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Republicans and Canceled Health Plans



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Republicans are rightly hitting the administration for promising that Obamacare would let people who like their health insurance keep it. The Democrats made that promise in the first place, of course, because most people who have insurance are satisfied with it — and fear what Washington policymakers’ monkeying with the system will replace it with.

Some Republican health-care plans would run up against this same obstacle, because they, too, disrupt existing health-insurance arrangements. Those plans generally take the tax break for employer-provided coverage and in some way extend it to insurance bought by individuals. The idea is that a level playing field between different methods of getting insurance — on your own or through your employer — would distort health markets less, make it easier for people to carry their policies from job to job, and allow a lot more people to get coverage than have it now.

That’s the right long-term vision. The problem is that if young and healthy people leave their employer plans to get cheaper coverage on their own, those employers will either have to offer worse policies to their remaining covered employees — or have to drop their coverage altogether. (The current insurance system, that is, includes disguised subsidies from young, healthy people to older, sicker people, just not subsidies as large as Obamacare’s.)

The answer to this problem, I think, is not to abandon the idea of moving in the direction of free-market health care as an alternative to Obamacare; it’s to make that move in steps. Step one would be flattening the tax break so it no longer rewards the purchase of the most comprehensive coverage available, and extending that flattened break to people who do not have access to employer coverage. That would work an enormous expansion of the individual market, solve much of the problem of people who are locked out of health insurance by our current policies, and create incentives for cost control. The smaller problem of people who have employer coverage but would prefer something else could wait until that market has developed, and voters’ fears about a more market-oriented health system have been assuaged.



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