As senior House Republicans work on a promised replacement for the Affordable Care Act, a pair of GOP lawmakers plan to introduce an alternative Thursday that would dramatically reshape the nation’s healthcare system.
The sweeping legislation – co-sponsored by Rep. Pete Sessions (R-Texas) and Sen. Bill Cassidy (R-La.) – stands little chance of becoming law as long as a Democrat is in the White House.
But just as Sen. Bernie Sanders of Vermont shook up the Democratic presidential primary by pushing the liberal dream of a “single-payer” government-run health system, Sessions and Cassidy are resurrecting a long-held conservative goal of overhauling of the healthcare system by rewriting an important part of the tax code.
In the process, the two lawmakers are also highlighting the difficult trade-offs that would be necessary in any replacement for the health law President Obama signed in 2010, commonly called Obamacare.
The centerpiece of the Sessions-Cassidy plan is a major change to the tax code that would provide every American adult with $2,500 to purchase health coverage, but also shake up the nation’s current employer-based health insurance system.
This new standardized tax credit would replace tax breaks that many Americans currently get if their employer provides health coverage.
Health benefits, unlike wages, are not subject to income or payroll taxes, and that means that higher-wage employees with comprehensive health plans often enjoy substantially greater tax benefits than low-wage employees without health coverage.
The proposed tax credit would also be available to people who don’t have work-based insurance, thereby equalizing the tax treatment of health benefits.
“Bill Gates will get the same tax break as the guys who mow his lawn,” said John Goodman, a health economist who helped develop the Sessions-Cassidy plan.
Goodman said most Americans, particularly those with lower incomes, would end up getting more money than they do now for health insurance.
Conservatives have long argued that giving Americans a basic tax credit to use to shop for health insurance no matter where they work would free up the health insurance market and drive down costs.
Former President George W. Bush urged such an approach in his second term. And Sen. John McCain (R-Ariz.) made a similar plan a major plank of his 2008 presidential run.
But such plans have never been popular, in part because they threaten to disrupt the popular employer-based system that nearly 150 million Americans rely on for health benefits.
Even many traditionally conservative business groups gave McCain’s 2008 plan a cool reception.
Goodman - a longtime advocate of health savings accounts, or HSAs, and other tools to make consumers shop more for health services - said the Sessions-Cassidy plan would be less disruptive than McCain’s because it would allow Americans to remain in their current health plan if they like it.
Nevertheless, many conservative health policy experts have concluded that any healthcare legislation that aims to replace the Affordable Care Act shouldn’t overhaul employer-based coverage because that would be too controversial.
“One thing we know is that employers are very good at getting people covered,” said Tevi Troy, a former health official in the Bush administration who now works with businesses on health policy.
"I worry about something that might knock employers out of the game.”
Donald Trump, the presumptive Republican presidential nominee, has proposed tax breaks for Americans who don’t get work-based health benefits. But Trump’s campaign healthcare plan, like other recent GOP health proposals, does not appear to envision major changes to employer-based coverage.
And a task force of senior House Republicans convened by Speaker Paul D. Ryan (R-Wis.) is expected to skirt major trade-offs next month when it releases a general framework for replacing the current health law.