in Congress-some well before President Obama even was nominated for president, and all months before the House (11/7/09) or Senate (12/24/09) voted on what eventually became Obamacare.

1.      Ten Steps to Transform Health Care in America Act (S. 1783) introduced by Senator Mike Enzi (R-WY) July 12, 2007.

2.      Every American Insured Health Act introduced by Senators Richard Burr (R-NC) and Bob Corker (R-TN) with co-sponsors Tom Coburn (R-OK), Mel Martinez (formerly R-FL) and Elizabeth Dole (formerly R-NC) on July 26, 2007.

3.      Senators Bob Bennett (R-UT) and Ron Wyden (D-OR) introduced the Healthy Americans Act on January 18, 2007 and re-introduced the same bill on February 5, 2009.

4.      Patients' Choice Act of 2009 introduced by Senators Tom Coburn (R-OK) and Richard Burr (R-NC) and Rep. Paul Ryan (R-WI) and Devin Nunes (R-CA) on May 20, 2009.

5.      H.R. 2300, Empowering Patients First Act introduced July 30, 2009 by Rep. Tom Price (R-GA).

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Likewise, conservative market-oriented health policy scholars have developed a rich menu of potential replacement plans for Obamacare:

What about the Bush plan? Connor added:

President Bush proposed a sweeping health reform plan that would have replaced the current tax exclusion for employer-provided coverage with standard tax deductions for all individuals and families. The Bush plan called for a tax deduction that would have applied to payroll taxes as well as income taxes. Moreover, if one were worried about non-filers, the subsidy could easily have instead been structured as a refundable tax credit in which case even those without any income taxes would have gotten an additional amount.

[...]

What's sad is that the Bush plan actually was superior to Obamacare when it comes to providing universal coverage. Remember, Obamacare actually does not provided universal coverage. The latest figures from CBO says that when it is fully implemented in 2016, Obamacare will cut the number of uninsured by only 45%, covering 89% of the non-elderly. Even if illegal immigrants are excluded, this percentage rises to only 92%. In contrast, the Bush plan (without a mandate!) would have cut the number of uninsured by 65%.

Politico Magazine also published a piece about Bushcare, but got more in-depth concerning the details.

Via Politico Magazine:

The Bush 2007 plan achieves these goals. The basic structure is to offer all Americans a standard tax deduction, in 2007 set at $15,000 for families and $7,500 for individuals. The deduction would apply to payroll tax - both employee and employer contribution - as well as to income tax. Importantly, the size of the deduction would be independent of the amount spent on the plan. Any taxpayer who has a plan that includes catastrophic coverage gets the full deduction, irrespective of the plan's cost. That is important because it creates the incentives to choose efficiently. A family that wanted to spend less on the plan than the value of the deduction would pocket the difference. A family that wanted to spend more on a plan than the value of the of the deduction would bear the additional cost out of pocket.

As a consequence, consumers would reap the full benefit of keeping the cost of their plan low, which prompts them to shop and choose effectively. If the extra coverage offered by a $10,000 plan over an $8,000 one is not worth at least $2,000 to the consumer, he will not purchase it. Under the current system, part of the cost is borne by others because the tax system does not treat employer-provided health insurance as income. As a consequence, a dollar spent by the employer or worker costs less than a dollar to that worker. The Bush plan would eliminate that distortion, replacing the non-taxed status of employer-provided health insurance with the standard deduction. By eliminating the link to employers, health insurance becomes more like auto insurance, where the consumer has appropriate incentives to shop around. 

And, like auto insurance, Bushcare would've allowed customers to shop across state lines.  But, what about costs?

None of this would break the bank...when the Treasury Department scored the plan, it estimated it to be revenue-neutral over 10 years. The cost of the standard deduction was offset by revenues associated with treating employer-provided health care as taxable income. The large majority of those who currently have health care would enjoy a net decrease in the cost of their plans through the tax deduction, Treasury found. Many without insurance would be able to obtain it and get a tax rebate that would exceed the cost of the policy, netting money on the deal. And the substantial number of Americans whose policies are not provided by an employer would enjoy a big gain.

The Bush plan would create strong incentives to choose the right policy, meaning one that covers large, unpredictable expenses, rather than small, predictable ones. And by giving the consumer the advantage of choosing higher co-payments and less coverage of inexpensive and predictable treatments, there would be fewer incentives to over-use health care. Not only would this cut health care costs, but it would also allocate the scarce health resources to those who need them most. Unlike Obamacare, which mandates coverage for conditions that many would opt against insuring, the Bush proposal pushes consumers toward choosing more efficient, low-cost plans that deal with catastrophic, high cost and unpredictable events over which the individual has little control. That is exactly what insurance is supposed to do.

Wait, so you're telling me that if we allowed more competition and less government intrusion; costs would be controlled and health insurance would be more affordable?  Now, that's incredible. Removing the weight of Washington D.C. off of people's backs; how revolutionary!  If only a certain political movement that advocated those ideas weren't butchered by the liberal media, then we could get somewhere.